Written by: Paul Veradittakit, partner of blockchain investment agency Pantera Capital
Polkadot is one of the most anticipated blockchain releases this year, let’s take a look at what it is? And I want to talk to you about what makes it compelling and some early use cases:
- As blockchains become more popular, we see them becoming more diverse. We found that after the success of its core concepts in other fields, people are increasingly developing unique, customized blockchains for customized functions and use cases. As more and more blockchains are developed and different blockchains provide more and more services, the industry needs a simple and secure way to communicate between different chains.
- In 2016, Ethereum (Ethereum) co-founder Gavin Wood and the Web3 Foundation released the Polkadot white paper. Polkadot is a decentralized security protocol for cross-chain communication. From a broad perspective, it includes:
- Relay chain, this is the backbone of the network. It provides a deterministic guarantee for the flow of information and ensures that the information is properly transmitted and processed. The relay chain is also non-forking, but outdated, which means that protocol updates can be performed without forking the entire mainnet, which ensures that stakeholders can maintain full operational control of the network, and Perform fast and convenient upgrades.
- The parallel chain is basically the access point of the relay chain. Parallel chains are owned by customers and can be customized according to different use cases and functions; its main purpose is to provide a chain of specific domain names for different blockchain services in order to interface with the Polkadot network.
- The transfer bridge facilitates the parallel chain to communicate with external networks and blockchains such as Bitcoin and Ethereum. This basically builds a “bridge” between the architecture of different networks and the Polkadot architecture.
- All of these are managed by DOT tokens, users govern the protocol by voting and changing functions, verify transactions by pledge DOT tokens on the relay chain, and bind the parallel chain to the relay chain, using the relay The security attributes of the chain enable different services to communicate with other services connected to the relay chain.
- On May 26, the Polkadot CC1 chain released the genesis block, which is a central service point for communicating between different networks. Currently, it uses the PoA authoritative certification protocol with limited functions, but users can claim tokens and establish verification infrastructure. The Web3 Foundation has also launched a competition with a prize of 6,000 Dai to incentivize developers to inspire new use cases for their ideas.
- Abstraction has always been the foundation of growth in various technical fields. As people discover more and more encryption use cases and various blockchains and protocols, functional methods will be increasingly needed to achieve cross-system communication. Similarly, as the communication layer becomes more robust, people will instead find unique ways to connect different decentralized services. Some use cases have included file services across different file storage chains, shared financial systems, and mechanisms for merging off-chain data into programs that require data for on-chain execution. As Polkadot’s functions are enhanced and expanded in the future, cross-chain communication will become the core of various blockchain networks, and the crypto community will discover more and more powerful blockchain technology use cases.
In recent years, the blockchain community has launched several new blockchains, each of which is customized according to its own use case. Bitcoin is mainly used as a decentralized financial ecosystem, similar to fiat currencies and trading assets. Although Ethereum retains some types of financial characteristics, it is more suitable for decentralized applications. Developers often fork the blockchain so that they can modify the underlying protocol of the blockchain to fully adapt to their new use cases.
This is a recurring feature of technological development. The Python, Java, and hundreds of programming languages in use today exist because someone wants to create a “better” language to meet some unmet needs. The explosive growth of APIs over the past 20 years shows that communication across different technology platforms has huge use cases. Similarly, the diversity of the chain also ensures the diversity of blockchain use cases. Since the birth of Bitcoin, the blockchain and cryptocurrency industries have achieved tremendous growth because innovators have found smart and unique ways to modify existing protocols to adapt to new use cases and expand the decentralized field. At the same time, the industry also raises a new question: How can we make these chains communicate with each other?
Decentralized applications and services are increasingly connected to multiple blockchains simultaneously to perform their functions. For example, the DeFi service may be built on Ethereum, using enhanced smart contract functions, but may need to communicate with the Bitcoin blockchain to enable the conversion of fiat currencies to cryptocurrencies. For more and more encrypted currency use cases, the demand for inter-chain communication is more and more urgent. There has never been a truly standardized protocol to support inter-chain communication (similar to the effect of HTTPS, TLS, etc. on computers)-such communication services are usually developed in-house for specific applications. The underlying protocol is ready (such as atomic swapping), but it usually requires a lot of engineering overhead to make these things work on a large scale.
To achieve the same innovation growth as the Internet, the community needs to propose some abstract concept of cross-chain communication. If we want to explore the vast future of this space, we must simplify cross-blockchain communication and utilize multiple functions at the same time. This idea of networking and enhancing cross-chain communication is largely called the “blockchain interoperability” problem.
So, how should we allow blockchains to talk to each other?
Take a look at Polkadot. Back in 2016, Gavin Wood (who was also the founder of the famous Ethereum) and the Web3 Foundation launched Polkadot as a protocol to help different blockchain networks connect. Last week, they launched the first CC1 network that could become the main network.
Polkadot provides a decentralized and seamless way to help blockchain networks communicate with each other and cross-governance.
The core of the protocol is the relay chain-it can be considered as a parallel chain infrastructure, used to join the Polkadot network and use its security and message guarantees; Polkadot protocol verifiers use relay chains to maintain our generally accepted Blockchain security. Polkadot uses an innovative consensus called GRANDPA (technical overview here). At a high level, GRANDPA is a finality algorithm that can achieve final confirmation for batches rather than individual blocks. Polkadot uses another protocol, BABE, to generate blocks finally confirmed by GRANDPA. This separation allows the Polkadot network to generate blocks at a constant rate, but waits for the block to be finally confirmed to provide strong data availability and validity guarantees.
Another core advantage of relay chains (and parallel chains, which I will discuss in the next step) is that updates do not need to be forked, which means Polkadot does not need to create a fork of the current chain every time it wants to make a new update. In particular, the protocol can push fully customizable updates, which means it is always backward compatible with the protocol. Most importantly, it also allows stakeholders to have complete autonomy over the behavior of the blockchain. No minority group (including operators on the chain) can have special authority over the behavior of the blockchain.
This is the key to the long-term success of the network; if multiple applications rely on a shared system for communication, it is very important that the shared system can be updated in a credible and decentralized manner under relatively less drastic conditions.
Attached to the relay chain is what Polkadot calls a parallel chain. Parallel chains are basically independent blockchains on the Polkadot protocol, which can be uniquely optimized for different use cases and functions. They are connected to the relay chain and can communicate with the relay chain and other chains connected to the relay chain. They are completely under the jurisdiction of the owner of the parallel chain, which means that they can be customized at will; their business model is to allow the owners of the parallel chain to lock a certain amount of DOT tokens on the Polkadot relay chain, regardless of the time they are connected to the network How long it is, it’s a bit like a cloud subscription model. You can check this article to learn more about parallel chain slots.
The last component of the agreement is the transfer bridge. The transfer bridge is a special parallel chain, which is convenient for external networks and blockchains (such as Ethereum and Bitcoin) to communicate with the blockchain in the Polkadot network.
How is the agreement managed?
To manage these components, the Polkadot network issues DOT tokens, which give holders three key permissions: govern the Polkadot network, pledge to ensure network security, and bind parallel chain slots.
As early as 2017, Polkadot began selling SAFT (a simple agreement for future tokens) of DOT tokens. DOT’s governance privileges enable holders to vote on updates, protocol changes, and different functions or modifications to Polkadot’s infrastructure.
The user pledges the token to a new protocol called Nominated Proof of Stake (NPoS) to select its validator, which provides data availability and validity guarantee for the relay chain and all parallel chains, and also provides The chain message provides an interface. Finally, the team can bind DOT to the parallel chain slot, so that the safety and message guarantee of the relay chain can be obtained. Some parallel chain slots will also be obtained from governance.
This community is made up of validators (pledged DOT to verify transactions), nominees (looking for trustworthy validators), collectors (building parallel chain blocks), and fishermen (monitoring protocols and notifying the community when the network is misused) .
In addition, there is another technical committee composed of people who actively contribute to the Polkadot code base, and there is also an elected council for high-level governance, which is responsible for proposing and rejecting various referendums. Specific governance details can be found here; conceptually, the council represents the interests of passive stakeholders in the network, and the technical committee is responsible for monitoring the technical health of the chain and can propose an emergency referendum for various reasons.
What happened this time?
Polkadot CC1 released its genesis block on May 26-this is the first production-ready attempt of the mainnet relay chain. Of course, it is not yet fully ready; some features have not yet been launched, such as comprehensive decentralized governance, proof of stake consensus, the ability to transfer DOT between users, and an ecosystem to develop parallel chains.
Currently, users can expect Polkadot JS applications and Polkadot nodes to work with CC1. Once it is approved in iOS and Google App Store, Party Signer (DOT stored mobile application) is also expected to work with CC1. The core purpose of the initial chain is to ensure that the mainnet is safely online by enabling features one by one when the appropriate infrastructure is ready.
In addition to this release, Polkadot also provided DAI challenges worth 6,000, divided into three areas: visualization, user tools and “surprise us” category. The idea is to incentivize developers to find novel and effective ways to utilize the Polkadot architecture and demonstrate its potential. It may also find some shortcomings and pain points and fix them in future iterations.
What are the initial use cases?
Some particularly compelling examples include:
- Connect the file storage chain to the shared file system or file request system (The Ocean Protocol)
- Merge the off-chain data of the oracle machine into the execution of the chain (ChainLink)
- At the same time hold financial assets distributed on different chains (ChainX)
- Enhance the smart contract chain to implement and execute contracts more easily and efficiently (Edgeware)
With the development of protocol functions, more and more services may want to use Polkadot as a means of cross-blockchain network communication; as more and more people find a simpler and more secure cross-chain through Polkadot Communication mechanism, this use case ecosystem will grow exponentially.
Polkadot, and the set of protocols that constitute it, present a unique future for the blockchain industry.
In almost every other technical field, the development of abstraction is almost the key to the exponential growth of this field. Once Apple and Google released the SDK, so that anyone anywhere can make and download millions of applications, the mobile field becomes extremely huge. The Internet has stimulated its own growth because people have discovered new ways to connect with each other and build functions on top of a shared technology ecosystem. Even the popular vocabulary AI corresponding to the blockchain has seen huge growth after abstractions like PyTorch and Tensorflow.
The problems of blockchain interoperability and cross-chain communication are fundamental to any decentralized system, and Polkadot’s ability to simplify and structure these communication channels will inevitably enable more cryptocurrency use cases to be realized. As Polkadot rolls out its features in an all-round way, the industry will find new ways to use it and create unique and compelling features.