Polkadot Network (DOT) is breaking into the blockchain world by looking at the current flaws and problems with blockchain and simply trying to fix them.
These problems are apparent to anyone who has ever used Bitcoin or Ethereum. The lack of blockchain interoperability, scalability and network speed, difficult to upgrade, and very poor governance systems to name a few.
Polkadot aims to fix these by bulidng a network that enables blockchains to communicate with each other, revolutionizing scalability enabling over 160,000 transactions a second, improving upgradeability, having a robust governance protocol, among many others.
But will Polkadot be able to achieve what it has set out to do? Or will it just be another small fish in a sea of chains?
In this review we will discuss the Polkadot Team, how Polkadot works, the technology behind Polkadot, the value of the Polkadot Token (DOT), and much more.
The Polkadot Team and Partnerships
The three founding members of the Polkadot Network are very big names within the cryptocurrency space.
Robert Habermeier is a Thiel fellow with background in blockchain, distributed systems, and cryptography.
Dr. Gavin Wood was co-founder and CTO of Ethereum. Inventing crucial aspects of current blockchain technology such as Proof-of-Authority and Solidity. He is the current president of the Web3 Foundation.
Peter Czaban is current technology director of the Web3 Foundation previously working in defense, finance, and data analytics industries specialising in a variety of blockchain technology.
The Polkadot Network is being developed by 5 seperate development teams in every corner of the world.
4 of these teams are Parity technologies based out of London and Berlin. Chainsafe based out of Toronto, Soramitsu based out of Tokyo, and community driven PolkadotJS.
The Web3 foundation commissions these teams as well as over 100 individual developers to work on building the Polkadot Network.
Whos Building on Polkadot
The 2 most reputable and liquid exchange Polkadot is currently being traded on are Huobi, OKex, and FTX. If you buy 100$ of DOT on your first OKex purchase you will recieve 10$ of BTC free.
How the Polkadot Network Works
The Polkadot network has a variety of key components that ensure that it runs securely, effeciently, and does what it sets out to do.
At the base of the Polkadot network is what is known as the Relay Chain. This is foundation of the Network from which all else is built. It is responsible for network security, consensus, and cross-chain interoperability.
Built off of the Relay Chains are Parachains. These Parachains are their own sovereign blockchains which can have their own token and can optimize themselves for specific use cases. These Parachains pay to connect to the Relay Chain.
The relationship between the Relay Chain and Parachains is similar to that of the relationship between Ethereum and an ERC-20 token. Except on Polkadot parachains are much more powerful, and have autonomy over their own chain.
Within the Network Architecture there is also Bridges. Bridges allow parachains to connect with external networks such as Ethereum.
See the diagram below for a visual breakdown of how the whole of the Polkadot Network works
There is also 4 roles within the Polkadot Network that ensure security and consensus. Validators, Collators, Nominators, and Fishermen.
Validators secure the relay chain by staking DOT, validating proofs from Collators, and participating in consensus with other validators.
Collators maintain parachains by collections parachain transactions from users and then producing proofs for validators.
Nominators secure the Relay Chain by selecting trustworthy validators and staking DOTs
Finally Fishermen monitor the network and report bad behavior to to validators.
See the diagram below for a visual breakdown of the process.
The Tech Behind Polkadot Network
Polkadot is much more scalable than previous blockchains. Polkadot bridges multiple specialized chains together enabling multiple transactions to be processed in parrallel. Current estimates suggest that Polkadot can process over 160,000 transactions per second (TPS) this compares with Ethereum’s 23 TPS and Bitcoin’s 7 TPS
One of the major reasons for Ethereum’s success was how easy it made it to deploy your own project or ICO. You can create your own ERC-20 token in a matter of minutes.
Substrate is again an improvement on this. Substrate allows you to build your own blockchain from scratch using already good to go pallets.
If you’re a developer who wants to build a DeFi theres pallets for that, if you want a DAO theres a pallet for that, if you want a pallet for a game theres probably something for that too.
Not only do they make building a blockchain a lot easier but it is also natively supported with Polkadot.
Upgrading an app on your phone is a very simple process which is often done automatically. A developer pushes an app update to the app store and then it is downloaded to your phone automatically or manually. You barely even notice what has happened.
With blockchains it is unfortunately not as easy. Upgrading a chain on older technologies typically require a network fork which can be a headache for a lot of parties. These upgrades can also cause contention and arguments within communities ultimately leading to splits. We seen this with most notably with Bitcoin and Bitcoin Cash
Polkadot changes this by enabling chains to upgrade themselves without needing to fork chains. Removing the headache of hard forking and reduces the risk of hard forks over network disagreements.
With the use of Bridges which we discussed earliers Polkadot will enable cross-blockchain transfers of any type of data or asset.
The Value of the Polkadot (DOT) Token
The Value of the DOT Token comes in three ways. Governance, Staking, and Bonding.
Governance is a common value derived from newer tokens in the blockchain space. DOT coins will enable users to have complete control over the protocol. These include protocol upgrades, fixes, among many others.
Staking will enable users to stake their DOT coins. Staking creates a mechanism wherein behavior which is beneficial to the chain is rewarded while detrimental behavior is punished.
Bonding, this is the process by which new Parachains are added to the network. In order to add a Parachain for your company, dapp, or token you must first bond your DOT.
The Use Case for Polkadot
The potential use case for Polkadot is seemingly infinite. If we imagine the current use case of Ethereum and multiply it by a factor of 10 or 20 we may not even be close to its full potential.
If Polkadot is sucessful in what they are doing Polkadot may be used in thousands of applications, companies, and governments. With the abilty to handle up to 160,000 TPS the potential for mainstream business use is there.
And that is without considering the potential for Polkadot to interact and cooperate with other chains and networks.