Polkadot is a multi-chain network that unifies many blockchains to a single network. Polkadot offers cross-chain transfer of data and assets, which makes it one of the most interoperable blockchains in the crypto arena.
Ethereum has been a frontrunner for blockchains for quite some time as it gave birth to smart contracts on a blockchain and changed the way on how the world looked at digital currencies. As Bitcoin paved the way for blockchain technology, so did Ethereum for smart contracts. However, one of the aspects which Ethereum lacked was scalability, which bring us to “Polkadot.” Polkadot democratized features like interoperability, scalability, and security.
Polkadot is a collection of many parachains which assemble into a single platform known as the Relay Chain. Application functionality is not supported by Relay Chain but instead provides security to the network’s parachains and contains Polkadot’s consensus, finality, and voting logic. To break this down for you let’s take our human body for an example, Polkadot is the body, Relay Chain is the brain and parachains are the sensory organs that are connect to the brain.
Even though Relay Chain and parachains are crucial factors of the Polkadot ecosystem, there are many more features that complete the blockchain. To understand this let us take deep dive into the additional components of the network.
Parathreads are similar to parachains which can be used to build special-use blockchain or application. However, in the case of parachains they need a significant amount of investment to cover the high throughput.
According to Polkadot “Parathreads have the exact same API and functionality as parachains, but on a pay as you go basis.”
Parathreads are leased for a brief period to participate in the Polkadot network. Therefore, few projects even use parathreads to try out the network before deciding to buy a huge parachain slot.
To connect various blockchains on a single network, Polkadot allows projects to build bridges. These bridges enable blockchains to communicate and share data on the Polkadot network.
Which means if a user wants to purchase an NFT priced in ETH but only has BTC. He can transfer his digital assets via the bridge created in the blockchain. One does not need to use the traditional method of converting BTC into fiat and then convert into ETH.
The main duty of nominators is to ensure security of the relay chain by selecting trustworthy validators. They do this by staking their DOT tokens on the platform.
You can earn DOT tokens by nominating one or more validators which will in turn make you a nominator for the validator(s) of your choice. It is necessary to choose good validators because if they break the rules of the network, they will get slashed, and you will lose DOT rewards as well.
In the same way if they tend to behave properly then you can share in staking rewards that they generate.
They are set in place for validating proofs from collators and participating in consensus with other validators. And by staking DOT they also secure the Relay Chain on the network.
Validators play a crucial role while evaluating the information on identities of the transacting parties and the subject matter of the contract contained inside an assigned set of parachain blocks.
They also participate in the consensus mechanism to produce the Relay Chain blocks based on validity statements from other validators. They are rewarded with DOT tokens in exchange for their services.
Collators collect parachain transactions from users to maintain parachains. They also produce state transition proofs for Relay Chain validators. They do so by aggregating parachain transactions into parachain block candidates and producing state transition proofs for validators based on those blocks.
To continue building blocks on a parachain, the proposed block candidate to the Relay Chain validators must be validated.
Last but not the least, Fishermen as the name goes, are responsible to monitor the network by searching and reporting bad actors to the validators.
If fishermen submit an invalidity report which proves to be genuine, they will be rewarded accordingly and if the report turns out to be false then they will lose their stake.
There are many projects on the Polkadot network with their own unique use-cases. We have listed few projects that will help you explore the Polkadot ecosystem.
Kusama is known as Polkadot’s “canary network” – a test bed used to validate and verify the network capabilities. The term comes from the practice of sending canaries to evaluate the safety of coal mines back in the days.
Kusama does the same for blockchain developers on the Polkadot network. It allows them to test their applications to check whether it is safe to launch them on the Polkadot network. By experimenting on Kusama they can launch robust applications on the Polkadot network.
Features such as parachain slot auction and matchable apps are part of Kusama network parachains. The designs of Polkadot and Kusama are similar however Kusama has traction by being known as a testing platform for Polkadot.
Moonbeam is an interoperable platform for smart contract deployment that allows users to easily bridge Polkadot and Ethereum. When executing and interacting with smart contracts, the Moonbeam utility token “Glimmer” will be used as transaction fees.
It will be developer-friendly platform for building cross-chain smart contracts and will bring increased speed and interoperability to decentralized finance. It is expected to be launched on Polkadot Mainnet some time in Q3 of 2021.
Centrifuge acts as a gateway for accessing the liquidity of decentralized finances. It conducts this by using two main components, Tinlake and Centrifuge Chain.
Centrifuge allows users to take out loans using real-world assets as collateral which can be later traded on the DeFi markets.
It also allows users to convert real-world assets into NFTs that can be used within the Tinlake dApp and exchanged for stable assets. With Tinklake users can create and manage customized asset pools.
Polkastarter is a launchpad and fundraising platform projects which also facilitates cross-chain auctions and token pools. It allows projects to raise capital through its DEX.
To switch easily between various blockchain protocols it uses Sharding technology. This enables users to swap any token from any network thereby increasing interoperability.
A well know name in the blockchain world is Dr. Gavin James Wood, the co-founder and chief technology officer of Ethereum network, who also helped in developing Solidity, a programming language for writing smart contracts and has also released a Yellow Paper on the subject.
And to my relief, Dr. Gavin Wood along with Jutta Steiner, also a former Ethereum executive founded Polkadot. Polkadot was built by Parity Technologies and supported by the Web3 Foundation.
In terms of Polkadot’s vision Parachains are the last piece of core functionality to be delivered as outlined in the Polkadot whitepaper and will allow Polkadot to realize its scalable multi-chain architecture.
After a period of testing, optimization, and auditing, parachains will be ready for launch on Polkadot, and can be enabled via on-chain governance. And once the parachains are live, it will be up to the community to decide which additional features and network upgrades should be added over time.
A roadmap is available on the Polkadot website which helps us understand how it plans to develop among other blockchains and upcoming innovation.
The most attractive characteristic of any blockchain is decentralization. That said, the polkadot ecosystem is a fully decentralized network and it is governed by its community or token holders.
Developers can create parachain using Substrate, the framework used for creating blockchains. Polkadot offers interoperability, security, consensus, and a lot of the other services for Substrate-based chains.
Since Polkadot is a sharded multichain network it drives scalability in its ecosystem. Which means it can simultaneously process multiple transactions at a given period. Its nature which allows it to operate parallel networks, brings flexibility within the network.
Polkadot is highly interoperable and works in tandem with other blockchain networks, cross-chain bridges being one of them.
To sustain eventually every blockchain needs to upgrade itself in the ever-evolving market. By recognizing the future needs of the blockchain industry, Polkadot comes with an added ability which supports forkless upgrades. Therefore, new features can be added without the need for reconstruction from the beginning.
Polkadot was and will be one of the most promising projects in the blockchain market. Making its way through and shining among the top ten cryptocurrencies in the world is not less than an achievement. As mentioned earlier it has many use-cases which are being upgraded with time and changing markets.
The team itself includes celebrities of the blockchain network, which makes it even more attractive. There are many projects which are inspired by the parachain function of Polkadot ecosystem.
The network already hosts many projects in its ecosystem but something that really draws our attention, is its feature which allows developers to launch chains and applications leveraging a shared security model, without having to worry about attracting enough miners or validators to secure their own chains.
But every project comes with a drawback it in the case of Polkadot there are limited number of parachains available, and slots are sold via auction, which may price out some smaller use cases.
Polkadot is a known project to many in the industry. In our opinion, it is one of the strong projects that every investor can have in their portfolio without worrying about its prospects. Polkadot has a long way to go as it has it has already marked a place in history.
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