What Is Polkadot (DOT) And Why Is It So Popular?

By Stan Peterson
April 14, 2022 Updated May 4, 2022
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What is Polkadot

Polkadot (DOT) was founded in 2016 by Gavin Wood, the co-founder of Ethereum, along with Peter Czaban and Robert Habermeier. The project was founded through the Web3 foundation of which Gavin Wood is also a founder.

Polkadot is a blockchain interoperability protocol that intends to bring together several blockchains into a single ecosystem. The Polkadot network aims to prioritize security, scalability, and creativity in its development. 

In the Polkadot network, a parachain (parallel blockchain) is a distinct blockchain from the main chain, which is known as the Relay Chain. When information is required, parachains and the Relay Chain swiftly exchange it.

Any developer, organization, or individual may establish their own unique parachain using Substrate, a framework for generating cryptocurrencies and decentralized systems. The custom chain becomes compatible with all other parachains in the Polkadot network after connecting to it.

Developing cross-chain applications, commodities, and services should be a lot simpler with this paradigm. Transferring data or assets across blockchains has never been possible on a large scale before.

With a limited number of validators covering several parachains, network validators secure and validate data across these various parachains. To boost scalability, these validators will guarantee that transactions may be dispersed over many parachains.

What is Substrate?

Substrate is a blockchain framework that allows you to create custom blockchains. These blockchains are self-contained, meaning they don’t need any other technology to function. 

The Parity team wanted to build a framework that would make it easier for developers to build multiple, distinct blockchains.

The goal was to use everything learnt while developing Ethereum and Bitcoin implementations and turn it into a simple and adaptable network. Substrate was built in a modular fashion to allow for technical flexibility while also making features like accounts, balances, governance, and smart contracts as simple as plugging in a library.

Since Substrate and Polkadot are developed by the same team, any blockchain that is built using Substrate can be easily integrated into the Polkadot network.

Why is Polkadot popular?

Developers like Substrate, the Polkadot development framework, since it gives them a more expressive and larger canvas to work with than Ethereum.

Polkadot has been referred to as the “internet of blockchains” due to its focus on connecting multiple blockchain networks. There’s also the possibility of interacting with the Polkadot ecosystem’s other blockchains. 

This not only saves money and resources, but it also allows developers to tap into the Polkadot community rather than creating their own to promote new coin-funded initiatives. Polkadot makes the process of invention easier by eliminating the need to start from scratch.

What brings value for Polkadot?

The Polkadot system works in a unique way, bringing together a network of disparate blockchains known as parachains and parathreads. 

The Polkadot Relay Chain connects and secures these chains. There are other cases when these chains use bridges to link to external networks. Polkadot now has more versatility thanks to this design. 

The network’s primary components are listed below:

  • Relay Chain

The relay chain lies at the heart of Polkadot’s functioning. The network’s common security, consensus, and cross-chain interoperability are all handled by this protocol. On the relay chain, for example, agreement is established via two single-responsibility consensus procedures. The first is for block creation, while the second aids in achieving finality.

  • Parachains

Sovereign blockchains are known as parachains. These are networks with their own cryptocurrency coins. The majority of the time, these networks are tailored to particular use cases. Parachains, on the other hand, are free to design their own governance mechanisms, allowing for maximum freedom while minimizing the impact on other parachains.

  • Parathreads

Parathreads are similar to parachains, with a few small differences. These networks operate on a pay-per-use basis. For blockchains that don’t need constant network access to operate properly, this technique is more cost-effective.

  • Bridges

Bridges are another significant component. This protocol enables parachains and parathreads to connect to other networks such as Bitcoin and interact with them. Bridges increase the network’s interoperability.

What’s Next for Polkadot Auctions?

The parachain auctions are a method that allocates spots on Polkadot’s primary chain, the Relay Chain, to projects. This is a consensus voting method in which members of the Polkadot community stake their DOT tokens for 96 weeks to exercise their voting rights. During this period, the blockchain project with the most votes is declared the winner of the auction.

The different blockchain initiatives that compete for spots on the Polkadot parachain auctions include decentralized finance (lending, staking, farming, and investing) as well as smart contract provision.

Previous projects that won parachain slots on the Polkadot network include Acala, Moonbeam, Astar Network and Parallel Finance. There will be a total of 100 parachains on the Polkadot network, with each parachain being awarded to an individual blockchain. There are a slew of fascinating initiatives vying for a spot and a place in the Polkadot family.

One of these projects is the smart contract platform t3rn. The platform aims to bring smart contract interoperability into the blockchain space. Furthermore, it functions as a smart contract repository, allowing developers to build contracts and get rewarded anytime their code is used. 

The Web3 Foundation funding programme financed the research behind t3rn’s ecosystem. After raising 32.5 million DOT (worth roughly $1.27 billion at the time) from a community of over 81,000 members, Acala was able to achieve its first parachain position on Polkadot.

The current parachain auction’s performance demonstrates the capability and power of the Polkadot community, which DOT has recruited for their preferred projects. Moonbeam won the second round with 35.8 million DOT pledges after losing the first round to Acala.

If the current pattern continues, between $4 and $4.5 billion in DOT will be locked up for almost two years by the conclusion of the first series of auctions, lowering possible sell pressure and cycling supply on the market.

Conclusion

There are a lot of features that make Polkadot appealing to developers on paper. It’s a system that can support individual programmers, small enterprises, and major organizations. The ability to create specialized blockchains to meet particular purposes and easily modify them is a revolutionary notion that might be beneficial to the whole crypto sector.

Polkadot, on the other hand, is still a very young ecology. While hundreds of initiatives are in the works, it will be some time before the first major ones are launched. Hundreds of projects are being built, according to PolkaProject, ranging from wallets to infrastructure projects, tools, DApps, and more.

Being an active participant in the Blockchain world, I always look forward to engage with opportunities where I could share my love towards digital transformation.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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