An in-depth look into the Polkadot project, it’s philosophy, features, the problem that it’s attempting to solve. We shall also delve deep into its architecture, basic network roles, consensus mechanism, as well as its Kusama Network and the Substrate framework.
Polkadot is a unique and interesting project considered by many analysts as one of the next big things in the blockchain and Decentralized Finance (DeFi). According to the official sources, Polkadot is a heterogeneous multi-chain framework for Web 3.0.
Simply put, it’s a blockchain platform that serves as a bridge layer to connect with other blockchains. It allows multiple chain protocols to operate as one hive mind, maintaining communication and transferring value/data across. This serves as a way to aggregate their strengths and minimize their shortcomings.
Regularly, blockchains operate in isolation because of their unique designs and different parameters. This severely limits their capabilities. Polkadot creates a decentralized, secure, and trust-free federation of blockchains, so they can work in tandem.
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Polkadot History And The Team
The Polkadot project started in 2016. It is managed by the Web3 Foundation and developed by Parity Technologies. However, multiple independent teams have also contributed to it. All significant projects building on the network have received grants from the Polkadot Foundation.
The Philosophy of Polkadot
The project is built upon a foundation of openness and collaboration. It provides strong guarantees for security and prevents isolation. Polkadot aims to become a common ground for a production-ready and rock-solid system to push the boundaries of what is considered possible.
It will allow the low-value chains to exist alongside their high-value counterparts, allowing them to provide services to each other. The design principles which Polkadot seems to abide by are minimalism, simplicity, generality and robustness.
Problems with the Current System
Most incumbent blockchain systems face five key problems that the Polkadot project seeks to rectify. These shortcomings are scalability, isolation, the ability to develop safely, governance, and applicability.
The blockchains of today sacrifice speed for security, inclusivity for standardization, the ability to develop safely for easy integrations, adaptable governance for consistency, and continuity of a network in favor of having actual cases on its own.
Features of Polkadot
Polkadot itself doesn’t do anything much on the application functionality level. It only arranges the relay-chain to host validatable, coherent dynamic data structures in parallel. These are known as parachains, with each of them being a blockchain in their own right.
The salient features of Polkadot include sharding, high scalability, and an adaptable consensus mechanism to accommodate different blockchains. It also allows them to pool their security, cross-chain transactions, and on-chain governance mechanism, as well as the ability to fork-lessly upgrade frameworks.
Polkadot: Shared Security
Polkadot introduces a unique concept of shared or pooled security. This presents an enticing incentive for other blockchain projects to join the network and be protected by a wide umbrella. Furthermore, leasing a parachain slot can help alleviate one of the major problems faced by blockchains, which is the arrangement of security.
It provides a strong economic guarantee from the relay chain validators to different blockchains. A well-funded cyberhacker who wants to attack a system(s) will have to face a strong network instead of an isolated blockchain.
Basic Roles In Running The Polkadot Network
The four basic roles in running the Polkadot network are collator, fisherman, nominator and validator. They ensure the discovery, priority determination and validation of activity on the network.
The validator plays a key role in running the network by accepting new blocks and attaching them to the chain. Like all other PoS systems, they deposit an initial stake first, relative to which they validate transactions and maintain valid activity on the network. They can even be delegated stake by other parties, known as nominators. There are rewards given to those who help run the network and penalties imposed on those acting in bad faith.
A nominator provides the validators with needed capital or stake, to act on their behalf. This signals trust in a particular validator as the stakes grow or decrease depending on their performance.
Collators assist the validators in producing valid blocks on the network. They run a full node and are able to see all information, as well as make new blocks. Collators prioritize transactions, batch them, and pass them to validators in order for them to be added on the blockchain.
As the guardians of the network, fishermen earn rewards by catching network actors who have done malicious activity. They also have to put a small stake to be able to work as such.
Polkadot Launch Phases
The project is still in development phases and expected to launch completely by the end of 2020. Owing to the importance and thus the sensitivity of the project, the team has decided to launch it in phases. The current phase is balance transfers
The launch phases include Proof of Authority (PoA) – chain functionality limited to staking and claiming DOT tokens. Once enough validators onboardeded and the network was stable, they transitioned to Nominated Proof of Stake (NPos), which allowed users to nominate and delegate their stake to the validators.
The team later transferred the governance to the community. It was followed by the removal of the Sudo key – a superuser controlling the network with the ability to override decisions and manipulate parameters. The final phase will be the enabling of balance transfers and the core functionality of Polkadot.
Polkadot Consensus Mechanism And Composition
Polkadot reaches low-level consensus by applying the modern asynchronous Byzantine Fault-tolerant Algorithm over a set of mutually agreed blocks. For determining the validators and incentivizing them to work honestly, the Proof of Stake consensus mechanism is used.
The project is built with Substrate technology, which allows for easy design and deployment of blockchains. Its state machine is compiled with WebAssembly (WASM). Furthermore, it uses libp2p for communication.
Polkadot’s coding base is written in C++, Rust and Golang for wide developer accessibility.
Polkadot Token (DOT)
Polkadot’s native token is DOT, which is used for all activities on the network. It had a total supply of 10M DOTs but has since then been redenominated to 985M DOTs. All existing holders received 100x more tokens as the price naturally decreased by the same amount. This was done for the purpose of easy operation.
DOT tokens are used for governance, staking, and bonding activities on the network. Moreover, 1 DOT token is now defined as 10 billion Plancks – the lowest unit.
DOT serves as the voting power in the on-chain governance in a multi cameral system, prevalent on the Polkadot network. It includes all participants with interests in a council. Additionally, the participants vote on the proposals received from various sources. If the voting is in favor of, the proposals are then enacted.
DOT holders can vote on parameters such as network fees, auctions, and prioritization of the inclusion of new parachains. They also decide matters relating to upgrades, bug fixes, etc.
The token is also used as a guarantee or stake, before allowing a validator to participate on the network. This makes it possible to reward or punish them based on the nature of their behavior. This functionality can also be delegated on one’s behalf, to passively contribute and earn rewards. It is a function of the amount staked and its duration.
DOTs are also used for staking to bind para-chains to the main relay chain in order to attach new blockchains to the network.
Polkadot is powered by the Substrate framework, which is a light, convenient, plug&play method of building blockchains. It has inbuilt templates and mass customization features to publish all that. This reduces the cost and speeds up the time needed for blockchain development.
The platform has cross-language support with WebAssembly, built in coordination, deterministic finality, and seamless integration. Plus, Substrate has built blockchains that are compatible with Polkadot without doing anything further.
The architecture consists of the relay chain (main Polkadot chain), para chains (other blockchains) and bridges (the connections with external networks).
This is the basic component of Polkadot’s architecture and is what every other blockchain connects to. The relay chain is responsible for providing security, evoking interoperability, and maintaining consensus among all.
A set of different blockchains having their own use cases and native assets but different parameters and optimizations, onboarding the Polkadot network directly.
Polkadot bridges allow communication and connection with external networks. They are special blockchains that allow the network to maintain interoperability with Bitcoin, Ethereum, as well as other networks.
Kusama is the Polkadot Lite version – an unaudited and rough release of Polkadot, serving as a testbed for its features and functionalities, in a real-world incentivized environment.
Much like Ethereum’s Goerli and Rinkeby testnet, developers can use Kusama to test their projects, before deploying them to the mainnet. The native token is KSM. It’s managed by the Polkadot community.
The Polkadot project has climbed to the top 10 crypto projects ranking, since the redenomination. It’s been growing in importance and significance lately.
The ecosystem has seen massive growth and expansion, with more than 150 projects working on it.
Most of the projects are diverse and not limited to one field, however, they are heavily biased in favor of Decentralized Finance (DeFI). It seems to be the motivation of most teams to take advantage of the network’s DeFi capabilities for their projects. However, apart from DeFi, it features tokens, oracle, DAOs, privacy, exchange, gaming, identity, etc.
Even though the projects are diverse, they are heavily biased in favor of DeFI. It seems to be the motivation of most teams to take advantage of the network’s DeFi capabilities.