Polkadot is the next generation heterogenous network designed for Web3 infrastructure comprising of multi-chain public, private and custom built blockchains interconnecting and transferring data seamlessly. We’ll be talking of how Polkadot is poised as the next generation blockchain unlike legacy blockchains like Bitcoin and Ethereum. We’ll also take a peek under the hood to better understand what powers the Polkadot machine and what really transpires in Dot ecosystem.
To begin with, a brief primer:
In the Polkadot ecosystem, independent blockchains can interconnect and transfer data and information, thus retaining their own consensus mechanism and protocols. A bicycle wheel analogy describes the Polkadot network as a cycle’s wheel with spokes connecting to the central pivot. Here the Central Pivot is the Relay Chain which is the hub of the blockchain and the wheel which is comprised of Parachains connecting to the hub through spokes. Parachains are independent blockchain networks and could have their own consensus algorithm, tokens etc.
Before we try to glimpse inside Polkadot’s technology, let’s look at the origin in brief:
The man behind Polkadot is the talented co-founder and former Chief Technology Officer of Ethereum, Gavin Wood. Gavin co-founded Parity Technologies in 2015 when he was still with Ethereum. Gavin then went ahead and co-founded Web3 Foundation with Peter Czaban of Parity Technologies in 2017. Web3 Foundation was established for fundraising and the research and development of the Polkadot project. While still at Ethereum Gavin conceptualised the Web3 network wherein sharded multi-chains could interoperate seamlessly, would be highly scalable and secure and hence consume lesser resources. Gavin released the first draft of Polkadot Whitepaper in 2016 and eventually left Ethereum to start the Polkadot project along with Robert Habermeier, and Peter Czaban.
Polkadot was officially launched on May 26, 2020.
Now let’s understand the various constituents of Polkadot :
Relay Chain – The core of the Polkadot network is the Relay Chain, which oversees the network’s cross-chain interoperability, security and consensus mechanism called nominated-proof-of-stake (NPoS). The various shards connect to the Relay Chain on a Substrate framework. Relay Chain governs, coordinates, and oversees the functioning of connected parachains and ensures transaction finality.
Parachain – Parachains are independent parallel chains that have their own validators and consensus mechanism, tokens etc. and are connected to Relay Chains. The current estimate is 100 parachains which are active in Polkadot. As the name goes, parachains work parallelly and utilise the network’s enhanced security, and spread transactions thus providing scalability for the Polkadot network.
Parathreads – Parathreads are parachains who don’t have to continuously connect to the network and can be utilised as a slot which is not a dedicated slot. Parathreads have the Pay-as-you-go model and are economically more viable but have the same API and functionality as the parachains. Parathreads are usually slots which have frequent read actions but do not necessarily write actions on an hourly or daily basis and hence need not have to process transactions every few seconds.
Bridges – The communication channel that connects multiple parachains and parathreads are Bridges. Tokens are transferred from one blockchain to another. For example - From Ethereum to Bitcoin or from Cosmos to Polkadot. Bridges could be centralised or decentralised depending on the ecosystem they are connected to.
Validators – Validators help in validating transactions in parachain blocks by utilizing a consensus mechanism with other validators. This in return help in securing the relay chain and ensuring rewards for the validators. However, to be a validator you need a node that is connected 24/7 to the network.
Nominators – Nominators as the name suggests nominate validators thus staking DOTs. If you don’t have a node running 24/7, you could still earn rewards by nominating verified validators. One can nominate multiple validators on the Polkadot network and get a share of the staking reward that your validator generates.
Collators – Collators are full nodes on Relay Chain and are a key element of the XCM (Cross-Consensus Message Passing Format). Collators as the name suggests collate data about transactions from parachains and produce a proof for the validators. Hence they help in authoring blocks in different parachains by validating transactions.
Fishermen – Fishermen are full nodes on parachains who help in monitoring state transitions and ensuring that no bad transitions are included. They continuously monitor the network and report bad behaviour statistics to validators which in turn helps in validating transactions.
Governance – Polkadot uses a robust governance mechanism which ensures rules are implemented and enforced through a consensual majority. Polkadot uses a modified version of POS called Nominated Proof of Stake (NPOS) wherein nominators secure the relay chain by selecting trustworthy validators who in turn validate transactions effectively. Collators collect shard information and produce proof for validators. Fishermen on the other hand monitor the network and report behavioral statistics to validators.
Substrate – Substrate is the web application framework on which Polkadot is created. Hence native parachains on the Polkadot network are built using the Substrate framework. The substrate has a multi-layered architecture and the three layers of Substrate - Substrate Node, Substrate SRML and Substrate Core constitute its core. Developers have the freedom and the flexibility to build their own blockchain while conforming to the guidelines of main the framework.
Kusama – The Canary Cousin of Polkadot
We won’t be able to move forward without spending a brief time understanding Kusama, the canary cousin of Polkadot. In old days, canaries were used in coal mines to test adverse conditions like poisonous gas inside a freshly dug mine. Similarly, every project needs to be first tested for its viability in Kusama before it goes live in the Polkadot network to test its durability, security and scalability.
Kusama was founded by the creators of Polkadot – Gavin, Peter, and Robert in 2019. It has its own native token called KSM. Kusama is modelled after Polkadot and can be called an exact replica of the network with its own Relay Chain and Parachains. It also has the same modular structure of Validators, Nominators and On-Chain Governance system.
Kusama is a pre-production test network wherein developers can test new blockchains before deploying on Polkadot. However, Kusama is an independent standalone network which is quite fast and scalable. It is said that it takes only seven days to vote on a referendum and eight days to get it implemented as compared to a month for each referendum on Polkadot.
Kusama though is slightly different in terms of its scalability and security as compared to its parent, Polkadot. Polkadot gives credence to high value and high-risk projects which take a longer time to get deployed on the main network. Kusama, on the other hand, is relatively faster and less secure giving priority to a low value and low-risk economical projects. This makes i t less secure but fast in getting the project deployed thus ensuring the risks are mitigated before they can be moved to the Polkadot network. This is a fail-safe mechanism which makes Kusama more prone to risk-takers but ensures the parent network is stable and all foreseeable security issues are sorted in the future.
Having understood in brief what Polkadot is, let’s go ahead and look at its strengths and weaknesses:| Strengths | Weaknesses |
|---|---|
| Aggressive Expansion – Polkadot is rapidly and aggressively expanding with projects vying to outdo each other to gain entry to the network. When this blog is being written, there are in total 544 projects as can be seen here . Parachain auctions determine the eligibility of blockchains vying for parachain slot. In parachain auction network members vote for the various projects by bidding their tokens. | Long Wait Time – The long wait time of the mainnet and relatively late launch process of parachain on October 13th, 2021 makes it a demerit. The first auction to include parachain happened as late as November 11th 2021. There are very limited number of parachains available. And all applications have to first run through Kusama which coupled with the long wait time and the auction bidding process makes it unglamorous for the uninitiated to gain a slot. |
| Shared Security – Polkadot has a robust security mechanism wherein nominators secure the relay chain by selecting trustworthy validators who in turn validate transactions effectively. Collators collect shard information and produce latest state transitions and proofs for validators. Fishermen on the other hand monitors the network and report behavioural statistics to validators. Parachains newly launched instantly benefit from this security model even if they are new and connect to the relay chain for the first time. | Twice Bitten Once Shy – Polkadot has been hacked twice during the early years of its conception and more than 50% of its ICO was taken away by an unforeseen vulnerability. It raised questions about its security during the early days. Though the amount was returned to the community members, it also made the entire community apprehensive about getting onto the Polkadot train and almost 5 years were spent in its development, research, and subsequent launch. |
| Flexible Framework – Substrate is a web application framework that provides the building blocks of a blockchain (networking layer, consensus, a Wasm interpreter). Substrate was made to provide a platform on which parachains could be created, but it does not provide support for Polkadot compatibility directly. For this reason, Cumulus, an extension to Substrate, makes it easy to make any Substrate-built runtime into a Polkadot-compatible parachain.(Source :Polkadot) | Late New Entry – The native token of Polkadot DOT is a new entrant to the cryptocurreny market and is currently listed as 14th in CoinMarketCap site. This is a major down figure as compared to other Blockchain networks like Cardano for example, which also relatively new, is listed as 9th position. The DOT must take major leaps and bounds to be listed in the top 5 or 3 tokens to gain public recognition and mass acceptance. |
| On Chain Upgrade/Governance – Polkadot can upgrade it’s runtime because it’s stored on the blockchain itself. Thus eliminating the need for Hard Fork. Polkadot upgrades its runtime which is stored as logic on the chain, thus eliminating the requirement of nodes to participate in the upgrade process. The stakeholders vote on the upgrade process through the On Chain governance system which is a multi-layered model. | |
| Crowdloan functionality – Crowdloan functionality is the way for potential projects to bid for a chance in the parachain auction by taking loans of source tokens for a lease period. Once the lease period is over or once the crowdloan period ends the tokens are returned automatically to the sender. This is an impressive method to expand your community and promote your community members by helping them with their projects. |
Polkadot Launch Phases – Sprucing for Web 3.0
Polkadot is set to launch in planned phases which will make it compatible with Web 3.0. As of writing this piece, there’s no other blockchain which has been launched in multiple phases over some time and Polkadot is said to be the first blockchain to do so. This is so because Polkadot is a heterogeneous network consisting of public, private and custom-built blockchains interconnecting with each other. Due to the magnitude and scale of its operations, Web3 Foundation has decided to roll out Polkadot functionality in phases as outlined below:
Proof of Authority – The launch was done in Proof of Authority POA mode and happened with the launch of the genesis block on 26th May 2020. Web3 Foundation restricted governance to a single SUDO user and this was done so that essential upgrades and commands required for the launch process were supervised by a single SUDO user. There were very limited validators who joined the network, and they were a part of the Web 3 Foundation.
Nominated Proof of Stake – Following this it transitioned to Nominated Proof of Stake on 18th June 2020 when the first validator election was being held. The network was tested for stability and sufficient validators were identified to ensure that the economic stake of the blockchain was bonded with the validators.
Governance – The Governance in Polkadot was enabled by Sudo to ensure that a consensual majority is set up and enforced by setting up a Council, a Technical Committee and public referenda. This ensured that the consensual majority could effect changes in the blockchain.
Removal of Sudo – The Sudo module was removed on 20th July 2020 and the governance was transferred to DOT token holders. Thus, decentralization was effectively put in place by ensuring that token holders have control of the network by taking part in a consensual majority system.
Balance Transfers – The restriction on balance transfers was removed on 18th August 2020 and it was fully enabled.
Redenomination – DOT token was redenominated on 21st August 2020. Subsequently, one old DOT equals 100 new DOT.
Core Functionality – The core functionality of the network is being upgraded by introducing XCMP (Cross-Chain Message Passing) and the launch of parachain slot auctions. Parachains will be tested on Kusama and subsequently, auctions will be held to make them go live on the network.
Polkadot 2.0
Let me conclude this write up with a few words on Polkadot 2.0 which is hyped as the next version with improved scalability, both horizontal as well as vertical scalability. Upgrades like XCMP (Cross-Chain Message Passing) and the launch of parathreads are being tested out and will be rolled out as future upgrades by the On-Chain Governance system once they are ready to be deployed. Research is being done to function multiple nested relay chains connected to their own parachains giving rise to a true decentralized interconnected network. This in turn would be truly interconnected relay chains connecting different heterogeneous networks, that are interoperable as well as truly scalable.
