Launched by Web3 Foundation, Polkadot is a next-generation, open-source blockchain protocol designed to enable cross-chain interoperability - allowing blockchains to communicate with one another and exchange data. Its mission is to create a decentralized and fair internet where users can control their own data, identity, and destiny. Think of it as an internet based on blockchains that talk to each other.
Polkadot features DOT, which is the network’s native coin. There is also KUSAMA, which is native to the ecosystem and helps power the testing area for the Polkadot ecosystem. DOT has solidified itself among the top 15 cryptocurrencies by market cap.
Polkadot was founded by Gavin Wood, a co-founder of the Ethereum network. The first CTO of the Ethereum foundation, Dr. Wood is recognized for having developed Solidity, the programming language used by developers to create decentralized applications (dApps) on Ethereum. He is the president of the Web3 Foundation and founder of Parity Technologies, the latter of which maintains Substrate for the Polkadot ecosystem (more on this later).
How Polkadot Works
Understanding how Polkadot works is no easy task, but we will break it down so you get a big-picture understanding of things. There are three main components to Polkadot that work together to make the entire ecosystem run: relay chains, parachains, and substrate. Let’s take a look at them now.
Main Components: Relay Chain, Parachains, and Substrate
As the control center of the Polkadot network, the relay chain acts like the relay runner that sends messages between Polkadot and other blockchains. This is known as interoperability. Ultimately, the relay chain ensures that the transactions from the Polkadot network are properly recorded.
Parachains are specialized stand-alone blockchains, or sometimes shards, within the Polkadot ecosystem that can process transactions at a rapid pace by outsourcing their network security to the relay chain.
You can design your own parachain to serve your particular needs on the network, such as issuing tokens and engaging in governance. Although parachains are customizable, they all adhere to the same rules regarding interaction with the relay chain. Each parachain connects to the relay chain either on a pay-per-use basis, or for continuous use.
Substrate, developed by Parity Technologies, is a blockchain-building framework that allows developers to quickly create their own Polkadot parachains. Instead of having to write code from scratch, Substrate allows developers to seamlessly add and remove state-of-the-art functionalities as needed. Developers seem to enjoy building on Polkadot in no small part due to the streamlined developing ecosystem.
Roles: Validators, Collators, and Fishermen
The Polkadot blockchain network is different from other smart contract platforms in that it has three distinct types of nodes: Validators, Collators, and Fishermen. The different nodes work with each other to maintain the integrity of the network, both for relay chains and parachains. Let’s now dive into the trio of nodes on Polkadot!
Validators are the most powerful nodes in the Polkadot ecosystem. A validator’s job is to maintain network consensus, or agreement, with other validators, as well as to validate and produce new blocks. Non-compliance with the network rules results in removal of some or all staked tokens, discouraging bad behavior.
Collators have a presence on both the relay chain and their particular parachain. They maintain the parachains by organizing transactions for the validators to verify (and subsequently produce as blocks). They also send and receive messages from other parachains to facilitate communication.
Fishermen are bounty hunter nodes that monitor the relay chain and other parts of the network for bad behavior. Essentially, fishermen oversee the organizing process that collators handle to make sure that all transactions are valid. Fishermen node operators are rewarded handsomely if they can spot an anomaly.
Consensus Mechanisms: GRANDPA and BABE
As with many of the first-generation blockchains, the Bitcoin network is capable of achieving ‘eventual consensus,’ meaning that all nodes will eventually agree on the accuracy of one set of data. This eventual consensus may take a long, undetermined amount of time.
In contrast, Polkadot’s hybrid consensus system enables ‘provable finality,’ meaning that it is designed to expedite consensus. This approach theoretically helps overcome network outages (block production halts) and the odds of following an incorrect version of the blockchain.
Hybrid consensus involves a two-way approach to ensuring a transaction reaches finality. Under hybrid consensus, there are two protocols: one protocol that produces blocks and the other protocol that makes sure that there is a universal agreement on the state of the blockchain (provable finality).
The two protocols at play on Polkadot are amusingly called GRANDPA and BABE. BABE is in charge of block production, and GRANDPA finalizes the blocks.
- BABE (Blind Assignment for Blockchain Extension) is the block-production mechanism that determines who the authors of the new blocks will be. BABE assigns block production ‘slots’ to validators based on how many DOT tokens they have staked.
- GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) is the finality gadget implemented on the relay chain that gets network nodes to vote on chains instead of blocks. GRANDPA finds the highest block number with sufficient number of votes to be considered final, and allows several blocks to be finalized all at once.
Roadmap & Use Cases
Polkadot’s relay chain was launched in May 2020. Since the start of 2021, several parachains have been launched. According to its whitepaper, the parachain rollout is the last phase of Polkadot’s official network launch. After this point, the community will be in charge of determining which additional features and upgrades should be added to the network over time.
Kusama is a public pre-production network built using Substrate and nearly the same codebase and governance parameters as Polkadot (it has its own coin too). It is an experimental sandbox where any developer can test their new ideas and dApps before releasing them on Polkadot. New products, dApps, and upgrades to Polkadot go through test phases on Kusama before their official release on Polkadot.
As we’ve seen in this post, Polkadot’s strengths lie in fully customizable parachains that can speak not just with each other, but also with blockchains outside the Polkadot network (like Bitcoin and Ethereum).
Here are some parachains that are under development (their latest progress may not be reflected in this post):
- Smart Contracts: Polkadot’s relay chain does not support smart contract capabilities. However, Acala, Edgeware, Patract, Plasm, and Moonbeam are some of the better-known smart contract platforms set to deploy as parachains on the Polkadot network. Compared to Ethereum, they will benefit from lower fees, faster speed, and interoperability (both among parachains and with outside networks).
- Oracles: Chainlink is reportedly working on its own parachain so that its off-chain data oracles can be accessed by other Polkadot parachains and external blockchains that connect to the Polkadot ecosystem.
- Identity: Speckle OS is working on a parachain that will store one’s verified identity. Users with IDs on this parachain will be able to refer it to other parachains, reducing the need to build multiple accounts across all the networks.
- Finance: ChainX is developing a parachain that will connect to outside networks like the Bitcoin network. Its goal is to build a DEX where assets can be traded regardless of their native blockchain. In theory, users will be able to hold and manage all their crypto assets via the ChainX parachain.
What The Future Holds For Polkadot
Like with every other crypto asset, it is too early to tell if Polkadot really has what it takes to be the dominant blockchain platform - let alone become a fair and decentralized new Internet.
However, the hype surrounding the potential explosion of Polkadot is VERY real. Since 2017, the Web3 Foundation has raised more than $200 million USD through its token sales; at the time of writing, DOT tokens are the 9th biggest crypto in terms of market capitalization.
A polite reminder that Polkadot hasn't fully launched yet!
Once upon a time, computers were just fancy calculators that sat on your desk. That is, until the machines started communicating over the internet. If Polkadot delivers on its promises, the same could happen with blockchain.