The advantages of Polkadot
Polkadot’s operation goes hand in hand with that of other blockchains, it is not an isolated system. Polkadot thus makes the link between different chains by trying to make the most of the strengths of each. There are 3 main advantages of this system:
· Interoperability: different blockchains and applications can exchange information and functionalities thanks to the interoperability and compatibility between the chains;
· A bigger scalability: Polkadot operates several blockchains in parallel thanks to sharding, which can also be called parachains;
· The specialization: each of the parachains can be assigned to a very specific task according to their strengths and their level of congestion. Thus, one chain can take care of smart contracts, another carry out fast transactions and a last process information at a lower cost.
Other projects have already tried to work on the interoperability of blockchains, but Polkadot is the one which is the most advanced, and which seems to be the most promising. In this article, we are going to take a look at how Polkadot works as a whole with you so that you have a better understanding of how it all works.
As we saw in the introduction, Polkadot wants to make several blockchains communicate with each other in order to use the advantages of each. To make it all work, the project had to develop a system quite complex which is divided into 3 parts.
First of all, we find the “Relay Chain”. it’s about the Polkadot main blockchain on which all transactions are finalized. According to a test of 2020, it would seem that this string allows to validate more than 1,000 transactions per second.
We then find the parachains. They are blockchains independent which work in addition to the Relay Chain. Each of these parachains is specialized in a very specific task and will be requested when it is necessary to perform an action of this type. The number of parachains is currently limited, but will increase over time as needed.
Finally, we also find what are called the “Bridges”. These bridges allow the Polkadot network to interact with other blockchains like Ethereum, EOS or Bitcoin. Eventually, it will be possible to interact with most popular blockchains.
How the Relay Chain works
What makes Polkadot work is the Relay Chain. This network blockchain uses a system of proof of stake amended that we name nominated proof of stake. Each person who decides to staker DOT tokens by blocking them in a special contract can perform a particular role that allows operations to be carried out on the Polkadot blockchain.
In total, there are 4 roles that stakers can endorse to operate the Relay Chain :
· The validators. These are the people who validate a block that is on a parachain. They can also participate in consensus and vote for changes on the network;
· The nominators. They are the ones who secure the Relay Chain by selecting trusted validators. The nominators allocate in a way the DOT tokens that they have staked to the validators and at the same time their right to vote ;
· The collectors. These are the people who establish a history full for each parachain and which aggregate this transaction data into blocks that will be added to the Relay Chain ;
· The fishermen. These are the individuals who secure the Polkadot network and who report the bad behavior to validators.
Each person who fulfills one of these 4 roles is rewarded in the form of tokens DOWRY. The number of tokens earned depends on the role played and the DOT tokens staked to obtain one of these functions.
Decision-making for future developments of the project
Cryptocurrencies all have a different mode of governance, which makes both their charm, But also complicates their understanding. To make Polkadot evolve, several players have their say.
First, find the people in possession of the DOT tokens. Each individual who has a token DOT owns a voice and can suggest changes on the network. They also have the opportunity to vote for approve or to reject a improvement proposal or change on the network that would have been made by someone else.
Second, we find the board. These are people who have been elected by holders of DOT tokens. Board members can suggest changes like people in possession of DOT tokens. However, proposals made by board members require fewer votes to be approved than if they had been made by DOT token holders.
Finally, there is the technical committee. These are individuals who are elected this time by the members of the council. This is usually important members of the community such as the people who are in charge of the design of Polkadot. In the case of a emergency, they can make a special proposal in order to quickly resolve a problem encountered by the project.
Anyone has the opportunity to join the board. All that is needed is to be appreciated by the community and to succeed in winning votes. However, joining the technical committee is a bit more complex because it is necessary to get involved much more in Polkadot and that requires special skills like the knowledge in programming for example.
The DOT token
Polkadot’s ICO took place on October 14, 2017 and collected approximately $ 140 million, a huge success for the time! However, the team made two other private sales in 2019 and 2020 to raise additional funds for approximately 100 million, i.e. a total that revolves around $ 250 million.
DOT tokens were not immediately available at trading. We had to wait for the month August 2020 so that the new token, whose total supply has been multiplied by 100 while its value has been reduced accordingly, be exchangeable on trading platforms. The total number of DOT tokens in circulation is around 1 billion units and there are a hundred different trading pairs if we refer to Coinmarketcap.
DOT tokens provide 3 rights to the people who hold them:
· The governance. DOT holders have a full control over the project. They are the ones who decide future developments of the project as we saw in the previous chapter;
· Staking. To participate in the Relay Chain and get one of 4 roles available, it is necessary staker his DOT tokens. Thanks to a bonus and penalty system depending on the behavior of the token holders, they can get or lose extra DOT tokens according to their honesty on the Relay Chain ;
· Bonding. This is a system that requires DOT token staker to create a parachain who improve system efficiency. If the parachain is not used or technologically outdated, it will be removed as this will result in a withdrawal of stakes tokens above because no reward will be granted. This therefore allows the system to always be at the cutting edge of technology by allowing token owners to use them. reallocate on the most economically profitable parachains.
Polkadot to conclude
If the basic idea behind the project is generally quite easy to understand, the technical side can be a little complicated for beginners to master.
The general idea behind Polkadot is to allow different blockchains to communicate with each other so that the different players in the blockchain ecosystem can interact. Many projects have already tried this experiment, but Polkadot is undoubtedly the one that has the most chances of succeeding on this path.
The token holders have a right to oversee the entire project thanks to the governance system that has been put in place. In addition to that, DOT tokens are used to earn rewards when participating in the Relay Chain.
Polkadot is a fairly popular project right now and it has been a long time since a cryptocurrency has risen so quickly in the ranking of the most capitalized digital assets. It is an undeniable sign that a large community revolves around the project and that the programmers in charge of its development know what they are doing.