Polkadot Network is a next-generation blockchain protocol that promotes blockchain interoperability. In particular, the protocol allows connectivity between established blockchain networks. Polkadot is said to be a scalable, interoperable, and secure network protocol for the next web.
Last 2019, decentralized finance (DeFi) grew in popularity in the crypto space. In wanting to ride the DeFi market, investors want to buy token assets of promising DeFi projects that can potentially compete and steal some market share from Ethereum. The search leads some of the investors to DOT, Polkadot’s native asset.
Investors’ expectation for DOT to moon in the market as ETH is highly-correlated to its founder. Polkadot has Gavin Wood as a co-founder, the same person who co-founded Ethereum. In fact, Wood has published Polkadot’s first whitepaper in 2016, a year after Ethereum’s launching.
In addition, Ethereum’s success slowly drags Polkadot into the spotlight. Due to Ethereum’s protocol making it easy to create DApps and deploy tokens, the network currently operates most of the decentralized projects in the world today. Moreover, ETH price also reached new highs — growing 266% in 2019 alone.
What is Polkadot Network Protocol?
Polkadot is a network protocol. It operates on Web 3.0, a decentralized and fair internet where users control their own data, identity, and actions. Moreover, the network empowers a single user rather than technology enterprises and internet service providers (ISPs) worldwide.
Overall, Polkadot is a language or set of rules that software applications can use in the future. It aims to interconnect blockchain systems without an underlying centralized system. At its core, Polkadot intends to introduce a new innovative solution by creating a unified network.
For instance, Polkadot refers to other blockchain features in development. Several innovative and impressive ideas are already laid out by other blockchains. Thus, gathering them into one ecosystem will pose a great advantage.
Advantage of the Polkadot Protocol
1. System Interoperability
Polkadot bridges the gap between blockchains. It facilitates efficient data and asset transfers between the various applications on the same network. Polkadot can send and receive data across public, open, permissionless blockchains, including private and permissioned blockchains.
Connecting to Polkadot enables software developers to interoperate with a wide variety of applications in the Polkadot network. This makes it possible to utilize permissioned data from a private blockchain and use it on a public blockchain when developing DApps.
As a real-life example, Polkadot could send proof to a document-verification smart contract on a public chain by accessing an organization’s private record stored on its own permissioned blockchain.
2. A Highly-Scalable Decentralized Ecosystem
One of the goals of Polkadot is to facilitate a scalable and true decentralized ecosystem. Polkadot provides groundbreaking scalability by introducing a standard set of validators to secure multiple applications. Plus, it operates with user-driven network governance.
Within the sophisticated governance system Polkadot introduced, all DOT owners have a voice. Upgrades are coordinated on-chain and activated autonomously to ensure the network operates in its best performance. This will ensure the Polkadot’s development will reflect a healthy flowing ecosystem and community.
Within the network, DOT token holders have the power to make important community decisions. In detail, Polkadot distributes equal voting rights to its members, considering them as board members who hold key positions to decide.
3. Easy Future-Proofed Blockchain Innovation
Polkadot makes use of the Substrate framework to build decentralized ecosystems. Substrate framework makes it convenient to create blockchains. Software developers can create a custom blockchain in minutes using it. This can save developers months of coding and allows for interoperability and security from day one.
Besides, one of the innovations that Polkadot offers is easy and upgradable blockchain. It allows the integration of new features to fix bugs without the need for hard forks. This capability enables Polkadot to quickly adapt to changes and upgrade itself as better technologies become available.
With the Substrate framework and a highly scalable network, Polkadot encourages the network. Moreover, all the projects built using Substrate that can run efficiently on Polkadot. Some of the builders now on the network are namely Edgeware, Centrifuge, Acala, Polymath, Chainlink, Katal, ChainX, Laminar, Energy Web Foundation, Dock, and Ocean Protocol.
4. Polkadot and Parachains
Parachain is short for ‘parallel blockchains’ as per Peter Mauric, Public Affairs Head of Parity Technologies. Parity Technologies is a European-based company known to work closely with Polkadot that builds tools for its open-source platform.
A parachain is a data structure specific for applications that would usually take the form of blockchain. However, it is not essential for parachains to be actual blockchains. Within the network, every parachain is recognized as coherent worldwide. As a result, it can be validated by the governance on Polkadot’s relay chain.
The concept of Parachains is to become a sophisticatedly designed blockchain capable of conducting parallel processing. In brief, Polkadot makes use of parachains to run higher throughput than Ethereum.
Mauric further explained the technology:
<blockquote>“Parachains can process more transactions than a single blockchain because the transactions spread across multiple computers, similar to parallel processing.”</blockquote>
There is a strong alliance between Polkadot and Parity. In fact, Parity Technologies is the company behind Substrate. As mentioned earlier, Substrate offers developer tools that help create decentralized applications within the Polkadot network.
Polkadot’s Innovative Connectors
Aside from parachains, other components exist within the network: relay chain, parathreads, and bridges. These serve as gears that allow Polkadot to transfer arbitrary data — not just tokens — across blockchains.
The relay chain is the core responsible for the shared security, consensus, and cross-chain interoperability within the network. On the other hand, parachains — not necessarily a blockchain — is a data structure that allows developers to create their asset and optimize the tokens for specific use cases.
Next, parathreads are similar to parachains but with an added payment feature. It follows a pay-as-you-go model that allows users to pay only for their network connection consumption. This makes it economical for those who don’t need to tap on the blockchain all the time.
At last, bridges, with what the name implies, bridges parachains and parathreads to external networks. It enables the Polkadot network to connect and communicate with external networks like Ethereum and Bitcoin.
Polkadot and Moonbeam Smart Contract
Another technology that gets often acquainted with Polkadot is Moonbeam. Moonbeam is a smart contract-focused platform that extends the accessibility of smart contracts. Polkadot is successfully proven to be compatible with Ethereum smart contracts.
PureStake, a company focused on blockchain infrastructure and tools, developed Moonbeam. It enables developers to build interoperable applications with other blockchains and technologies to which include the Ethereum network.
Polkadot claims to offer more than Ethereum Virtual Machine (EVM) in terms of functionality and compatibility. Moonbeam platform extends the base Ethereum feature set with additional features such as on-chain governance, staking, and cross-chain integrations.
However, Moonbeam embodies a highly-specialized Layer 1.5 chain patterned to Ethereum’s Web3 RPC, keys, accounts, logs, and subscriptions, among others. Also, Moonbeam smart contracts greatly assist developers in building decentralized finance applications that can solve existing finance issues using Web 3.0 technologies.
DOT on the DeFi Spotlight
Polkadot protocol’s concept is intelligent. It introduced a powerhouse network protocol that encourages growth in the blockchain industry. The protocol offers DApps developers a next-level technology to power up their decentralized projects, all while opening an avenue for decentralizing projects to communicate, interact, and interoperate.
Its inherent features get the cryptocurrency world’s attention. More importantly, Polkadot maintains a good connection with the Ethereum network. Considering that the two networks share the same co-founder, the question if Polkadot would take some market share or even rival Ethereum have crossed digital-savvy minds.
In conclusion, the project’s technical prowess and connection make its digital asset a promising investment. Looking at DOT’s performance recently in the crypto market, many believe Polkadot (DOT) will be profitable in 2021.
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.