What is Polkadot (DOT)?

Polkadot (DOT) is an innovative blockchain project that aims to create a secure interconnection infrastructure between different blockchains, while providing scalability possibilities and new functionalities to them. 

Uno of the projects cryptocurrencies, recently created that has captured the world's attention the most is Polkadot (DOT). The reason? This new project of tecnología blockchain seeks to dethrone Ethereum with a much more scalable and efficient network. At the same time, it offers the possibility of interconnecting different blockchains and becoming an unparalleled cross-chain development hub.

What is the origin of Polkadot

The origin of this project leads us to meet one of the main figures in the crypto world, Gavin Wood. Wood is a well-known blockchain technology developer who was part of the Ethereum development team. In fact, Wood held the position of lead developer of Ethereum, being on the same level as Vitalik Buterin. A situation that denotes his knowledge and work within this project. It is thanks to the work of Wood, that Ethereum has the powerful programming language Solidity, which was created by his person. However, on January 11, 2016, Wood decided it was time to go and start his own project, abandoning the Ethereum project.

At the time, Wood's idea was to start a blockchain project capable of overcoming Ethereum's weaknesses. In particular, its scalability and enable new cross-chain or inter-chain operating structures. Thus, by June 2016, Wood had already started working on this new project, and in October 2016, he presented to the world the first version of the whitepaper by Polkadot. With this, this interesting project began, in which the developer was also participating Marek kotewicz.

From that moment, the development of Polkadot would begin its way, until gathering a greater amount of attention on it. Something that, in fact, can be clearly seen today. And, Polkadot is one of the fastest growing blockchain projects during 2020 and early 2021.

Initial funding of the Polkadot project

Gavin Wood, began this project initially with the financial support of his company Parity and Web3 Foundation, which he also helped create. Although Parity and Web3 Foundation are benchmarks within the Ethereum world, their participation in Polkadot financing is vital.

However, both companies' resources were limited due to their Ethereum-centricity. This led to a Initial Coin Offering (ICO) which was held from October 15 to 27, 2017. The success of the ICO was extraordinary, managing to raise 143 million dollars for the development of this project.

However, shortly thereafter, this success would be seriously jeopardized. A hack would cause Parity to lose more than $ 90 million within the Ethereum network. With his income severely diminished, the work route was rethought and Gavin Wood made it clear that Polkadot's work would continue. This is thanks to the fact that there was enough money for the project to be successful and the conditions of the ICO will be respected.

Additionally, Parity and Web3 Foundation looked for a way to request support to carry out a hard fork that would allow the rest of the ETH blocked by the hack to be recovered. The measure received harsh criticism and the community opposed the realization of an action such as the one that occurred after the hack of The dao in 2016. This is because they feared that this situation will lead to a new incision in the community. Result? The funds are still locked in the known Parity bug, and there seems to be no way to get that money out of that place.

Polkadot, a radically different blockchain network proposal

Now, Polkadot started its way into Gavin Wood's mind as a network capable of offering the same capabilities as Ethereum, while overcoming its weaknesses, and offering a number of unique features. To achieve this, Polkadot devised from the ground up a whole new series of technology and consensus protocols designed for this purpose.

First, Polkadot was designed with heterogeneous network operation in mind, which could be interconnected. In this way, Polkadot could fulfill two well-defined functions:

1. As a chain of data transmission and processing. A functionality that allows you to receive information from other chains, process that information and send it back to the source chain. This first option allows Polkadot to become a scalability layer for any other blockchain that needs it.
2. Independent operation creating your own chains. That is, create strings with your own capabilities, such as the compatibility case to run smart contracts or tokens. This enables native operation of decentralized applications (DApps) and tokens on the network that can take full advantage of the potential of the network.

The idea with all this is that Polkadot can become a scalability option for networks like Ethereum or other cryptocurrencies. In addition, it could also serve to interconnect different ecosystems in different blockchains, all on the same network. This last case, for example; can be seen with the DeFi project, Equilibrium what makes life in EOS.

Relay Chain and Parachains, Polkadot's chain division

Additionally, this operation allows Polkadot to provide better security, scalability through sharding and parallel execution within the network, which increases the overall performance of the network. At this point, it is important to highlight the application of sharding within Polkadot. Let us remember that this computing technique divides the main chain and the network, into several substrings and subnets attached to it. In this way, each substring has its own blockchain history, nodes, and all the necessary infrastructure for its operation.

In Polkadot this is precisely what happens. Substrings in Polkadot are called parachains, which can be seen as a sidechain or secondary chain, where its own blockchain instance runs. That is to say, a parachain has its own blockchain or history, which supports its own existence of tokens, smart contracts, and nodes. Thus, this parachain has its own capacity and computing power to meet your needs.

Furthermore, the relay chain, is the main chain of Polkadot, and this exists under the union of the history of all the parachains that are executed in parallel within the Polkadot network. This organization makes it possible for Polkadot to execute smart contracts in parallel, and additionally, it allows scalability superior to current blockchains.

Additionally, this segmented functionality also allows the existence of Bridges or Bridges, With which the parachains can open communication with other blockchains (such as Ethereum, EOS or Bitcoin) and serve as a link with them. As the parachains can communicate with each other, this also allows different bridges pointing to other chains to communicate, serving as cross-chain channels to carry out operations between them. In short, with Polkadot and its Bridges, it is possible to interconnect Bitcoin and Ethereum (or other blockchains) at high speed, with highly reduced costs without sacrificing security at any time.

Smart contracts and tokens within Polkadot

Polkadot natively does not offer native support for smart contracts. This leaves out the creation of tokens or DApps natively on the network. However, Polkadot parachains are extensible and modular, having the ability to create layers of abstraction that allow the execution of these smart contracts. When executed within a parachain, their impact is limited in terms of resource consumption, to that parachain, leaving the rest of the system working normally. This prevents, for example, that a high number of transactions in a parachain, reduces the performance of the rest of the system.

Another great advantage of this system is that its operation, design, programming and deployment is much easier. That has made Polkadot a much more secure network. Additionally, smart contract-capable parachains can activate alternative high-speed protocols that allow the execution of these smart contracts with minimal impact on the general Polkadot ecosystem.

An example for this type of functionality is edgeware, which has an extension layer for Polkadot that enables their execution, including compatibility with Ethereum smart contracts and its EVM. Additionally, there is also, Ink, a development designed to build smart contracts that exploit the capabilities of Substrate, a fundamental part of Polkadot, and that uses the secure programming language, Rust.

Another project of great relevance in this regard is Moonbeam, which enables a Polkadot parachain with these capabilities, which implements a solution fully compatible with the Ethereum EVM, and with the Web3 RPC API, giving all the necessary tools to programmers to take advantage of the potential of Ethereum smart contracts on Polkadot.

Of course, these are not the only solutions for smart contracts in Polkadot parachains, but they are a clear example of the possibility of implementing this technology easily and much more within the network.

Network organization within Polkadot

Now to achieve this type of operation, Polkadot has created a whole new network organization in which four elements stand out. These elements are:

Validators

The Polkadot network, like any blockchain network, has a group of validator nodes whose job is to verify, validate and inform the network about the information contained within each block that is part of the blockchain. These blocks come from the nominators, who are in charge of creating the candidate block that will be analyzed and validated by the validators.

Given the importance of a validator, and the way Polkadot works, this position requires powerful hardware, high bandwidth, a connection dedicated exclusively to your work within the network and, additionally, Polkadot validators must block DOT tokens in order to qualify as validators of the network.

On the other hand, remember that Polkadot is a network with a segmented operation in sharding and with parallelism capacity, which increases the demands of computing power and connection.

Nominators

Nominators, on the other hand, are a special type of node whose job is to create a secure link between the validators and the entire network operation process. The role of nominators is simple: take the transactions from the network, group them and perform the necessary metadata generation process so that the validators can verify it and include it within the history of the Polkadot blockchain.

Without a doubt this function looks a lot like the miners of the system Proof of Work (PoW) or validator nodes Proof of Stake (PoS), and its function is basically the same in this sense.

Additionally, the nominators issue the validators the structure of a block will be examined by the validators, who will have the last word to issue it and make it part of the Polkadot history.

Classifiers

These types of nodes help validators to keep a complete history of the parachain (Polkadot substring) to which they have been assigned. His job is to maintain at all times the information necessary to create new blocks within the parachain, which will eventually end up in the complete Polkadot history. Under normal circumstances, it will collect and run transactions to create a block and provide it, along with a zero knowledge test (ZKP), to one or more currently responsible validators who are proposing a block within the parachain.

Fishermen

Given that Polkadot works in sharding, where there are several substrings that are part of a more complete history, an infrastructure designed to prevent malicious actors from cheating has been created. This structure is maintained by the fishermen or fisherman. These nodes have the function of looking for duplicate transactions or illegal operations within the network, to avoid them, in exchange for a reward.

The operation of these four pieces is what allows the orchestration of the process of generation, verification, validation and emission of the blocks within Polkadot and its parachains. In addition, it is noteworthy that the communication between each of these elements (between the substrings and the main chain) is completely asynchronous and parallel, guaranteeing a high communication speed within the system.

Consensus within the network

The elements that are part of the Polkadot network work in unison thanks to the Polkadot consensus protocol known as NPoS or Nominated Proof of Stake. This consensus protocol is thought of as a slight variation of the well-known protocol of Proof of Stake (PoS).

In NPoS, validators must provide the infrastructure and maintenance of the network. They are responsible for the production of new blocks, the validation of the parachain blocks, guaranteeing the purpose and ultimately the security of the network. They must be responsive at all times and run a secure and reliable infrastructure.

Additionally, validators need tokens to back them up, which incentivizes them to comply with the rules, otherwise some of these tokens could be removed (a concept called "cutting"). For their services, validators are paid in bounties denominated in the native token of the underlying network. In order for validators to perform their services for the network, they must be in the active set. Validators in the active set take turns proposing, validating, and adding new blocks.

For their part, nominators are token holders who contribute to the security of the network by financially supporting (also known as “nominating”) up to 16 validators of their choice with their tokens (also known as “participation”). Nominators share part of the rewards earned by validators in the active set they nominated. It is important to note that nominators are also subject to cuts in the event of misconduct by one of their nominee validators.

How It Works

NPoS can be compared to a choice and was inspired by the Phragmen sequential method. This method was introduced in the late XNUMXth century to optimize the choice of a set of a specified number of people from a larger set of candidates. Thus, the goal of NPoS is to ensure decentralization and fair representation through justified proportional representation. And along with it, provide high security through maximum support.

Proportional justified representation ensures that spaces are allocated to validators in proportion to their nominations. Therefore, the more nominations and ultimately the greater the number of tokens that back a validator, the greater the likelihood that the validator will be chosen for the active set. Validators are chosen at the end of each. This means that the set of active validators changes in each Era.

Once the validators are elected to the active set based on their nominations, the endorsement provides a distribution of the nominated stake such that each validator in the active set has roughly the same amount of stake as endorses it. This increases the overall security of the network by raising the stakes by supporting the "weakest links" of the validator set, ultimately making it more resilient to attack.

Reward distribution in NPoS

In NPoS, all validators in the active set receive the same amount of rewards. From these rewards, the validator's commission is deducted. The remaining rewards are distributed among the nominators in proportion to their participation. At this point, the system works identically to Proof of Stake (PoS).

Token DOT, the economic heart of Polkadot

To keep the entire Polkadot network running, this project has created a DOT name token. The purpose of this token is multiple. In the first place, it serves for the decentralized governance of the protocol. For this, the DOT token allows validators a voting power with which they can participate in the decisions and evolution of the project.

In addition, the DOT token serves to link and incentivize validators to act honestly within the network. This by having a financial interest in the authenticity of the verification process. Even Polkadot parachains or substrings can be created, joined or destroyed thanks to DOT tokens. Something that undoubtedly offers enormous flexibility and maintainability to the network.

Current state of Polkadot

Polkadot is a fairly new project and much of it is still under construction. The last major update to the network was received on August 21, 2020. This was intended to activate the ability to perform transactions within the network, and change the decimal denomination of the DOT token.

However, the full functionality of its Relay Chain is finally expected in the second half of 2021. Once Polkadot reaches this level, we can finally talk about a full functionality Polkadot network. A level of functionality that would later evolve according to the needs of its users.

After the activation of the Relay Chain, the development of Polkadot 2.0 will begin. This update is aimed at improving privacy (making use of zero knowledge testing (ZKP) and improving general scalability (vertical and horizontal scalability within the network).

Conclusions

At this point, there is no doubt that Polkadot is shaping up to be one of the community's great blockchain projects. Furthermore, the acceptance and future outlook of the project are gigantic for its DOT token. And it is that this token has become the 4th most important token and with the highest market capitalization of the entire crypto world. And that is something that it has achieved in just over 6 months of operation.

Not only that, currently the community that makes life around Polkadot has grown exponentially. This has allowed the creation of large infrastructures that will continue to grow during 2021, especially with the launch of its relay chain.

There is no doubt at this point, that Polkadot is one of the great blockchain projects. In fact, it is considered an Ethereum-killer, this if we take into account that it is capable of executing smart contracts compatible with the EVM through layers of abstraction. In addition, the project has much of its infrastructure advanced, which will allow its launch long before the full arrival of Ethereum 2.0.

All of the above makes something very clear, Polkadot will have great growth as a project this 2021. One that will undoubtedly open up new opportunities for this technology.

Links of interest