Primer - Founded by Gavin Wood (Co-founder and former CTO of Ethereum, inventor of Solidity, and founder of Web3 foundation), Polkadot envisions itself as a next-generation blockchain protocol that unites an entire network-of-purpose built blockchains, allowing them to operate seamlessly together at scale. It is a leading multi-chain technology focused on blockchain interoperability. Furthermore, it seeks to facilitate the easy development of new chains via the Substrate framework and provides bridges to networks such as Bitcoin and Ethereum.
According to Messari's report, despite a brutal macro environment, Polkadot's on-chain activity has been consistent quarter over quarter. In addition, its developer activity remains among the strongest in the crypto market.
But what is Polkadot? Let's look at everything you need to know about the multi-chain network.
In the following section, we shall closely examine the components and features of Polkadot. But before we do that, let's understand some of the problems of existing blockchains.
The three unique properties of blockchains are decentralization, speed, and security in a trustless environment. Historically, most blockchains have prioritized decentralization over scalability and security, which is reflected in the low transaction volumes.
Lack of interoperability
The inability of protocols to interact beyond their native environment and the parallel growth of Layer 1 protocols has resulted in a fragmented landscape; a plethora of blockchains siloed from one another.
Polkadot offers a fresh perspective to the Blockchain Trilemma and seeks to address the interoperability problem. Gavin Wood describes Polkadot as the biggest bet in the ecosystem against chain maximalism. Emphasizing innovation and interoperability, he shuns the narrative of only one blockchain. Instead, Polkadot offers multi-chain support and can be seen as a decentralized ecosystem for blockchains. Often dubbed as the Blockchain of Blockchains, it is a Layer 0 meta protocol that connects Layer 1 blockchains to itself. Bridging and connectivity are integral to its design and enable it to focus on interoperability and scalability.
Polkadot is a heterogeneous multi-chain framework that connects application-specific Layer-1 blockchains (referred to as parachains) into one unified network via the Relay Chain. The relay chain is responsible for security, consensus, and cross-chain interoperability across the entire network.
Despite technical differences between public, permissionless networks, private consortium chains, and other Web3 technologies, Polkadot enables an internet that provides seamless communication and transfer of value between distinct networks under common security guarantees.
How does Polkadot work?
The network runs on a sharded model featuring multiple blockchains running in parallel and connected via the Relay Chain. The Relay Chain allows Polkadot to process transactions from all chains in the network at the same time, eliminating the bottlenecks of legacy networks and significantly increasing scalability. The simultaneous transaction processing also called parallel processing, is why blockchains on Polkadot are called parachains (short for parallelized chains). Parachains are sovereign blockchains offering specific use cases and featuring their own tokens and governance mechanism. As long as a parachain's logic can compile to WebAssembly (Wasm) and adhere to the Relay Chain, it can connect to the Polkadot network.
Polkadot is representative of the entire ecosystem of parachains that plug into the Relay Chain. The Relay Chain forms the basis of the Polkadot ecosystem and is often referred to as Layer 0 or the foundational layer of the network. It is responsible for securing, governing, connecting, and ensuring the seamless functioning of parachains. The Relay Chain does not support application functionality. Its primary task is validating the state transition of all connected chains and providing a shared state “State of States” across the entire network. Parachains connected to the Relay Chain execute smart contracts, support dApps, and the creation and transfer of assets on the network.
In the blockchain world, each platform is designed to fulfill a specific need or deliver a specific product/service. Unfortunately, no single blockchain design works optimally for every use case. However, Polkadot’s parachain model addresses the issue by enabling each blockchain to have a novel design optimized for its selected use case. For example, one chain might optimize for gaming, while another might optimize for NFT trade. Polkadot envisions a future where different blockchains work in tandem to ensure growth and mass adoption of blockchain technology.
Polkadot deploys a Nominated Proof-of-Stake (NPoS) consensus mechanism to maximize chain security. Validators stake DOT (Polkadot’s native token), confirm parachain blocks, produce new blocks and guarantee transaction finality. DOT stakers can even participate as Nominators by backing specific Validators with their stake.
Parachains derive their security from the network. Full nodes of parachains called collators have no security responsibilities and can interact without trust. They simply collect the states of the blocks and submit them to the Relay Chain validators. The sharded infrastructure of Polkadot ensures only one set of validators is responsible for a specific parachain. In addition, the network features fishermen who’re tasked with monitoring the network and reporting bad behavior to validators.
The Relay Chain also provides a secure way for parachains to communicate with each other. Polkadot's cross-chain messaging scheme(XCM) facilitates the exchange of any type of data allowing for true interoperability and creating a new paradigm of interchain services, communities, and economies. Developers can leverage and build on features/offerings of multiple blockchains rather than being restricted to the features of a single blockchain. Moreover, parachains can incorporate Layer 2 solutions on top of them for enhanced scalability and efficiency.
Parachains can even function as bridges. Bridges are specifically designed parachains that enable interoperability with external blockchains like Ethereum, Bitcoin, Kusama, etc. Bridges allow for token swaps without the need for a central entity to facilitate these swaps.
Other benefits of parachains include customizable governance and forkless upgrades. Governance on parachains is completely customizable. Parachains can choose from a wide array of pre-built modules or deploy whatever model they see fit. Moreover, Polkadot enables forkless upgrades for parachains to stay relevant in the future. New and advanced technologies can be easily incorporated at the community's will without the risk of forking (splitting the chain).
At present, the Polkadot network can support 100 parachains. Connection to Polkadot requires leasing an open slot on the Relay Chain via slot auction. This auction entails locking up a bond of DOT for the entire lease duration (2 years). However, leasing is not the only option to join the Polkadot ecosystem.
Other options include -
Common good parachainsAs the name suggests, these parachains are reserved for functionality that benefits the Polkadot ecosystem. They're approved by governance and operate on a non-profit basis.
Parathreadsare similar to parachains but operate on a pay-as-you-go model. Under this model, participation is temporary and does not need continuous connectivity to the Relay Chain. The Polkadot network can accommodate up to 10,000 parathreads. Parathreads enjoy the same security level and interoperability features as parachains.
Today blockchains operate independently and in silos necessitating reliance on centralized entities for cross-chain communication. This setup goes against the entire principle of decentralization. Polkadot's design delivers on blockchain technology's promise of a Web3 future that returns individuals control over their identity and assets secured from central authorities and internet monopolies. Polkadot enables blockchains to scale, specialize and work together. Moreover, the network boasts an advanced suite of governance tools and, using the Wasm standard, can autonomously deploy network upgrades. In essence, the network is future-proof as it can adapt to growing needs sans the risk of forks.
Substrate - for easy development
Substrate is a framework for building and customizing blockchains developed by Parity technologies. Substrate eliminates the complexity associated with building blockchains from the ground up. It provides developers access to several development tools and a solid foundation to build on. Moreover, it enables them to focus on adding value to their projects instead of spending time and energy on building the basic infrastructure.
Substrate is the technology underpinning the Polkadot ecosystem. All chains made with the toolkit are compatible with Polkadot and, as such, gain access to its speed, security, and interoperable ecosystem of parachains and applications.
However, building with Substrate on Polkadot is optional and the two are not dependent on each other. Blockchains with alternate software can also be integrated as shards (parachains) on the Polkadot network. Similarly, blockchains made with Substrate are not compelled to join the network and can be launched as stand-alone.
Kusama - for testing and early stage deployment
A unique component of the Polkadot ecosystem, Kusama is a sovereign blockchain with a code base similar to that of Polkadot. The two networks are closely related, with Polkadot being a high-value network and Kusama the test network. Kusama is the testing ground for new technologies and ideas before being deployed on Polkadot. Although testing is not foolproof, Kusama provides a system of comparable complexity with real economic incentives. Thus, Kusama is crucial in securing and stabilizing Polkadot for risk-averse applications.
Polkadot's flexible and adaptive network architecture ends the era of siloed blockchains. It provides a solid foundation for innovation and collaboration to unlock blockchain technology's full potential for real-world use cases.
I hope this article helped you gain some insight into the Polkadot ecosystem. This article will be a part of a series covering the Polkadot ecosystem. The series will consist of the articles outlined below.
Part I - Polkadot Overview
Part II - Polkadot’s canary network - Kusama
Part III - Parachain Slot Auctions and Crowdfunding
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