We are currently witnessing one of the biggest tectonic shifts in the history of technology since the advent of the personal computer, and thus began the democratization of computing for countless billions of people worldwide. But today, there remains the archaic remainders of decades gone by, as infinite streams of data flow through large, inefficient, insecure, and opaque structures. In our Polkadot review, we'll be taking a look at how one blockchain is trying to solve all that.
Blockchain marks the decentralization and democratization of information. But the key limitations with blockchains today are twofold – scalability and interoperability. While some blockchains are trying to solve either one, Polkadot wants to solve both at the same time. Polkadot's innovative and ground-breaking “multichain” ecosystem wants to create bridges that interconnect the world's blockchains together and augment their abilities in ways we've never been able to explore before.
Polkadot is showing the way ahead in how a new generation of blockchains can be, ones that are not just robust, modular, versatile, powerful, and efficient by themselves, but ones that could also co-exist with other decentralized networks equitably. It's a win-win situation for the continued growth of mass adoption and adaptability for blockchains as a whole. So, read along our Polkadot review to find out more about why Polkadot's existence matters and how it could change things.
What is Polkadot?
Polkadot was founded in 2016 by Dr. Gavin Wood, who was incidentally one of the founders of the Ethereum blockchain and also the creator of Ethereum's dedicated coding language, Solidity. Since then, parallels have been drawn to Polkadot's ideas in wanting to solve some of Ethereum's key limitations, following the original intent of creating Polkadot as a ‘sharded' version of Ethereum. Polkadot's open-source ‘multichain' has thus earned the nickname the “Ethereum Killer.”
Polkadot's blockchain has been given the primary objective of solving two key problems within the blockchain space as of writing this Polkadot review article. Firstly, most blockchains of today are not scalable and have not yet adopted more efficient or powerful means of processing on-chain transactions. Secondly, blockchains of today are often siloed within their own ecosystems and not having an easy or optimized method for interconnecting with other blockchain networks.
The blockchain protocol designed by Polkadot aims to solve these two issues by mainly focusing on enabling cross-chain communication and interoperability, thus connecting several blockchains – both large and small – into a single unified global network. Polkadot's blockchain runs in parallel with a number of unique side-chains that are each optimized for different types of tasks and applications, which can then be bridged to other blockchain networks, such as Ethereum.
This solves the two major aforementioned problems with many “legacy” or traditional blockchain protocols. By interconnecting with other blockchains, all networks can off-load processing power with one another and interoperate or share its computing power to be able to get around limited scalability. Furthermore, Polkadot's “bridge” can help to augment or supplement one blockchain and allow it to share features and abilities with other completely different blockchains.
What are Polkadot's Features?
We've learned thus far in our Polkadot review what their blockchain can do and how Polkadot's solutions can help to interconnect the countless different decentralized (or centralized) blockchain protocols around the world. The simple art of creating bridges between blockchains may seem like a simple thing to do, but the increased co-existence and intercommunication between these once estranged complexes are key in seeing its growth and adoption within the mainstream.
There's little wonder then that there's a lot of excitement and hope surrounding Polkadot's continued rise. But is that hype justified, and what does Polkadot have under the hood to solidify its bold claims? Thankfully, we're happy to see that Polkadot's blockchain has no shortage of unique characteristics and traits to bolster its ambitions. So, for our Polkadot review, we'll be looking a bit closer at some of the key features that make Polkadot stand out from the rest.
Mostly, we'll be taking a look at what makes up Polkadot's interoperable blockchain network, creating a so-called ‘multichain' to allow blockchains to talk with one another. They all sit within Polkadot's Nominated Proof-of-Stake (NPoS) on-chain governance model. This is where Polkadot's DOT token holders can become ‘nominators' and thus nominate amongst them the ‘validators' who will then be responsible for processing and confirming transactions within the network.
1. Relay Chain
The Relay Chain is the primary chain within the Polkadot multichain ecosystem and can be considered the central hub to which all interconnected blockchains can commune. Going back to our previous explanation on Polkadot's unique NPoS governance mechanism, this is where all validators will be centered. Every node validator on the Polkadot multichain will be staked on the Relay Chain using DOT cryptocurrency tokens and will validate for the Relay Chain.
The Relay Chain is where Polkadot's governance system is being held in place. This is where other actions will be processed, such as Parachain auctions. The primary role of the Relay Chain is to coordinate the rest of the Polkadot multichain ecosystem, and as such, the Relay Chain has been deliberately made to have minimal functionality. This allows all side-, and parallel chains within Polkadot to be securely managed and governed while still being independently governed.
Whereas the Relay Chain is the primary governance and central hub of the Polkadot ecosystem, the Parachains are the workhorses that allow applications to operate on Polkadot and for users to build on them. Parachain is a portmanteau of ‘parallel', and ‘blockchain'. While the Relay Chain has minimal functionality at its core and executes only a limited number of transactions by design, Parachains are each optimized to run a wide variety of different types and functions.
Each Parachain can be made uniquely from one another and run as entire blockchains by themselves in parallel to the Relay Chain. This parallel processing is what entails Polkadot's multichain protocol to be highly scalable, as computing power can be shared easily and readily between Parachains, and enabling Parachains to work with each other. Each Parachain can thus be made with their own styles, built and powered on Polkadot's multichain.
This allows each Parachain to have their own economies, fee structures, cryptocurrency tokens, governance models – all optimized for different applications within Polkadot's expansive multichain. For example, there can be high-performance Parachains to optimize themselves to run a large number of transactions, privacy-focused Parachains that use specialized cryptography to attain better anonymity, or smart-contracts capable Parachains for DeFi integration.
As such, there's no limit to how Parachains on Polkadot can be designed, deployed, and operated. Each Parachain will be managed by one or a set of Collators. The role of the ‘collator' will be to maintain a full-node on the specified Parachain. This is to store, verify, and process all data to and from the Parachain. This will then be shared across to validators on the Relay Chain, and thus helping to secure the Polkadot multichain network.
The aforementioned Parachain is among the key features of Polkadot and the USP that makes its ecosystem stand out amongst regular single-chain blockchains of today. However, there can only be a limited number of Parachains at any single point within the Polkadot multichain, and this is determined through bidding. Parachain auctions are held so that users can buy dedicated Parachain slots to then interconnect with the Relay Chain and operate within Polkadot.
Although incredibly versatile and powerful, the idea of Parachains can be cost-prohibitive for some developers. Thankfully, this is where Parathreads come in. The structure of a Parathread is not too dissimilar from that of a Parachain. They both interconnect within the Polkadot multichain, and they each have been optimized for one or a few specific different applications. They both augment the rest of the Polkadot ecosystem for added functionalities and can run independently.
This also means that Parathreads are their very own blockchain networks and can thus have their own governance, tokens, and so on. The key difference here is in the economics of how Parathreads are intertwined with Polkadot. Parachains will need to deposit large sums of money and compete in an auction or through a direct proposal to the Polkadot Relay Chain pending approval. However, Parathreads can still have the benefits of Parachains but only needing a regular fee payment.
So, unlike Parachain's more integrated connection with the Polkadot Relay Chain, Parathreads can have a more flexible relationship and a theoretically cheaper pay-as-you-go subscription model to retain its ongoing connection with the Relay Chain. It also allows existing Parachains a more affordable and versatile existence within Polkadot, as they can migrate into a Parathread while still being connected to the Relay Chain.
As we've mentioned much earlier in our Polkadot review, one of the primary reasons for Polkadot's creation is to help achieve seamless and easy interoperability between and with other blockchain networks. This will be achieved using Polkadot's Bridges. Bridges are by themselves specialized blockchains that have been created to allow Polkadot's Parachains and Parathreads to interoperate with other blockchains from outside the Polkadot multi-chain environment.
Using Bridges, any two or more blockchains can be interconnected within the Polkadot ecosystem, even between two economically independent or technologically diverse blockchains. For example, a new bridge can be formed on Polkadot to interconnect between the Ethereum, and Bitcoin blockchains, while also allowing access to Polkadot's own Parachains (or Parathreads) for added features or services.
Bridges can be built on Polkadot with varying different shapes and forms, depending on how they've been programmed. For instance, a bridge can be made to be centralized, private, or permissions chains. Or, they could be public, decentralized, and permission-less bridges, instead. This enables any blockchain to interface with each other, with Polkadot acting as the medium in between, and allows for the sharing of any data, computation, smart contracts, or assets.
Polkadot's interoperability and scalability features are further compounded with the ability to develop and create new applications on top of Polkadot's multichain easily using Substrate, as a tool created by Polkadot's partner, Parity Technologies. Substrate allows any blockchain to be built easily, powered by Polkadot. Developers could use mainstream coding languages to program new blockchains on Polkadot instead of needing to learn a completely new standard.
Moreover, it shares Polkadot's benefits of being able to implement and integrate new network upgrades without needing any hard forks. This includes being able to create Parachains or Parathreads to later be integrated into the Polkadot multi-chain environment. The substrate can be used to help build any blockchain, including those compatible with smart contracts, made for better security or privacy, internet-of-things (IoT), decentralized finance (DeFi), and more.
What are Polkadot's DOT Cryptocurrency Tokens?
The native cryptocurrency within the Polkadot multi-chain environment is DOT tokens. Naturally, DOT can be used as a store of value, but within the Polkadot ecosystem, DOT tokens are used in one of four ways.
Firstly, DOT tokens are used as the primary currency within the Polkadot multi-chain environment, and this includes using them to pay for transaction fees. Carrying data and information across the Parachains will incur fees.
Secondly, DOT tokens can be used for staking in the Polkadot multichain, which in turn helps to power the network through processing and verifying transactions. The staking process will also help to secure the Polkadot network from malicious actors.
Next, Polkadot's DOT tokens are crucial in the governance of the network, and holders have been entitled to the responsibilities for helping to manage the Polkadot multichain. That includes needing to vote for implementing new network updates or for day-to-day operations such as sanctioning the auction for a new Parachain slot.
Finally, DOT tokens are also used for ‘bonding,' or otherwise creating a locked deposit that's needed for the creation of a new Parachain. The tokens used for bonding will be returned once that Parachain slot has been vacated. DOT tokens can also be exchanged easily within Polkadot, with a particular Parachain's native tokens.
Owing to Polkadot's massive growth and increasing adoption, the popularity has led its DOT tokens to appreciate very handsomely. As of writing this Polkadot review, one DOT token is worth $33.50, which marks a very respectable 1,144.17% gain from August 2020. Polkadot maintains a total token supply cap of 1,048,682,818 DOT, where 913,015,958 DOT are in circulation. This gives a market capitalization value of $30,589,777,868, making DOT the 6th-most valuable cryptocurrency.
What are Polkadot's Future Roadmap Updates?
Polkadot's development team has adopted a staged roll-out strategy for its launch and releases new updates one at a time as they are ready – this is following its main-net launch in May 2020. Prior to that, there have been several public test-net launches leading back to 2018. The most significant of those updates is regarding the launch of Kusama, which remains to be one of the larger and more popular blockchain protocols to date.
Kusama is mostly identical to Polkadot, it was created by the same team, and following the same principles and key concepts. However, Kusama was (and still is) a “canary” network for Polkadot, where developers and users can beta test their applications on Kusama before launching it for the public on Polkadot. Kusama is essentially an open sandbox-style environment or a testbed for all sorts of experimentations or proof of concept ideas before making their way onto Polkadot.
During Polkadot's first main-net launch, it used a Proof-of-Authority (PoA) consensus model, which was managed by six trusted validators from the Web3 Foundation. This was done to ensure a smooth and uninterrupted roll-out of Polkadot. After the multichain network had gained stability, however, Polkadot switched to a more public NPoS governance model. One of the major advantages of Polkadot is that network updates can be done without needing to hard fork.
1. Continued Roll-Out of Parachains
Polkadot's most important future update would be the roll-out of their Parachains, which will be key in determining its future growth and complete Polkadot's launch in its entirety. Currently, the Parachain technology is still undergoing final optimizations and refinement, and a complete launch should be done sometime by March 2021. This should also mark the beginning of the Parachain auctions, allowing slots to be bid on one-by-one, with one auction done every two weeks.
Presently, Polkadot's multichain can have support for around 100 Parachains, and all 100 slots will be gradually put up for auction over time. It's also worth noting that a Parachain slot cannot be bought outright and can only be leased by the developer wishing to build on said Parachain. The lease period will last up to two years. At the conclusion of the lease period, the Parachain slot will be auctioned once again, where it can be bid on to retain it.
However, developers can also have the option to move from that Parachain and onto a more flexible subscription-based option with a Parathread. Polkadot allows users to easily move in between them without needing any costly or time-consuming migration process. In the future, more updates to Polkadot's multichain optimization would allow for more than Parachains to be made, beyond the approximately 100 technical limits at present as of writing this Polkadot review.
2. Launch of XCMP and Parathreads
Other network upgrades that are currently being tested and primed for launch within Polkadot are the implementation of Parathreads and XCMP. The former has already been discussed earlier in our Polkadot review as a much cheaper and more flexible way to retaining a network connection within the Polkadot multichain. This will come following the roll-out of Polkadot's Parachains as an alternative for those wanting to take advantage and take part in Polkadot's ecosystem.
Meanwhile, XCMP stands for ‘Cross-Chain Message Passing,' which is essentially Polkadot's universal data transmission system within the Polkadot multichain. XCMP allows for Parachains to be able to transmit and share data with each other more easily and cheaply. Currently, Polkadot is adopting HRMP, which requires data to be sent to the Relay Chain first, which results in needing more time for transactions between Parachains, more processing, and having to pay higher fees.
Polkadot Review – Conclusion.
At this stage of our Polkadot review, we can finally make a conclusive summary of whether this is one blockchain, or shall we say ‘multichain,' project that you should pay attention to. By now, we've learned more about what Polkadot dot is, its key features and specialties, and what it can achieve relative to other blockchains. In our Polkadot review, we can say for certain that Polkadot is definitely worth having a closer look into and in the early months leading upwards in 2021.
Polkadot's open-source, multichain network protocol focuses on solving many of the key problems surrounding today's blockchains. This includes limited scalability for future growth and adoption or being siloed into their own spaces that can't allow easy interconnectivity with the rest of the outside world. Polkadot gives that chance for other blockchains, including itself, to expand beyond what was thought to be possible. The sky truly is the limit when blockchains can “talk” to each other.
Blockchain technology has shown us the way forward in how humans can commune and co-exist with one another through the creation of wholly decentralized networks without a controlling party. Here, any piece of information can be shared transparently, quickly, freely, securely, without censorship, and remain immutable. But as the blockchain grows ever bigger, it has stumbled on the age-old problem with scale. We've seen this with major blockchains such as Bitcoin and Ethereum.
There, we're continually experiencing major disruptions caused by high network congestion, slow processing speeds, energy inefficiencies, and transaction fees spiraling out of control. Meanwhile, even the very best of blockchains can only be the best for themselves without having the chance to interconnect and share with other blockchains. If our Polkadot review is anything to go by, Polkadot's existence is a reminder that the blockchain revolution is just about to begin.
- Ease of Use
- Project Values
- Tokenomics Model
- Long Term Sustainability
- Highly scalable thanks to the implementation of parallel chains (side-chains), with readiness for high growth and adoption.
- Creates an interoperable with other blockchains, or from one existing blockchain to another with its interconnected bridge.
- Substrate allows for the easy creation of new programs or applications to be made on Polkadot, without needing complex coding.
- Multichain configuration is more modular and versatile, enabling it to be adapted into a wide range of different real-world applications and scenarios.
- Seamless network upgrades, without needing any hard-forks for integrating any new updates or fixes.
- Currently, a new blockchain and its nascent status means that its future remains uncertain until we can see the roll-out of new Parachains.