After the first iteration of the first- and second- generation of blockchains, the problem of blockchain scalability was apparent. Many projects since then initiated their own projects specifically in addressing the blockchain scalability problem. The most prominent project among them was Polkadot. What is Polkadot? In this article, you will find all you need to know about Polkadot, its vision, and its platform architecture.
What is Polkadot?
Polkadot is a third-generation blockchain platform that aims to unite an entire network of purpose-built blockchains. Polkadot enables these purpose-built blockchains to operate and communicate with one another at scale. By allowing various blockchains to exchange information in a seamless way, Polkadot unlocks a wide range of real-world use-cases.
Such a design allows individual projects and teams to build a blockchain tailored and optimized to their needs. Each team focuses on solving the problem at hand in the best possible way while leveraging the technology built by other teams. This design is based on the realization that there won’t be a one-size-fits-all blockchain as different applications have different requirements when it comes to volume of data, transaction speed, etc.
Specialized or purpose-built blockchains are blockchains built to address one specific area or problem. For instance, blockchains can be built to address specific sectors such as Gaming, the Internet of Things, Energy, or Finance. Some other blockchains are built to be specialized in the technology and execution environment they offer such as EVM or WebAssembly. Finally, blockchains can be application-specific. This implies that a blockchain is built to support one application, such as a game, a social network, or a financial application like a DEX.
While initial iterations of blockchains have demonstrated great promise in several fields, their inability to scale has largely prevented them from gaining wider adoption. Polkadot is designed from the ground up to address many of the limitations the initial iterations of blockchain networks suffered from. Some of the advantages of Polkadot over existing and legacy networks include heterogeneous sharding, scalability, forkless upgrades, transparent governance, and cross-chain composability.
A Brief History of Polkadot
Polkadot was founded by Gavin Wood alongside co-founders Peter Czaban and Robert Habermeier in 2016. Gavin Wood was also one of the co-founders of the Ethereum blockchain and a key person behind the designs of some of Ethereum’s core components, including the Ethereum Virtual Machine (EVM).
Wood is also the founder of Web3 Foundation and Parity Technologies. Parity Technologies now maintains Substrate, a software development framework primarily used by Polkadot developers who wish to quickly create parachains.
Since its launch Polkadot has come a long way going live on mainnet in late 2021, almost five years after the inception of Polkadot’s idea. In early 2022, the revolutionary candle stick mechanism and parachain slot auctions began. Since then, 17 blockchain parachain slot auctions have concluded out of which many have already gone live, operational, and connected to Polkadot.
The latest big milestone of Polkadot concerns its cross-chain communication framework XCM. XCM stands for cross-consensus messaging format and launched in early May 2022. XCM is key in the realization of Polkadot’s foundational objective to be a fully-functioning, interoperable multichain ecosystem, as it enables seamless communication between blockchains, pallets, and smart contracts.
What is Kusama?
Polkadot’s Kusama is an early, unaudited, and unpolished version of the network intended to evaluate the technology and economic incentives in a real-world setting. It’s also a great environment for parachain developers to test concepts before moving them over to Polkadot.
Many call Kusama the test net of Polkadot, however, Kusama is far from just a testnet. At least from a technical perspective. A more appropriate term would be to call Kusama the innovation hub of Polkadot, where new ideas are born before they are implemented on Polkadot.
KSM tokens are the currency of Kusama, and it is governed by a community of supporters who own them. There is no official kill switch, so it will continue to exist as an autonomous community-driven network.
Polkadot Platform Architecture
The Polkadot network is a heterogeneous multichain with common security and interoperability. The Polkadot multichain Platform architecture is composed of two main components. The Relay chain is the central chain of the design and it does not support any smart contract capabilities, but rather supports functions for the parachains. The second component of the Polkadot design is the parachains. The parachains are fully featured layer 1 blockchains that can be application-specific, industry-specific, or have any other type of specialization.
The Polkadot Relay Chain is the core chain of Polkadot. All validators on the Polkadot Relay Chain are staked in DOT and validate it. The Relay Chain consists of a small number of transaction types that include interacting with the governance mechanism, parachain auctions, and participating in NPoS.
The Relay Chain does not provide any sophisticated features, such as smart contracts. Coordinating the system as a whole is the main goal of the chain. The parachains are responsible for other specialized activities, which they do in various ways and with different functions.
Parachains & Parathreds
A parachain is a universally validatable application-specific data structure used by the Relay Chain’s validators. They derive their name from the notion of parallel chains that run alongside the Relay Chain. A blockchain is the most popular form of a parachain, but they don’t have to be actual blockchains.
Because they operate in tandem, they are able to parallelize transaction processing and scale the Polkadot system. They collaborate in the network’s security and may communicate using the XCM protocol with other parachains.
There are a limited number of parachains that Polkadot can handle; presently estimated to be around 100. Because the number of slots is restricted, various methods must be used to allocate them.:
- “Common good” parachains, which are governed by governance granted parachains
- Auction granted parachains
“Common Good” parachains are governed by Polkadot’s on-chain governance structure, and they are considered a “common good” for the network, such as bridges to other networks or chains. They are often referred to as system-level chains or public utility chains. These seldom have an economic model and assist in the removal of transactions from the Relay Chain, allowing for more efficient parachain processing.
Permissionless auctions are used to distribute auctioned parachains. Parachain organizations may either bid with their own DOT tokens or get them from the community using the crowdloan platform.
Parathreads are part of a pool that shares slots and must-win auctions for individual blocks. The API is the same between parathreads and parachains; their distinction is economic. Parachains will need to reserve DOT for the duration of their slot lease, while parathreads will be charged on a per-block basis.
Shared Security Mechanism
All parachains connected to the Polkadot Relay Chain benefit from the security of the chain. Between the Relay Chain and all of its linked parachains, Polkadot has a shared state. If the relay chain must be reverted for any reason, all of the parachains would revert as well. This is to ensure that the entire system’s validity can continue and that no component is tamable.
The shared state ensures that the trust assumptions of the Polkadot parachains are limited to those of the Relay Chain validator set. Because the validator set on the Relay Chain is expected to be secure, with a significant amount of stake backed it, parachains should profit from this security.
When it comes to interoperability Polkadot leverages different mechanisms and components to allow the various parachain to interact with one another as well as to connect Polkadot with other networks.
XCM & XCMP
A cross-consensus message, or XCM, is a format rather than a protocol. The format does not care what the recipient’s or sender’s consensus mechanism is; it only cares that the messages must be formatted in a certain way. The XCM format will be used to communicate between parachains. Unlike XCMP, which stands for the cross-chain messaging protocol, XCM is what is given and XCMP is the method of delivery.
A blockchain bridge is a connection that allows data from one network to be sent to another. These chains may operate as independent chains with different protocols, regulations, and governance arrangements, but they are interoperable through the bridge.
Polkadot’s bridges connect to the Relay Chain and are secured by collators via the Polkadot consensus mechanism. They are essential to the interoperable architecture of Web 3.0, acting as a secure and resilient communication channel for chains in isolation.
Polkadot Governance model is one of the most sophisticated governance models that you can find in the space. Is a very detailed, well-thought governance process and it was established very early in the project’s days which is not very common. Below you will find a brief overview on what are main elements of Polkadot’s governance and how it works since Polkadot’s governance model deserves its own full article.
At the request of its established stakeholders, Polkadot has a sophisticated governance mechanism that allows it to develop smoothly over time in keeping with the wishes of its collective members. The aim is for the majority of the stake to be able to control the network at all times.
Polkadot Governance Participants
The DOT token is at the heart of Polkadot’s governance, allowing for frictionless and immediate interaction between proposals generated by the community. By locking up DOTs with their vote for extended periods of time, DOT holders may influence the weight of their vote.
DOT holders can utilize their DOTs in the following ways to participate in Polkadot governance:
- Propose a public referendum
- Prioritize public referenda
- Vote on all active referenda
- Vote for council members
- Become a council member
Participants can also stake their DOTs to validate the network, or nominate validators, which is referred to as “nominating.”
Low voter turnout is a problem that has plagued decentralized public networks that have attempted to formalize specific voting procedures. This is also an issue in conventional governance systems, where unless highly politicized issues are made available to the general population, public referenda are little more than theatrical performances.
The Council is a group of 6-24 members, who will receive prioritized voting rights over the Polkadot network in order to represent inactive stakeholders who may not be able to vote on every referendum. The intention of the council will be to propose reasonable referenda, as council members will put their knowledge and experience in developing, maintaining, and utilizing decentralized networks forward.
The incoming proposals are subject to council members’ veto power. These ideas, on the other hand, may be re-submitted after a period of time and the council member who denied them previously can no longer do so.
Council members are chosen in rolling elections, with one council member elected every two weeks from a list of self-nominees. Each council member’s term is determined by the size of the council, which will fluctuate over time due to Polkadot’s adaptive governance. This indicates that the term length of one council member is equal to 2 weeks times the total number of members. For instance, if there are six council members, one member’s term lasts for 12 weeks (6×2).
Council members are elected by DOT holders. Polkadot developed a weighted loss function to help runners-up in each election, benefitting council members with a long history of putting in the effort as candidates.
Candidates for the council are chosen by themselves. The council’s candidates list is filled out by prospective members. Every two weeks, the council member with the most DOTs accumulated for them is elected. The next round is the final one, in which candidates from both sides of the council compete for their supporters’ second-round votes. As long as DOT holders do not alter their opinions, council hopefuls retain their first-round votes. Furthermore, the value that was lost by losing council members is added to the next round’s results.
Votes cast by DOTs are not fixed in any way and may be revoked or changed at any time during the election by DOT owners. Votes that have been carried over from prior “lost” elections, on the other hand, are reset when a voter changes his or her position.
Polkadot Governance’s Referenda
Every change to Polkadot is made via a public vote. Referenda are extremely important in the code since they contain a crucial function, set_code, which has the power to alter any aspect of the system. Because it modifies any element, including the governance structure itself, set_code is Polkadot’s most powerful function.
Three methods for submitting a referendum are available, each with its own set of stages to completion:
- Unanimous Council
- Majority Council
- Public referenda
Proposals that do not receive a majority of support from the council are not put to a public vote. In cases where the council is unanimous in its approval, proposals benefit from a less-than-majority threshold in a public vote for approval. A simple majority is required for a proposal to pass when it is approved by only a majority of council members.
Any DOT holder can propose a public referendum and second it with other DOT holders. Because many ideas from the general public will be submitted, Polkadot prevents proposal spam by giving extra weight to those with the most invested stake in it. This ensures that the most desired proposals are voted on first.
Polkadot DOT token Utility
The DOT token has three distinct purposes: network governance, staking, and bonding.
With respect to governance, token owners have complete control over the protocol. All privileges that are only available to miners on other platforms will be given to Relay Chain participants (DOT holders), including organizing special occurrences such as protocol upgrades and fixes.
Staking is also possible on the DOT network, just as it is with other blockchain networks. Game theory motivates tokenholders to act ethically. Good actors are rewarded using this method, while bad actors will lose their stake in the network. This mechanism ensures the safety of the network.
Finally, DOT is utilized to adhere to new parachain together. Bonding tokens are used to join new parachains. Non-functional or obsolete parachains are eliminated by removing the bonded tokens that were previously attached. This is a type of proof-of-stake demonstration.
Polkadot is a Web 3.0 Interoperability platform with a very promising future. Its history, constant developments, transparent governance, and smooth deployment make it stand out among other blockchains. We look forward to seeing more great things from Polkadot in the future.