What is Polkadot (DOT)?
Polkadot —— A Sharded Network for Cross-Chain Communication and Interoperability
- Polkadot facilitates cross-chain communication and interoperability by connecting multiple blockchains into one unified network.
- Polkadot's infrastructure includes the Relay Chain, the Parachains, and the Bridges.
- The Relay Chain is the central chain of the Polkadot network. All validators of Polkadot are staked on the Relay Chain.
- The Parachains are parallel chains that connect to the Relay chain and are maintained by their validators, called collators.
- The Bridges are special blockchains that allow Parachains to connect to and communicate with external networks like Ethereum and Bitcoin.
- Polkadot’s native DOT token serves three clear purposes: providing network governance and operations, and creating parachains (parallel chains) by bonding.
Polkadot Key Metrics
Polkadot is an open-source sharding multichain protocol that facilitates the cross-chain transfer of any data or asset types, not just tokens, thereby making a wide range of blockchains interoperable with each other.
This interoperability seeks to establish a fully decentralized and private web, controlled by its users, and simplify the creation of new applications, institutions and services.
The Polkadot protocol connects public and private chains, permissionless networks, oracles and future technologies, allowing these independent blockchains to trustlessly share information and transactions through the Polkadot relay chain (explained further down).
Polkadot uses DOT tokens for operating on its network. DOT serves multiple purposes such as:
- Governance: where participants can manage protocol updates and fixes.
- Staking: where the tokens are staked to ensure the network remains secure, as good validators are rewarded, and bad actors lose their stake.
- Bonding: where new parachains are supported by bonding tokens.
- Fees: for ferrying messages across parachains.
Polkadot has four core components:
- Relay Chain: Polkadot’s “heart,” helping to create consensus, interoperability and shared security across the network of different chains;
- Parachains: independent chains that can have their own tokens and be optimized for specific use cases;
- Parathread: similar to parachains but with flexible connectivity based on an economical pay-as-you-go model;
- Bridges: allows parachains and parathreads to connect and communicate with external blockchains like Ethereum.
As noted above, Polkadot’s design is meant to support several chains. It is not merely a single blockchain that exists in isolation. There are several advantages to its approach:
- Scalability: Polkadot supports multiple blockchains through a mechanism called “sharding” or parachains. This allows transactions to be processed efficiently and in parallel.
- Interoperability: Different Polkadot parachains and applications can share information and functionality thanks to the project’s interoperable design and compatibility between chains.
- Specialization: Each Polkadot parachain can be tailored to a specific use case or application.
- Forkless upgrades: Polkadot can be upgraded without time-consuming and divisive hard forks; new features can be added without overhauling the network entirely.
Polkadot Project Team
Polkadot was founded by the Web3 Foundation, a Swiss Foundation founded to facilitate a fully functional and user-friendly decentralized web, as an open-source project.
Its founders are Dr. Gavin Wood, Robert Habermeier and Peter Czaban.
Wood, the Web3 Foundation’s president, is the most well-known of the trio thanks to his industry influence as Ethereum co-founder, Parity Technologies founder and the creator of the smart contract coding language Solidity.
Habermeier is a Thiel Fellow and accomplished blockchain and cryptography researcher and developer. Czaban is the Web3 Foundation’s Technology Director. With a wealth of experience across highly specialized fintech industries, he is currently helping to develop a new generation of distributed technology.
Substrate and Parachains
At the heart of Polkadot is the concept of “parachains,” which are blockchains that can run higher transaction throughput than Ethereum because of more sophisticated design. According to Peter Mauric, head of public affairs at Parity Technologies, the term is short for “parallel blockchains.” Developers can create their own parachain with Substrate, a framework for building blockchains.
It is also possible to run blockchains developed with Substrate without being part of the Polkadot network; Polkadot merely provides interoperability, consensus, security, and other services for Substrate-based chains.
Parachains can support features found in many other blockchains, including smart contracts (Ethereum), ZK-snarks (Zcash), and UTXO transactions (Bitcoin). These features are not a fundamental part of Polkadot; instead, these features can be added to and removed from parachains.
Developers can also call functions that exist on other parachains.
There are many different use cases for Polkadot parachains, including transaction chains, oracle chains, identity chains, file storage chains, data curation chains, IoT chains, finance chains, and privacy chains.