Currently, the crypto-sphere is booming with new and innovative projects constantly building and refining cutting edge technology for the future, and Polkadot (DOT) is no exception. Polkadots is a Layer 0 protocol that allows transfers of any type of data across any blockchain connected through a para chain without sacrificing security or efficiency, creating true blockchain interoperability as we have never seen before.
What Is Polkadot?
Polkadot is currently one of the largest cryptocurrencies around, hovering around rank 12 with a market cap of around $20bn. It currently has just less than a billion DOT in circulation, with 1.1bn in total supply.
Polkadots main aim is to create an internet where users have complete control over their data and identity in a completely decentralized web, unlike what we currently have in Web 2.0. We will dive deeper into how they are currently working to make this aim a reality through parachains and much more.
Polkadot currently has the capacity for 1,000 transactions per second, compared to Ethereum’s 15 for example, with founder Gavin Wood publicly claiming the potential for up to 1,000,000 transactions per second in the future.
The Team
Founded by the Co-Founder of Ethereum, Dr Gavin Wood in 2016, who coined the term Web 3.0 with other founders, including Robert Habermier and Peter Czaban, who both have expert resumes in the Web 3.0 and blockchain development space.
The Founders of Polkadot, Gavin and Peter are both heavily involved with the ‘Web3 Foundation’, where Polkadot is the main project, aimed at bringing to life a functioning and decentralized Web 3.0.
The Web3 Foundation, a swiss owned foundation, is providing grants for the development of decentralized apps and projects to be built on the Polkadot ecosystem through the use of parachains. It is also working with the likes of Parity Technologies and Polychain Capital to aggregate the best minds and willing investors in the space.
How Does The Ecosystem Work?
The native token in the Polkadot ecosystem is $DOT and is crucial to most interactions in the ecosystem not exclusive to paying transaction fees, staking and paying for parachain auction slots and governance. The use of DOT in governance is a great way Polkadot ensures its token holders are the ones affecting the decision making on the chain, making a truly decentralized ecosystem.
Polkadot Relay Chain
The relay chain constantly working inside Polkadot is the central chain of the system. The relay chain is where all validation occurs for the entire network of parachains, done through their nominated proof of stake consensus mechanism (NPoS). The relay chain was purposefully kept simple, such as avoiding smart contracts, as it acts as the layer on which specific utility is built on top of to enable such benefits as:
- Shared Security
Any parachain connected to the relay chain benefits from the security of the relay chain, allowing smaller parachains to reap the rewards from a trusting network of validators, without having to create a whole new validation system for their project.
- Bridges
Bridges are the middlemen between the relay chain and the connected parachain, allowing all types of data to flow through from other blockchains which normally could not comminute, such as Bitcoins blockchain to Polkadot. Bridges are fundamental to creating an interoperable blockchain (one that works with others) and, therefore, the key to creating a decentralized yet connected Web 3.0.
- Parachains
Parachains are what set Polkadot apart from other protocols. Parachains are simply non-native blockchains with their own token and function attached to the Polkadot ecosystem through a bridge. The parachain will benefit from the security and validation that Polkadots relay chain brings.
Parachains use a sharded model, which means transactions coming in from many different parachains are validated in parallel with each other, not one after another, creating the massive potential for scalability.
Sourced directly from Polkadot, this image perfectly demonstrates how the relay chain, bridges and parachains are all interacting with each other in unison, not one by one.
So, Who Is Making This All Happen?
Polkadot is completely decentralized, so there is no governing power pulling all the strings, it is a collective effort to ensure the validity and security of the blockchain and consequently, the parachains. Polkadot relies on three main moving parts to keep a secure decentralized blockchain: Validators, Nominators and Collators.
- Validators
Validators are the ones staking DOT through a Proof of Stake mechanism to validate transactions and ensure the security of the blockchain. Polkadot uses a ‘sharded’ method means multiple validators will confirm each block or ‘proof’.
- Nominators
Nominators, often known as delegators, are essential for any DOT token holder choosing to delegate a certain amount of DOT towards a specific validator to help secure the relay chain. Nominators are incentivized to choose trustworthy validators and those with a good track record, making the validators want to be trustworthy, benefiting the whole eco-system. Nominators need to be careful with their validator of choice to reduce the risks of slashing events.
- Collators
Collators maintain shards or parachains of Polkadot by producing ‘proofs’, mentioned before, for the validators.
Governance Roles
The decentralized nature of Polkadot requires a good governance system to make Gavin Woods' vision of true decentralization happen. Decisions are voted on by two groups; Council members and the Technical Committee.
Council members are elected representatives there to vote on decisions on the behalf of passive DOT holders. The technical committee is made up of several teams actively working within the Polkadot ecosystem.
Benefits of Polkadot
Polkadot has the ability to transfer any arbitrary data between any type of blockchain, whether it be private or public. This creates the ability to validate public information through a private blockchain. Polkadot uses the example of degree verification.
- A private and permissioned blockchain sends data to a public blockchain to verify the proof of an individual’s degree certificate, without violating anyone’s privacy.
Future Proof Blockchains
Polkadots forkless upgrade system allows any parachains connected to upgrade themselves in a much easier manner as blockchain technology rapidly increases. Forking has consistently been a barrier to entry for many organizations entering the blockchain space. A barrier that Polkadot is breaking down.
One Chain Model Is Not Inclusive
Gavin is a Co-Founder of the second-biggest cryptocurrency ever, yet still decided to move away from Ethereum toward Polkadot. He lives and breathes his philosophy on blockchains that a singular blockchain is not enough, and will not be enough for mass adoption. With Polkadots sharding or parachains, there is ample room for innovative dApps to build on without worry of a potential bottleneck due to Polkadots relay chain parallel transaction processing.
Polkadot aims to add even more slots for other chains, along with a constantly increasing threshold for its transaction per second capability.
Having a project such as Polkadot, which understands that allowing other blockchains to flourish, and not be a gatekeeper forcing one blockchain to do it all, is the key to mass adoption in the future and working towards making their dream of a trustless and permissionless web come to life.
Decentralization at Heart
Gavin is well known in the cryptocurrency community as a founder who stands wholeheartedly by a decentralized web, even if he could profit more from the current Web 2.0 situation. He strongly believes in the likelihood of harsh regulations coming to cryptocurrency much earlier than most, around 1-2 years, and has already begun putting steps in place to ensure the aspects which he believes the regulators will come for the hardest are the main focus of decentralization for Polkadot.
Feeless Transactions
Due to the interoperability, parachains of Polkadot can offer feeless transactions, while still providing security through the relay chain, which is a massive competitive advantage.
*Feeless transactions mean users will be able to access a completely trustless and permissionless ecosystem of blockchains, with security from the relay chain, without even having to have a wallet connected to the ecosystem to interact.
Drawbacks of Polkadot
A major drawback to Polkadot is the lack of a future roadmap, currently ending at the release of parachains and further auctions, which have already been undergoing. Lacking a future roadmap can cause the project to stagnate and make progress move very slowly.
Weak Governance
DOT holders, the ones supposed to be voting for changes and upgrades in the Polkadot ecosystem are simply not voting enough! The lack of proper engagement could stagnate progress in the ecosystem.
Competition for Talent
Polkadots’ nearest competition for talented coders and developers are NEAR and Solana protocols as they all utilize rust. These other projects have been receiving a lot more funding, which trickles down to coders and developers.
Polkadot Conclusion
Polkadot has large strides to make before all its dreams become reality and has competitors such as COSMOS knocking on its doorstep. However, Polkadot has a team with a proven track record, massive institutional funding and fundamentals which align with the core values of all true cryptocurrency users. Trustless, permissionless and decentralized communication, finance and governance could be the reason Polkadot is here to stay.
Yet another great video from the Whiteboard Crypto youtube channel.
