Polkadot: Your Guide
One of the most exciting projects in the crypto realm is Polkadot. Its founders claim that Polkadot will be the technological solution that will fix all of Ethereum’s downsides:
- It is Energy efficient.
- It allows for cross-blockchain transfers.
- It enables high scaling activity.
- It even allows voting rights for holders.
Last year, The Polkadot Currency, Dot, was traded for over 50$ per token. However, in this “Bearish” climate, it is traded now at around only 8$. Since Polkadot is a Top 10 Coin, and due to its unusual interoperability, we think it is time that you will get to know a little bit better about this unique project.
Dr. Gavin Wood was one of the founders of Ethereum and its first chief technology officer. After Wood realized that Ethereum 2 would not be built as fast as he wanted, he decided to retire from Ethereum and started experimenting with other Web3.0 endeavors. In 2016, he founded The Web3.0 Foundation, a nonprofit that was established to create decentralized internet infrastructure. The Web3.0 Foundation’s first project is Polkadot. According to Wood, Polkadot’s main goal is to be “the internet of blockchains” by allowing cross-blockchain data transfer and solving Ethereum’s scaling problems.
By the end of 2017, Wood had raised over 145 million dollars. In the ICOs, the project issued 10 million tokens, which were later split at a rate of 100 to 1. As of now, there are about 900 million tokens in circulation.
Polkadot has a number of layers that enable its activity. The first and the primary layer, which is called the “Relay Chain,”: This layer contains the system’s validators, which are nodes that stake their DOT tokens (Proof Of Stake). Staking tokens allow holders to validate transactions and, by that, earn tokens.
The second layer is the “Parachains”: Most of the calculations that are made in the network will be made on Parallel chains with relevant apps and features. These Parallel chains can present mathematical proof that the nodes can validate. These Parachains can use “Bridges” in order to access separate networks like Bitcoin and Ethereum. This is major: Polkadot might end the unbearable situation in which every blockchain is siloed and contained.
Between the Parachains and the Relay chains, you have a security mechanism called a Shared State: If the Relay chain is reset for some reason, its Parachains will be reset with it. Another thing we should know by now is shrading: Each parachain is considered a shard. Basically, sharding is dividing the network into little pieces so that everything will work faster.
There are four types of roles in this network:
- Validators- secure the network by staking DOT tokens, validating transactions, and participating in the consensus mechanism.
- Collectors- responsible for maintaining chains and creating shards for the validators
- Fisherman- monitor the network. Anyone who is a “full node” could be a fisherman.
- Nominators- responsible for appointing trustworthy validators.
This structure could change over time since it is truly a decentralized organization that allows holders to decide upon changes democratically.
In conclusion, Polkadot has high functionality, enabling cross-chain transactions, high scalability, the support of the Web3.0 foundation, and more. However, it is still highly concentrated: 40% of its tokens are held by the organization.