What is Polkadot (DOT)?
Polka dot (DOT) is an innovative blockchain project that aims to create a secure infrastructure for interaction between different blockchains while providing scalability and new functions
This blockchain technology project positions itself as Blockchain 3.0, aiming to overthrow Ethereum with a much more scalable and efficient network. At the same time, it offers the ability to connect different blockchains and turn them into an unprecedented cross-chain development center.
The history of the project
The origin of this project leads us to one of the famous figures in the world of cryptocurrencies, Gavin Wood. Wood is a well-known developer of blockchain technology, who was part of the Ethereum development team. In fact, he held the position of Ethereum's lead developer, being on the same level as Vitalik Buterin. It was thanks to Wood's work that the powerful Solidity programming language, created by him personally, appeared in Ethereum. However, on January 11, 2016, Wood decided it was time to start his own project, abandoning the Ethereum project.
Wood's idea was to launch a blockchain project capable of overcoming Ethereum's weaknesses, in particular, scalability and the ability to create new interchain operating structures. Thus, by June 2016, Wood had already begun work on this new project, and in October 2016, he presented the first version of Polkadot's whitepaper to the world. This is how this interesting project began, in which developer Marek Kotewicz also participated.
Gavin Wood started this project initially with the financial support of his company Parity and the Web3 Foundation, which he also helped create. Although Parity and the Web3 Foundation are benchmarks in the Ethereum world, their involvement in funding Polkadot is vital.
However, the resources of both companies were limited because of their focus on Ethereum. This led to the initial coin offering (ICO), which was held from October 15 to 27, 2017. The success of the ICO was outstanding: raising $143 million to develop this project. From that point on, the development of Polkadot began, attracting more and more attention to the project. Today, Polkadot is one of the fastest-growing blockchain projects in both 2020 and 2021.
A radically different blockchain network offering
Polkadot began its journey as a network capable of offering the same capabilities as Ethereum while overcoming its weaknesses and offering a number of unique features. To achieve this, Polkadot developed a whole series of new technologies and consensus protocols from scratch.
Polkadot is based on working in heterogeneous networks that could be connected to each other. Thus, Polkadot could perform two well-defined functions:
- The chain of data transmission and processing.
This is functionality that allows you to receive information from other chains, process that information, and send it back to the original chain. This allows Polkadot to become a level of scalability for any other blockchain that needs it.
- Independent work on creating your own chains.
That is, creating substrings with their own capabilities, such as launching smart contracts or tokens. This ensures the natural operation of decentralized applications (DAapps) and tokens on the network and allows you to fully use its potential.
The idea behind all this is that Polkadot can be a scalability option for networks like Ethereum or other cryptocurrencies. In addition, it could also serve to connect different ecosystems in different blockchains on the same network. This case, for example, can be seen in DeFi's Equilibrium project.
As a reminder, this computational method divides the main chain and network into several substrings and subnets attached to it. Thus, each substring has its own blockchain history, nodes, and all the necessary infrastructure to make it work.
In Polkadot, this is exactly what happens. The substrings in Polkadot are called a parachain, which can be thought of as a side or secondary chain in which its own blockchain instance runs. In other words, a parachain has its own blockchain or history, which maintains its own existence of tokens, smart contracts, and nodes. Thus, this parachain has its own computing power to meet your needs.
The main Polkadot chain is called the Relay Chain, and it exists in combining the history of all parachains that are executed in parallel in the Polkadot network. This organization allows Polkadot to execute smart contracts in parallel and also provides better scalability than existing blockchains.
Such a segmented network structure also ensured the existence of bridges through which parachains can open communication with other blockchains (such as Ethereum, EOS or Bitcoin). Since the parachains can interact with each other, it also allows various bridges pointing to other chains to interact, acting as interchain channels to perform transactions between them. In short, with Polkadot and its bridges, it is possible to connect Bitcoin and Ethereum (or other blockchains) at high speed with very low costs without compromising security at any time.
Smart contracts and tokens in Polkadot
Polkadot does not initially offer built-in support for smart contracts. This excludes the creation of tokens or DApps initially on the network. However, Polkadot’s parachains are extensible and modular, being able to create abstraction layers that allow these smart contracts to be executed. When they are executed in a parachain, their impact in terms of resource consumption is limited to that parachain, with the result that the rest of the system works fine. This prevents the rest of the system from, for example, suffering performance degradation due to the large number of transactions in the parachain.
Another big advantage of this system is that its operation, design, programming and deployment are much easier. This has made Polkadot a much more secure network. In addition, smart contract parachains can activate alternative high-speed protocols that allow smart contracts to be executed with minimal impact on the overall Polkadot ecosystem.
An example of this type of functionality is EdgeWare, which has an extension layer for Polkadot that enables the execution of smart contracts, including compatibility with Ethereum smart contracts and its EVM. In addition, there is an Ink development designed to create smart contracts that take advantage of Substrate, a fundamental part of Polkadot, and uses Rust, the secure programming language
The network organization in Polkadot
Polkadot has created an entirely new network organization, in which four elements stand out:
The Polkadot network, like any blockchain network, has a group of validator nodes whose job is to verify and inform the network of the data contained in each block of the blockchain. These blocks come from nominators, who are responsible for creating a candidate block that will be analyzed and validated by the validators.
Nominators are a special type of node whose task is to create a secure connection between validators and the entire network operation process. The role of nominators is simple: take transactions from the network, group them and perform the necessary metadata generation process so that validators can verify it and include it in the history of the Polkadot blockchain.
This type of node helps validators keep a complete history of the parachain (Polkadot subnets) to which they have been assigned. Their job is to constantly maintain the information needed to create new blocks in the parachain, which will eventually end up in the full Polkadot history. Under normal circumstances, they will collect and run transactions to create the block and provide it, along with a zero-knowledge proof (ZKP), to one or more of the currently responsible validators who offer the block in the parachain.
Given that Polkadot operates in a segment where there are several parachains that are part of a more complete history, an infrastructure designed to prevent fraud was created. This structure is supported by so-called fishermen. Such nodes perform the function of searching for recurring transactions or illegal transactions in the network to avoid them.
The work of these four elements allows you to organize the process of generating, verifying, and issuing blocks in Polkadot and its parachains. In addition, it is worth noting that the communication between the parachains and the main chain is completely asynchronous and parallel, which guarantees a high speed of data exchange within the system.
The consensus within the network
The elements that are part of the Polkadot network work in unison owing to the NPoS, or Nominated Proof of Stake consensus protocol. It is a variation of the well-known Proof of Stake (PoS) protocol.
In NPoS, validators must provide infrastructure and maintenance to the network. They are responsible for producing new blocks, verifying parachain blocks, guaranteeing purpose, and ultimately securing the network. They must be constantly responsive and have a safe and reliable infrastructure.
For their part, nominators are token holders who contribute to the security of the network by financially supporting up to 16 validators of their choice with their own tokens.
The DOT token as the economic heart of Polkadot
To keep the entire Polkadot network running, the DOT token was created. It is designed for multiple purposes. First of all, it serves for the decentralized management of the protocol. To do this, the DOT token gives validators the right to vote, with which they can participate in the decision-making and development of the project.
In addition, the DOT token serves to connect and incentivize validators to act honestly on the network. This has to do with a financial interest in the authenticity of the validation process. Even Polkadot parachains can be created, merged, or destroyed thanks to DOT tokens, which provides more flexibility and convenience to maintain the network.
Current status of the Polkadot project
Polkadot is a unique project, most of which is still under development. The last major network upgrade was received on August 21, 2020. It activated the ability to perform transactions within the network and changed the decimal denomination of the DOT token.
However, the full functionality of its Relay Chain is finally expected in the second half of 2021. When Polkadot reaches this level, we will finally be able to talk about the full functionality of the Polkadot network, which will subsequently develop in accordance with the needs of users.
Once Relay Chain is activated, the development of Polkadot 2.0 will begin. This upgrade is aimed at improving privacy, namely, using zero-knowledge proof (ZKP) and improving the overall scalability of the network (both vertical and horizontal). There are also plans to launch their own stablecoin.
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