The blockchain and cryptocurrency space has seen tremendous growth since its debut. Today, we have several blockchain networks that work independently. Each accomplishes new and innovative stuff.
Every blockchain network in existence is like a star in space. These stars wander around but are unable to connect. The lack of interoperability is similar to the pre-internet time. Sure, computers were fantastic. But being able to send and receive data made it better and more incredible.
Similarly, today’s blockchain networks are fantastic. But, introducing interoperability can lead to data exchange. It will ultimately lead to the development of powerful DApps and services.
Here is where the Polkadot blockchain comes in. Polkadot acts as a foundation layer for all blockchains.
Polkadot is a next-generation multi-chain network. It links various specialized blockchains such as Ethereum and Cardano into a single unified network. It also allows the transfer of value and data across these networks while remaining fast and scalable.
The main aim of Polkadot is to serve as a foundation for blockchain networks by handling validation and security protocols. Through this, developers can focus on developing DApps. In addition, Polkadot will link all the other blockchains. It will make it easier for the general public to use blockchains.
Polkadot will be fast and scalable with the help of parachains. These are several parallel blockchains that handle much of the leading blockchain’s processing requirements.
A brief history of Polkadot
Web3 Foundation maintains Polkadot’s open-source code. They are the primary research organization for the network. The concept behind Polkadot was proposed in Gavin Wood’s whitepaper. He is the Ethereum Co-Founder and the creator of Ethereum’s Solidity programming language. In 2017, Gavin Wood co-founded the Web3 Foundation to research and develop a decentralized internet.
Kusama network refers to Polkadot’s future codebase. It was released in 2019. It is an independent network that will continue to exist and evolve according to the direction of its decentralized community. Kusama serves as the proving ground with real economic incentives for Polkadot.
Polkadot’s genesis block was created in May 2020 as a Proof-of-Authority (PoA) network. A single super-user account initially governed it. In June 2020, the network transformed into a Proof-of-Stake (PoS) network. The super-user was then removed from the chain in July 2020.
Currently, Polkadot’s governance was handed in its decentralized community of validators: the DOT token holders.
The DOT token
The DOT token is the official currency of Polkadot’s blockchain. It serves three main functions:
- Staking — for Polkadot’s operation and security.
- Bonding — for connecting a chain to Polkadot as a parachain.
- Governance — for the right to vote in the direction of the network.
The DOT token is inflationary. It means that, unlike Bitcoin, there is no maximum number of DOT. The inflation rate is not fixed. It is designed to be 10% in the first year. The generated DOT is used for validator rewards, with the remainder going to the Treasury.
Components of Polkadot
At its foundation, the Polkadot blockchain is simply a Proof-of-Stake network that connects other blockchains. It operates using ground-breaking technologies.
Let’s have a look at the main elements of Polkadot:
The Relay Chain: The Relay Chain is the centre chain of the Polkadot network. It forms the network’s heart. It is also in charge of the network’s shared security, consensus, and interoperability among chains.
Parachain: Parachains are layer-1 blockchains that operate independently. Each parachain can have its own token economy, functionality, and governance structure. Parachains are linked together via a Relay Chain. It allows them to share the network’s security. It also makes token and arbitrary data exchange possible.
Parathread: Parathreads are pay-as-you-go parachains that connect to Polkadot. They lower the barrier to entry for blockchains that do not require continuous network connectivity. Polkadot blockchains can transition between parachains and parathreads based on their requirements and parachain slots on the Relay Chain.
Bridges: Bridges are parachains that allow Polkadot chains and apps to link to and communicate with external networks like Ethereum and Bitcoin.
Nominated Proof-of-Stake: Polkadot validates transactions and ensures the blockchain’s security and integrity through Nominated Proof-of-Stake (NPoS) consensus mechanism. In NPoS, the nominators back validators with their stakes by bonding their tokens with the validators. Nominators receive a portion of the validator’s reward for validating the transaction. But, they are also accountable if their nominated validator misbehaves.
The future of Polkadot
In the past, blockchain engineers attempted to build bridges to connect one blockchain to another. Binance Smart Chain (BSC), for example, has constructed a bridge for Ethereum. However, integrating several blockchains remains a critical challenge.
Polkadot is laying the groundwork for a new decentralized web by constructing an infrastructure that shields its users’ interests. It promotes greater access to open financial institutions and a dependable, open-source, peer-to-peer infrastructure for collaboration and communication.
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