Crypto Spotlight: Polkadot, leading the way to interoperability
Key facts, problems being tackled, and how.
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After covering key fundamentals and concepts we think are most relevant to understanding the crypto world, we are shifting our focus this month to look at the top cryptocurrencies by market cap!
We’ve already covered Bitcoin (read here) and why it’s considered a store of value (read more here), and Ethereum(read here)
Today, we’ll be focusing on Polkadot. Let’s get started!
What is Polkadot?
The name “Polkadot” is actually a representation of the mission behind it.
Think of the polka dot pattern: it’s a bunch of scattered dots that are isolated from each other. The analogy here is to imagine each dot as an individual blockchain isolated from each other, and the goal of Polkadot is to be the link that bridges and connects them all together.
Think of your computer. There are many different computers from diverse brands and manufacturers around the world. These computers are very powerful tools, but left individually they will only be working in their own bubbles, until you connect them to the internet. This will give these isolated computers access to the entire network and endless opportunities available in the digital world.
Polkadot aims to be the Internet of blockchains.In this sense, Polkadot defines itself as a layer 0 multichain:
Layer 0: because it’s the underlying layer that enables interoperability among blockchains,
Multichain: because by enabling interoperability among blockchains, Polkadot provides an environment where multiple blockchains can interact and transfer data to each other.
Let’s look at some Key Facts about Polkadot!
Polkadot is a Proof of Stake (read more here) blockchain founded in 2016 by Gavin Wood, together with Robert Habermein and Peter Czaban.
Gavin Wood is the Co-Founder and first CTO of Ethereum. He is also the one who wrote Solidity, which is the main programming language in Ethereum supporting most Smart Contracts (read more here).
Polkadot is built under Parity Technology’s umbrella, which was founded by Gavin Wood in 2015, as a core blockchain infrastructure company.
DOT is Polkadot’s native coin, and at the time I’m writing this article, it’s currently ranked 8th in the top cryptocurrencies by market cap (almost $50B).
What are the problems Polkadot is trying to solve?
Crypto is disruptive and revolutionizing the world. As lucky as we are to be part of this, there is no doubt that it is still a nascent space with key problems and challenges to be solved.
Polkadot is tackling some of these main problems, with a set of particular solutions. Let me show you an overview below, and we can move on to explain what each of these things means, and why Polkadot has so much potential.
1. Interoperability
Polkadot aims to be the Internet of blockchains, but how exactly does it connect the dots?
The 2 most important concepts to understand are:
Relay Chain:this is the core of Polkadot, it’s responsible for the network’s security, consensus, and cross-chain interoperability.
Parachains:these are basically blockchains that are built on Polkadot’s ecosystem. They are fully sovereign and can have their own coins. Developers can customize the design of their blockchains according to each specific use case.
Think of Relay Chain as the mothership, and Parachains as the aircrafts that it launches, stores and maintains.
Take a look at the image below: Relay Chain is the core in the center defined by the light gray circle. The different pieces in darker gray that are connecting into this core, are the Parachains.
Additionally, there are 2 more ways Polkadot is trying to enable interoperability:
Parathreads: they are very similar to Parachains, but with a pay-as-you-go model. It’s more economical and tailored for those blockchains that do not need constant connectivity to the network.
- For example, if you are an Oracle trying to get weather information from the real world to the blockchain, getting it running constantly is overkill. Probably once every hour might be enough.
- Another example: blockchains that are focused on operating in certain regions, such as an Insurance application working on the US market. People don’t normally need this at 4am, so it’s probably better to reduce validation frequency during off-hours.Bridges:just as its name suggests, Bridges allow Parachains and Parathreads to connect and communicate with external blockchains, such as Ethereum and Bitcoin.
2. Scalability
Building blockchains, avoiding congestions, and scaling operations to ensure the growing number of transactions can be processed in a timely and affordable manner is extremely challenging.
Polkadot comes up with a few innovative solutions:
Substrate
Metaprotocol
Kusama
Let’s take a look at them!
2.1. Substrate
Polkadot is built using Substrate. It’s essentially a framework or template that offers different modules and components that are essential to a blockchain.
Developers can use it to create blockchains in an easier and faster way, saving an immense amount of time and resources.
Think of it like when you are creating a website on the likes of Wordpress, you can choose from a bunch of different sections, widgets, and features.
With Substrate, it would be a similar plug and play approach to build a blockchain that customizes to its specific applications.
2.2. Metaprotocol
Another Scalability challenge has to do with the fact that current blockchain protocols are quite rigid and very hard to make changes: once you create it, it’s kind of set in stone. This becomes an issue for a nascent and rapidly growing space like crypto.
The solution that Polkadot implemented is the so-called “Metaprotocol”.
Metaprotocol is the underlying layer protocol, which serves as the base on which you build your actual protocol. It is supposed to be simpler and more ambiguous, so when you need to make changes to your actual protocol, you have the flexibility to do so as long as you follow what the Metaprotocol defines.
Kind of like building a house: you buy a land, create the layout, and then build the house according to it. The layout of the house will likely remain the same over time, but the fornitures you use, wall colors, interior design style, even people who live there, etc can keep changing and adapting.
Polkadot’s Metaprotocol is WebAssembly, which is an industry-standard that has gone through multiple iterations already, offering a very solid foundation.
Polkadot is then built on top of it, and everything related to Parachain, Governance, Staking, DOT, etc are all part of Polkadot’s protocol.
The Metaprotocol doesn’t really change. Polkadot’s protocol, which is built on and defined by the Metaprotocol, does change over time, and has the ability to do so in this setup.
This way,
Polkadot created the way that allows them to and evolve as they scale.
2.3. Kusama
Kusama is like Polkadot’s cousin network.
It’s a full-stack blockchain that serves the purpose of a test net, a network that is meant for innovation and experiments.
In Kusama, you are supposed to embrace chaos, and have a live fast, die young attitude. This is where projects do their testing before launching for real.
The interesting thing that sets Kusama apart from test nets from other blockchains, is that there are real stakes required in order to experiment on it, to ensure people don’t play around unnecessarily and use the network responsibly.
3. Security
As one of the blockchain classic trilemma, Security of the network plays a critical role in the success or not of a blockchain.
Typically, developers need to spend a significant amount of time, energy, and resources to put together the required elements that will contribute to maintaining their network security, including stakers, miners, validators, etc.
Polkadot came up with a different approach by enabling “Security Pool”. Just like in Uber Pool you share a ride with other people going in similar directions, with Security Pool you can adopt a shared security model, which means that the blockchains’ security is aggregated and applied to all.
You are essentially, piggybacking on Polkadot’s network security.
It’s like living in your parent’s house: no need to worry about basic things like water, electricity, doing grocery, or security of the house.
This is an amazing deal for developers. They will not need to bootstrap and fight so many battles at the same time, unloading a huge bunch of weight from their shoulders.
Governance @ Polkadot
Polkadot has quite a sophisticated Governance.
There are mainly 2 Governance roles:
Council Members: they are elected to represent passive members in primarily 2 subjects:
1. Proposing referenda
2. Vetoing dangerous or malicious referendaTechnical Committee: composed of team members that are actively building Polkadot. These members can propose emergency referenda, to fast track voting and implementation.
They also have a very robust Consensus Mechanism. If you are interested in learning more, here is the link to more information!
Final Comments
Interoperability and Multichain are the two hot keywords that everyone in the crypto industry is talking about, and Polkadot seems to be leading the way.
The fact that it’s being built under the Parity Technology umbrella means that there is a robust ecosystem around it, focused on creating an infrastructure and system of such magnitude.
A lot of the above is not yet fully live and functioning though, so it’s quite an exciting time to be part of crypto, and witness the progress.
At the time I’m writing this article, DOT price is breaking its all-time high, as we are currently at the phase of Parachains Roll Out. Based on Polkadot’s roadmap, Parathreads are scheduled to be the next launch.
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