💭 What is a parachain and how does it differ from a rollup? 💭 Although transactions are cost-effective and fast on Moonbeam, it is not a layer 2 solution. It is a layer 1 blockchain, more specifically a parachain. Like modular chains or Ethereum rollups, Polkadot parachains can have their own custom features. HOWEVER 🔽

Unlike most Ethereum rollups (L2) that bundle transactions and send proofs to the main network to achieve consensus, parachains are L1 blockchains that use their own native token for transaction fees and governance, while benefiting from the security of Polkadot. 🔽

The DPoS system of parachains is used to elect a set of (decentralized block producers managed by the community) who submit blocks to the Polkadot relay chain for a finality of 12 seconds. Moonbeam distributes rewards based on inflation to block producers according to the blocks they produce. With the recently added asynchronous support in Polkadot, block time is expected to decrease from 12 to 6 seconds. 🔽

In terms of interoperability, thanks to the XCM (Cross-Consensus Messaging) of Polkadot, parachains/appchains can easily exchange information and assets between each other without relying on third parties, thus minimizing the risks associated with bridges. This is where Moonbeam stands out from other parachains 👇

The combination of XCM with other GMP solutions and EVM compatibility has made Moonbeam the entry/exit point to and from Polkadot for inter-chain activity. Moonbeam has become a liquidity hub thanks to MRL (Moonbeam Routed Liquidity), allowing users to move liquidity to and from Polkadot with a simplified one-click experience. 🌕 This is how Moonbeam integrates web3.