What is Polkadot (DOT)
Polkadot Network: Connecting the dots
Polkadot is the flagship project of Web3 Foundation, a swiss authority established by Dr. Gavin Wood to facilitate a fully functional and user-friendly decentralized web. It is designed to connect multiple specialized blockchain networks into one unified network. Focused on true interoperability, economic and transactional scalability, easy blockchain innovation, and security, Polkadot is built to connect private and consortium chains, public and permissionless networks, oracles, and future technologies that are yet to be created. Polkadot seeks to promote an internet where independent and individual blockchains can communicate efficiently and effectively while exchanging data and transactions in a seamless and trustless way, using the Polkadot relay chain. Polkadot is a top-tier next-generation blockchain protocol that unites multi-purpose blockchain networks, allowing them to operate and function effectively, seamlessly, and securely.
Brief history
Polkadot boasts of one of the best teams and foremost builders in the blockchain and cryptocurrency ecosystem. Polkadot was co-founded in 2016 by Robert Habermeier, a Thiel fellow and member of the Rust community with a background in blockchain, distributed systems, and cryptography, Dr. Gavin Wood, CTO of Ethereum and President of Web3 Foundation with an experience in blockchain and Proof-of-Authority consensus and Peter Czaban, Technology director for Web3 Foundation with a Masters degree in Engineering from the University of Oxford and background in defense, finance, data analytics, machine learning, and business development.
Polkadot co-founders (L-R) Robert Habermeier, Dr Gavin Wood and Peter Czaban
From its inception, Web3 Foundation has partnered with professional entities to build Polkadot and foster the development of the services and applications that will run on its blockchain network. Partners include Inria Paris, ETH Zurich, Parity Technologies, Polychain Capita, Soramitsu, and ChainSafe.
Polkadot Technology
Many blockchain networks and projects strive to be the ‘chief cook and bottle washer,’ incorporating and integrating everything. Building an application on one of these all-in-one blockchain networks binds one to the platform’s limitations, including its bottlenecks and governance decisions, while also benefiting from that network’s user base. Polkadot uses a technology that allows specialized chains/ networks to seamlessly exchange messages and communicate with other specialized chains/ networks. Polkadot technology comprises four core features:
- Relay chains. These are aimed at creating consensus, interoperability, and shared security across the network of different chains. The Relay Chain is the major chain of Polkadot. The Relay Chain comprises a relatively small number of transaction types, including ways to interact with the governance mechanism, parachain auctions, and participating in network activities, hence, minimizing the functionality of the relay chain.
This feature allows dozens of blockchains to run in parallel while being connected through one relay chain. It is estimated that a relay chain will be able to host about one hundred parachains. This feature would create a system that would have about one hundred times the current Proof-of-Stake system’s scalability. An improved version of Polkadot could have multiple relay chains attached to the root relay chain developed with Substrate, the same technology stack that most parachains are being built with. This could allow for up to 1,000x to 10,000x scalability compared to current Proof-of-Stake systems.
- Parachains. Parachains are independent chains with their tokens and specific use cases. Parachains comprise heterogeneous blockchain shards, while the leading Polkadot Relay Chain secures every other component. Peter Mauric, head of public affairs at Parity Technologies, told CoinDesk in an email,
“Parachains can process more transactions than a single blockchain because the transactions are spread across multiple computers, similar to parallel processing.”
A significant player in the Polkadot network’s development is Parity Technologies, a for-profit European-headquartered firm that focuses on building tools for the open-source Polkadot platform. Parity is the company behind Substrate, a set of tools for developers and tech-driven individuals and project teams to create blockchain applications and web3.0 applications on Polkadot. In the words of Polkadot co-founder Robert Habermeier,
“Substrate is a set of libraries for doing all the things that are annoying about writing blockchains.”
Substrate effectively puts aside the individual functionalities and activities of a blockchain as modules while grouping them enough so that libraries can still use them effectively for different scenarios. While this is done, Substrate always ensures that their manageability enables near-instant implementation. Substrate has been developed as a useful tool to create blockchains that will easily connect to Polkadot.
- Parathread. Like parachains but with flexible connectivity, parathreads function to allow parachains to temporarily participate or be involved in Polkadot security without leasing a parachain slot. Using parathreads, any development team can gain full access to the Polkadot relay chain and bootstrap their application, as well as be involved in the Polkadot network’s shared security. Parathreads require a minimal bond (50–100 DOTs) and permit chains to submit a block to the relay chain while reaping the relay chain’s full security and connectivity benefits. Applications that gain heavy adoption and usage can raise the requisite DOTs and upgrade to a full parachain. This upgrade can be done by swapping with an existing parachain.
Unlike the traditional isolated security system where interconnected chains have individual security levels, and the chain with the weakest security defines the system’s overall safety, Polkadot gives the same security guarantees for all parachains by pooling their security and delegating it to the Polkadot relay chain via the parathread.
- Bridges. Bridges allow parachains and parathreads to communicate and connect with external blockchains. Bridges leverage Polkadot shards to enable easy and seamless communication with other blockchains like Ethereum or Bitcoin blockchain. In early 2021, Interlay will introduce Polkadot’s first trustless wrapped Bitcoin (polkaBTC) to promote interoperability in the Polkadot ecosystem. There are two types of bridges in the Polkadot ecosystem:
- Bridge modules. Bridge modules are possibly system-level or community-deployed parachains which serve the sole purpose of being consensus-adaptors to external chains. Bridge modules allow non-parachains to act as a “virtual parachain” while extending the external or the other chain’s functionality, with the interoperability benefits of Polkadot. Bridge modules are based on particular chains such as Bitcoin or Ethereum. This means that blockchain networks that are based on the latter will be easily supported as well.
- Bridge contracts. Similar to bridge modules, bridge contracts exist on specific parachains that support smart contracts, linking Polkadot and any other smart contract capable or intelligent contract enabled blockchain.
The advantages of the Polkadot blockchain, which cannot be overemphasized, include:
- On-chain governance: Polkadot native token (DOT) participates in governance decisions like voting transparently.
- Security: Rather than using the vulnerable Proof-of-work or Proof-of-Stake models to secure its network, Polkadot lets blockchains pool their security by aggregation, making it very secure compared to the Proof-of-Work and Proof-of-Stake models.
- Polkadot uses a GHOST-based Recursive Ancestor Deriving Prefix Agreement(GRANDPA) consensus algorithm to ensure network security, scalability, and resilience.
Dr. Gavin Wood was presenting Substrate on stage at Web3 Summit 2018, Berlin.
Polkadot Ecosystem
Polkadot is a unique blockchain protocol that functions to connect individual blockchain networks into one blockchain network efficiently. Just like the Ethereum-driven ICO craze of 2017, where over 30-50% of cryptocurrency and blockchain projects at the time launched/ built on the Ethereum blockchain and further pushed Ethereum to the position of the second most famous and valuable cryptocurrency, Polkadot’s entry into the cryptocurrency and blockchain industry has resulted to many projects building on its blockchain. The issues and challenges of scalability, speed, and cost of transaction faced by the Ethereum blockchain have encouraged blockchain and cryptocurrency projects to migrate to and/or build on the Polkadot blockchain, taking advantage of its seamless, efficient and interoperable network.
The rise in the adoption of DeFi (Decentralized Finance) has also catapulted the demand for a more efficient and interoperable blockchain like what Polkadot offers. Many Polkadot projects are built using Substrate, the blockchain development framework for parity.io, enabling developers to build high-value applications on Polkadot. The Polkadot ecosystem comprises over three hundred blockchain and cryptocurrency projects. These range from wallets to decentralized exchanges, Non-Fungible Tokens (NFTs), Decentralized Autonomous Organizations (DAOs), Decentralized Finance (DeFi), Smart contracts, Internet-of-Things (IoT), and Automated Market Makers.
Interlay is the major Polkadot protocol making decentralized finance interoperable. Interlay is designing a unique and robust bridge-parachain infrastructure on the Polkadot blockchain while also creating a trustless BTC-Parachain. This BTC-Parachain bridge infrastructure is supported by a Web3 Foundation grant and would serve to link the BTC and Polkadot blockchain networks.
DIA (Decentralised Information Asset) is an open-source substrate-based financial information platform/ oracle that utilizes crypto-economic incentives to source and validates all forms of data. Market players involved can supply, share as well as use financial and digital asset data.
Ontology is a blockchain infrastructure built on the Polkadot blockchain for self-sovereign identity.
Phala network is a substrate-based privacy blockchain that functions to ensure confidentiality through Trusted Computing.
Rio Chain is a substrate-based decentralized finance protocol built for DeFi with the security, speed, scalability, accessibility, and interoperability needed to connect traditional finance to other decentralized blockchain networks. Rio chain intends to link traditional finance to decentralized finance.
Kusama project is a tooling and infrastructural Polkadot protocol on which ecosystem projects build on.
Polkaswap is a non-custodial cross-chain Automated Market Maker decentralized exchange designed uniquely for the Polkadot ecosystem and hosted on the SORA v2 network.
Paralink is a substrate-based multi-chain oracle platform for decentralized finance applications powered by the Polkadot blockchain.
TIDAL Finance is a substrate-based DeFi platform that ensures assets across chains in custom balanced liquidity pools.
API (Application Programming Interface) Protocol is a Web 3.0 API Economic infrastructure that functions as a decentralized web API connector protocol for Web 3.0 applications, designed to quickly and efficiently utilize web 3.0 APIs.
OptionRoom is a decentralized application oracle and forecast market protocol built on Polkadot to serve as an Oracle as a Service.
SherpaX is a Substrate-based independent research and development network where innovative ideas and technological experiments of ChainX will be tested and explored before they are released on the market.
Also known as the sister network of the Acala network, Karura is the DeFi hub of Kusama Network, while being based on Substrate protocol.
Starks network is a Substrate-based protocol that uses a zk-STARK virtual machine to enable data privacy protection via self-proving computations by providing Zero-Knowledge proof as a service to other Polkadot parachains.
A decentralized AWS, Aleph.im is an open-source cross-chain decentralized cloud project that provides decentralized databases, computation, and a DID framework.
Polkadol{.js} extension is a unique browser extension that manages users accounts and allows the signing of transactions with those accounts on the Polkadot network.
Polkastarter is a decentralized exchange built on Polkadot for cross-chain token pools and auctions. Its primary focus is on enabling startups or existing projects to raise capital securely on a decentralized and interoperable platform.
MAP Protocol is a substrate-based open, fully decentralized chain-to-chain interoperable protocol that ensures interoperability between multi-chain consensus blockchains without the presence of a relay chain.
Robonomics forum is a secure, сost-effective, and futuristic Internet-of-things infrastructure built on the Polkadot blockchain to connect robotics.
Clover is a Polkadot-based All-in-One decentralized finance service that provides an easy-to-use blockchain infrastructure.
Saito is an open network-layer infrastructure for Web3. Saito lets users run blockchain gaming applications on its platform without any closed plugins, private APIs, or non-open infrastructure.
Web3 Capital is a decentralized infrastructure with a venture capital fund. The fund is focused on investing in projects building on the Polkadot/Kusama ecosystem. Other projects in the Polkadot ecosystem include:
- WalletConnect.
- Apron Network.
- Summa Network.
- HydraDX.
- Trust Wallet.
- Decentralized communication network for Web 3.0.
- Polkadot Ecosystem Promo Team.
- PAID Network.
- PolkaCover.
- DApp Exchange.
- Zeropool.
- Bluzelle.
- Frontier.
- OriginTrail.
- Reef Finance.
- Ankr.
- Celer Network.
- OAX Foundation.
Polkadot Native Token
The Polkadot native token, DOT, was created after the Web3 Foundation concluded a relatively successful ICO in October 2017 and raised over $140 million by selling 50% of the 10,000,000 DOT token supply. Despite some unfortunate events that led to the loss of over half of the raised funds, Polkadot endured, and the company further conducted two private sales. One in 2019 and the second one in the summer of 2020. During Polkadot’s ICO in October 2017, DOT tokens were sold at an average of $30 per coin. On August 21st, 2020, the DOT token was effectively redenominated by a factor of 100, and existing holders received 100 new DOT for the old ones they held. In other words, ICO investors have seen a massive increase of roughly around 2000%.
DOT is currently priced at $16.86 with a total supply of 1billion coins and a market capitalization of $16.1 billion, making it the fourth most valuable cryptocurrency. DOT had a 516.9% price surge from it’s All Time Low of $2.70 on August 20th, 2020, to it’s All-Time High of $19.05 on January 16th, 2021. Thus, giving it a market capitalization dominance of 1.51% as at the time of writing.
Storing and managing DOT tokens
Currently listed and actively traded on over twenty centralized and decentralized cryptocurrency exchanges, DOT is supported by multiple wallet providers, including Atomic Wallet. Atomic Wallet enables you to efficiently and securely manage, exchange, and buy DOT in one wallet application. Atomic Wallet gives you full control over your funds since your Private Keys are protected with a mnemonic seed. Install the Atomic Wallet application now and manage your DOT right in the Atomic interface.
Conclusion
With the Chinese government-backed blockchain institution, the Blockchain Service Network (BSN) introduces Polkadot and many other projects. Including Edgeware, Ocean protocol, ChainLink, Speckle OS, Chain X, MXC protocol, and Zerochain. These are all building on Polkadot, and as a result, 2021 would see Polkadot deliver the most robust platform for security, scalability, and innovation. In the words of KR1’s van Schreven,
“We’re going to see a growth of economic activities from all these chains because of this cross-chain aspect of the Polkadot ecosystem.”
Polkadot Website
Visit Polkadot’s Official Website for more information on Polkadot.
Polkadot Community
Join Polkadot’s telegram community and get involved in the project.
Polkadot Block Explorer
Track your Polkadot transactions with the Polkascan Block Explorer.
Polkadot Twitter
Follow @Polkadot on Twitter to keep up with the latest updates and news.
