Polkadot is a next-generation blockchain protocol that connects multiple specialized blockchains into a unified network. Polkadot builds on the revolutionary vision of previous blockchain networks, while additionally offering several key benefits.
The vision is of a Web where people’s identities and data belong to their owners and are not actually under the control of Internet giants. They are therefore safe from any central authority.
This vision has its roots in the early days of Ethereum, when Polkadot founder and Ethereum co-founder Gavin Wood and others began thinking about what a next-generation version of Ethereum might look like.
Polkadot allows for transactions not only of digitized tokens (and thus cryptocurrency as well) but also other types of data.
Its flagship token, DOT, is now in the top 10 by capitalization.
Isolated blockchains can only process a limited amount of traffic. Polkadot is a sharded multichain network, which means it can process many transactions on different chains in parallel, eliminating the bottlenecks that used to occur on legacy networks that processed transactions one by one. This parallel processing power significantly improves scalability and creates the right conditions for greater deployment and future growth. The chains connected to Polkadot are called “parachains” because they run on the network in parallel.
There are several projects that allow interconnection between blockchains that otherwise could not communicate with each other. Polkadot’s particularity lies in offering interfaces that allow for the transmission of non-tokenized data as well. This can be extremely important to enable the activation of smart contracts with data that comes from external sources, such as exchanges or companies.
Polkadot provides several ways to build an application: as a smart contract, on an existing parachain, on its own parachain, or as a parathread.
Parachains open up the possibility of building complex runtime logic that would be too expensive to execute with smart contracts.
Parathreads are like parachains; the main difference between the two is economic, as parathreads are much less expensive to secure than a parachain.
Parachains connect to Polkadot by renting a slot on the Relay chain for up to 96 weeks at a time, with the option to renew. An auction on the chain allocates the parachain slots.
The Polkadot launch
In June 2021, the first ever parachain, Statemine, went live, followed in the following weeks by Kusama’s first group of five parachain auction winners (Polkagot’s test parachain). Since then, a total of 18 parachains have been launched on Kusama.
A phased, structured launch of Polkadot was completed in December 2021. Five parachains have become operational. They are: Acala, Moonbeam, Parallel Finance, Astar and Clover.
The launch of the parachains on Polkadot represents the culmination of the original vision outlined in the Polkadot Whitepaper in 2016.
Applications and services
Nearly 200 projects have been or are currently in development for the Polkadot ecosystem. These include decentralized finance (DeFi) applications, data privacy systems, digital identity systems, social networking, IoT, gaming, robotics, and supply chain logistics. Here are some examples of Polkadot applications
Acala is a decentralized financial network that offers a Polkadot-protected blockchain platform, as well as a suite of cross-chain financial applications that allow users to trade, issue loans, become liquidity providers, and access derivatives. The network is scalable, Ethereum compatible and optimized for DeFi.
Clover is a powerful smart contract platform that allows Ethereum developers and projects to migrate their contracts to Polkadot. Minimizing the changes required to run existing Solidity smart contracts on the new network. Ethereum projects can simply replicate their dApp and deploy it on Clover using MetaMask, Truffle, Remix and other familiar tools.
Moonbeam makes it easy to build decentralized applications on Polkadot – which means DApps can integrate with other blockchains, including Bitcoin and Ethereum. With smart contracts, Moonbeam, and compatibility with the Ethereum developer toolset, you can quickly build applications that work with users and assets on remote blockchains, either through native Polkadot compatibility or bridge-based integrations.
Parallel finance is a decentralized money market protocol that offers lending and staking. Depositors can lend and staking simultaneously to earn “double interest,” and borrowers can post collateral to borrow assets.
Polkadot is one of the most innovative and growing platforms. This is particularly due to some architectural features. For example, the ability to interconnect and make other blockchains communicate. Not only to transfer financial assets but also data of any kind.
It is therefore proposed as the center of an Internet world in which the control of data and the identity of users is taken away from the giants of the web giving it back to users.
As in many other cases, time will tell if this seemingly impossible mission will be accomplished.