What is Polkadot (DOT) Blockchain? The Complete Guide
Introduction
Polkadot is a sharded blockchain. Sharding is a database partitioning that spreads the computational and storage workload across a peer-to-peer (P2P) network so that each node is not responsible for processing the entire network’s transactional load allowing networks to scale more efficiently.
Shards on Polkadot operate as separate blockchain networks with transactions and data exchange across the sharded network executed in parallel with security guarantees. Polkadot is a cryptocurrency network that promises to create a platform of interoperable blockchains for a decentralized web.
In this article, we will provide you the complete guide to the Polkadot Blockchain and cover its overall aspects. Let us look into this Polkadot Blockchain review in detail now:
What is Polkadot?
Polkadot is a project by the Web3 Foundation that delivers a framework that allows developers to build and join blockchains together. The network operates cross-chain communication and interoperability by connecting multiple blockchains into one unified network.
The project’s Lightpaper explains that the network aims to offer advantages of heterogeneous sharding, scalability, upgradeability, transparent governance, and cross-chain composability over other projects.
The Creator and Team behind Polkadot
Polkadot was built by Ethereum co-founder Gavin Wood, Robert Habermeier, and Peter Czaban- the technology director of the Web3 Foundation. Web3 Foundation has been in charge of Parity Technologies to build Polkadot. Founded by Ethereum co-founder Dr. Gavin Wood, Parity is a global team of top distributed systems engineers, cryptographers, solutions architects, and researchers.
Parity has fundamentally shaped the blockchain industry, from building the highly-adopted Parity Ethereum client and implementations of Bitcoin and Zcash, to developing the next generation of blockchain technology with Substrate and Polkadot.
How Does It Work?
There are four basic roles in the working of the Polkadot network which can be described as below:
1) Validators: A validator is the topmost in charge and helps to connect new blocks on the Polkadot network. A validator must run a relay-chain client protocol with high bandwidth and availability
2) Collators: The collators in all the Parachains provide proposals for blocks, so that there may be many blocks coming from each of the Parachains, but only one block from each of the Parachains must be chosen to be validated and put into the finalized block.
3) Nominators: A nominator is a stake-holding party who contributes to the security bond of a validator. Their role is to place risk capital and to signal that they trust a particular validator to act responsibly in their maintenance of the network.
4) Fishermen: Fishermen are somewhat similar to “full nodes” in present-day blockchain systems that the resources needed are relatively small and the commitment of stable uptime and bandwidth is not necessary. Fishermen differ in so much as they must post a small bond.
Polkadot Token Details
- Polkadot Price: $6.38 USD
- Polkadot Token: DOT Token
- Total Supply: 1,000,000,000 DOT
- Circulating Supply: 897,657,920 DOT
- 24 Hour Volume: $627,982,239 USD
- All-Time High: $6.79 USD (Aug 27, 2020)
- All-Time Low: $2.69 USD (Aug 20, 2020)
Polkadot ICO and Token sale
The ICO of Polkadot was significant since the tokens were over on the third day. The DOT price at that moment was 0.109 ETH, so the available 5 million tokens were sold for $145 Million. There was a redenomination on August 21, at block number 1,248,328. Polkadot announced the redenomination does not affect the percentage share of Polkadot a user holds, and the people’s stakes have not been diluted.
New DOT is now 100x smaller than the old DOT. Therefore, your DOT balance is now 100x higher and the price per DOT is 100x lower. The percentage of the DOT you own relative to total supply will remain unchanged. This will further not affect the total value of your position. DOT holders still own an equal share of the network as before.
Advantages of Polkadot
Polkadot offers some of the notable advantages which can be listed in detail as follows:
1) Scale: Blockchains in isolation are able to process a limited amount of traffic. Polkadot is a sharded multichain network, meaning it can process many transactions on several chains in parallel. This helps in eliminating the limitations that occurred on legacy networks that processed transactions one-by-one.
2) Specialize: Polkadot allows blockchains to come up with a novel design optimized built with specific features. This provides the blockchains to offer better and more efficient services to users. Polkadot utilizes a concept known as ‘Substrate Development Network’. Here the developers can create customized blockchains for faster and much more efficient performance
3) Collaborate: Polkadot builds an environment where applications do not have to operate in silos. The applications can share data and functionality instead of it. Also, it is done without banking on centralized entities whose handling of user data is questionable.
4) Self-govern: The fans and the communities of Polkadot blockchains have the freedom to check the direction and future of the network as per the way it fits. Whether it is overhauling existing modules for more efficient ones, or the changing governance to meet their needs or, the teams on the Polkadot network can provide governance with varying needs and conditions.
5) Easy Upgrading: Similar to the requirement of the upgrade of any technology, blockchains need to change with time to meet the changing needs and preferences of users. Polkadot facilitates blockchain upgrades that are relatively easy. This further enables them to adapt quicker and easier to new technologies and making for happier communities.
Tokenomics in Polkadot
DOT tokens are the native network token of Polkadot and serve a number of distinct roles. DOT is used for staking in order that a user can participate in the network’s consensus protocol. DOT holders have very good control over the network.
Another function of DOT is that it enables the ability to add new Parachains by tying up DOT in a process called Bonding. The DOT will be locked during their bonding period and will be released back to the account that bonded them after the duration of the bond has elapsed and the Parachain is removed.
The participants put their DOT holdings on the line to perform chain functions, and the potential for losing one’s stake acts as a disincentive for malicious participation in the network. The amount of DOT required to participate in the network varies according to the duration DOT is staked for, the activity undertaken, and the total number of DOT staked.
DOT holders also manage the consensus mechanism that underpins Polkadot. Polkadot relies on DOT holders to play active roles in order to allow for valid transactions to be carried out across Parachains and the platform to function.
The Polka Dot Structure
The infrastructure of the Polkadot network is composed of three core components; They can be broadly described as below:
1) Relay chain: The Relay chain is the central chain of the network where all of its validators reside and are staked to.
2) Parachains: These are parallel blockchain shards that connect to the main Relay chain and are maintained by their own unique validators, called collators.
3) Bridges: Bridges are the special blockchains that allow the Parachains to connect to and communicate with external networks like Ethereum and Bitcoin.
What problems is Polkadot solving?
Blockchain projects will also have more options for innovation and flexibility. By creating an environment for specialized blockchains to operate, Polkadot Blockchain further paves the way for blockchain tech and aims to go to the next level.
Polkadot is the flagship protocol of the Web3 Foundation. This seeks to fund or otherwise assist in the development and deployment of projects aligned with its mission:
- Innovative blockchain technologies, cryptographic messaging protocols.
- Peer-to-peer networking infrastructure, such as libp2p and devp2p.
- Crypto-economic mechanisms, such as DAC/DAOsoftware
- Data publication systems, such as IPFS
Governance
Polkadot uses open-chain governance with a unique system. There are different procedures that have to pass proposals, e.g. a Technical Committee, from an on-chain Council, or from the public. All these proposals ultimately undergo through a public referendum, where the majority of tokens can always control the outcome.
For governance, DOT token holders control the direction of the network. The different governance functions include determining fees on the network, scheduling for the addition of Parachains, and auction dynamics. Holders handle decision making around exceptional events such as upgrades and fixes to the Polkadot platform.
For low profile referenda, Polkadot uses an adaptive protocol to set the passing threshold. Referenda can contain a variety of proposals, including on-chain Treasury and fund allocation.
Use Case Examples
Polkadot uses a Proof of Stake (PoS) interface contract by taking the Proof of Authority (PoA) consensus mechanism. Then they turn it into a PoS mechanism with logic to decide who the decision-making authorities are based on criteria such as DOT tokens staked when they were staked, and the reward has taken for their work. Polkadot smart contracts are coded in languages that compile to WebAssembly
Polkadot opens up a wide range of real-world use cases as it allows any type of data to be sent between any type of blockchain. Polkadot’s design offers some of the distinct advantages over existing and legacy networks, including heterogeneous sharding, scalability, transparent governance, upgradeability, and cross-chain composability.
Future
Polkadot plans to launch in the future with the ability to validate up to 100 shards per block. Apart from the Parachains, which are intended for the execution of every block, Polkadot also has Parathreads, which are being scheduled on a dynamic basis. In order to interact with chains that want to use their own finalization process (e.g. Bitcoin), Polkadot has the bridge Parachains that offer two-way compatibility.
Polkadot has an efficient plan to provide the interoperability of blockchains which was very much essential. If it gets achieved, then the internet users can expect to finally have much more control over their digital existence.
Conclusion
Polkadot uses a sharded model where shard chains are secured by the main chain. This is achieved by linking the shard state in the blocks of the main chains. Polkadot assists the shards to have an abstract STF. Polkadot makes use of the Wasm meta-protocol, which helps in enacting chain upgrades and successful proposals easily.
The governance decisions in Polkadot are on-chain and are further enacted autonomously. Also, It employs unique validator selection mechanisms because Polkadot can provide strong availability and validity which guarantees with a smaller number of validators per shard.
