Imagine finding the perfect crypto project for you. It has solid tokenomics, a reputable team behind it, and fast transactions. This sounds all great until you run into the age-old problem that it has difficulty communicating with other blockchains due to having different architecture and coding.  See, most blockchains have functionalities that work perfectly fine on their own, but these blockchains are often isolated from interacting with other blockchains. This creates a problem wherein applications are limited to the specific chain they exist on. Thankfully, Polkadot is here to solve that very issue. Let’s find out more!  

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What is Polkadot? 

Conceptualized back in 2016 by Ethereum co-founder Gavin Wood, Polkadot was meant to transcend the concept of a singular blockchain. Polkadot hopes to solve the blockchain interoperability issue by becoming a network that efficiently connects multiple blockchains. The project also wishes to address other blockchain challenges such as scalability and governance. Living up to its vision, Polkadot currently operates as a multichain network cryptocurrency allowing different blockchains to leverage each others’ strengths. The network operates using the DOT token. 

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Key Features of Polkadot

Polkadot boasts several key features that contribute to its overall success. Let’s go over each of them! 

Unique Architecture

‍Polkadot is able to act as an interoperability hub by relying on its unique blockchain architecture. This consists of a central Relay Chain and numerous side parachains and bridges. The Relay Chain acts as the “command center” of Polkadot and is responsible for overarching security, consensus, and interoperability. Parachains are independent blockchains in the Polkadot network with unique features and applications. All parachains are connected to the Relay Chain and benefit from its security. Each parachain also processes transactions independently thus reducing the load on the main network and increasing scalability. Moreover, all parachains can communicate with the entire Polkadot ecosystem through their connection to the Relay Chain. On the other hand, bridges act as gateways between the Polkadot network and other blockchains ecosystems like Ethereum or Bitcoin. Polkadot also plans to implement trustless bridges, such as Snowbridge, which differs from traditional centralized bridges by eliminating the need for a single entity to hold or control user funds. 

NPoS Consensus Mechanism

‍Polkadot utilizes a unique consensus mechanism called Nominated Proof-of-Stake (NPoS). Unlike traditional Proof-of-Stake (PoS) where token holders directly validate transactions, NPoS introduces the concept of nominators. Nominators are DOT token holders who stake their DOT to secure the network and nominate trustworthy validators. Validators are responsible for validating transactions and proposing new blocks on the Relay Chain. By separating staking from validating (which requires more stake size), more people would be encouraged to be nominators thus increasing Polkadot’s security and decentralization. 

Forkless Upgrades

‍Polkadot also has the capability to do forkless upgrades. In traditional blockchains like Bitcoin or Ethereum, upgrades often require a hard fork. A hard fork creates two versions of the blockchain with the old chain staying on the previous rules, and a new chain follows the updated rules. Forkless upgrades on Polkadot remove the need for users to choose between blockchains whenever a hard fork occurs. Polkadot’s democratic system of on-chain governance allows its users to vote on changes to the network and seamlessly implements them should the majority request a change. 

DOT Token Dynamics

‍The DOT token is used to power the Polkadot network. DOT holders have voting rights on important governance decisions and they can also propose changes to the network. They can also stake their DOT to secure the network and nominate validators. DOT is also used as fees for various transactions in Polkadot and Polkadot parachains. It was also used to secure parachain slots during the 2021 parachain auctions. 

Core time‍

Core time, to be introduced in Polkadot 2.0, refers to a unique mechanism for allocating block production slots on the network's parachains. This function replaces the previous parachain auction model wherein each parachain received a fixed number of slots for block production, regardless of its activity or demand, which could lead to inefficient resource allocation. Coretime allows projects to purchase network capacity with DOT as needed, offering flexibility and scalability. What this means is that resources such as blockspace from the Relay Chain get allocated more efficiently. Only projects that need the blockspace get it which improves the network as a whole. 

Deflationary Ecosystem 

While certainly already a robust ecosystem, Polkadot continues to try and develop into something better. Polkadot 2.0 is an upcoming major upgrade to the Polkadot network hoping to redefine its technological and economic landscape. One feature this upgrade plans to add would be token burning to reduce the DOT supply. 

Right now, DOT experiences inflationary pressure through staking rewards. Users are encouraged to stake their tokens to help secure the network and are given more DOT in return. While having a lot of stakers helps the network, minting more DOT rewards leads to an increased supply and a lower price. The Polkadot team plans to add a DOT burning mechanism  to help combat this increased supply from staking rewards by burning DOT tokens used in coretime payments, another new feature. This burning to increase the scarcity of DOT is hoped to improve its overall tokenomics and increase its value over time.

As blockchain technology evolves, Polkadot strives to not just ride the trends but also to set the standards. It hopes to continue to innovate and improve the network’s overall efficiency as it pushes towards a more interoperable, secure, scalable, and decentralized Web3.0. Check out the Polkadot network, explore its different parachains, and see how it connects the entire blockchain space!

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