What Is Polkadot?

Welcome to the Bixiaobao Blockchain Open Course! Today our topic is: what is Polkadot?

Polkadot is a cross-chain protocol between different block chain network as well as one of the trending projects in the world this year. According to www.bixiaobao.com, Gavin Wood, the founder of Polkadot, used to be one of the core developers of Ethereum, and enjoys very high popularity in the area. Many media regards Polkadot as a rival of Ethereum. This year, DOT, the token of Polkadot, has also gained a great rise. Here we will have a look at it.

I. Introduction

Polkadot was created by the Web3 Foundation in 2016, aiming to be the next generation of blockchain network infrastructure by connecting different blockchains through a blockchain network and achieving cross-chain interconnection. According to the data from www.bixiaobao.com, Polkadot token DOT ranks the eighth in market cap.

Why do we need Polkadot?

As is known to all, data from different blockchains are not compatible with each other, for example, Bitcoin cannot participate in the Ethereum ecosystem directly, and TRON cannot participate in other ecosystems, so capital is utilized inefficiently, which has led to the growth of derivative assets. Polkadot was created to solve that problem. With Pocket, different blockchains can be linked to each other for cross-chain interaction.

The infrastructure of the Polkadot network includes:

Relay Chain: The main communication node between the parallel Chain and the “backbone” of Polkadot.

Parachains: Independent blockchains that run at the top of the relay chain and are bound and retained by auction.

Transition bridge: Modules and contracts that connect to other blockchains, such as Bitcoin and Ethereum.

Parathreads: A lighter alternative for developers who just want to have a try on Polkadot, with a pay-as-you-go model available to them.

If the main chain (relay chain) of Polkadot is regarded as a plug, then the different electrical appliances on the plug are parallel chains. These electrical appliances can be refrigerators, televisions, etc.

The main chain of Polkadot is a relay chain created based on Substrate. The parachain of Polkadot contains many types such as Bitcoin, Ethereum, TRON, etc.

The parachain is linked to the Polkadot main chain through a “slot”, so that each parachain and the relay chain form a cross-chain system, and the cross-chain between any two chains can be realized through the relay chain.

Therefore, Polkadot has a heterogeneous cross-chain protocol with interoperability, scalability, shared security. It is a block chain integration composed of multiple blockchains. The main purpose of Polkadot is to connect the now separate blockchains. Through Polkadot, communication and data transfer between different blockchains can be carried out to achieve cross-chain function.

II. Polkadot Token Economic Model

The token of Polkadot is DOT, with an initial circulation of 10 million. DOT raised about $140 million in a 2017 crowdfunding campaign, and about $100 million in two private placements in 2019 and 2020.

In August 2020, Polkadot split the DOT token 100 times, increasing the total number of offerings to 1 billion, and the price to 1/100 of the original.

Like the stock market high send, the issuance volume is bigger, but the equity is not changed. After 100 times split, Polkadot started rising.

1. The role of DOT

DOT is used in Polkadot Ecology for governance, pledge, voting, running nodes, etc. Like ETH in Ethereum, there is no upper limit on the total amount of DOT, which is inflated annually through the NPOS mechanism.

NPOS, also known as Nominated Proof of Stake, is a new POS consensus mechanism proposed by the Polkadot team. In NPOS, there are two important players: the verifier and the nominee. Each would benefit from dot-inflation, also known as Staking.

The number of verifiers is limited and is determined by governance. Whether it can be a verifier node is determined by the amount of self-mortgage and pledge of the nominee.

Generally speaking, verifiers are nodes that need running and maintenance. A nominee is the person who votes for the node, so he or she doesn’t need to run the node, but any credit that a nominee gets from Staking would go partly to the verifier who voted for it, “compensating” for the cost of running the verifier node.

The minimum number of pledges to join the verifier pool varies from day to day, depending on the number of candidates wanting to join the verifier pool and the number of pledges on each verifier. In NPOS, each elected verifier has an equal say in the consensus.

There is no minimum amount of self-mortgaging to run a verifier node on Polkadot. If your DOT with 100% nomination meets the required minimum number of stakes, you can join the node pool. The goal is to enter the pool without going too far above the minimum. As a result, many verifiers keep a low self-mortgage and pledge most of their DOT to themselves from a separate account. This mechanism allows them to remain flexible and to add verifiers with the lowest number of stakes when the node pool changes.

2. The Polkadot inflation model

Polkadot used a nonlinear model to set inflation after the mainnet went online. Companies that start staking early on will see inflation steadily rise until 50% of DOT is pledged. This model was an important incentive for token holders to participate in the network’s earliest and most critical period.

The blue line is the rate of inflation in the network, and the green line is the rate of return (inflation divided by the pledge rate).

In the figure above, the maximum inflation rate of the Polkadot token is 10% and the minimum is 2.5%, depending on the pledge rate. This indicates the earlier the participation is, the lower the inflation rate and the higher the income will be. Therefore, the nodes should prepare in advance if they participate in Polkadot network.

III. Team

The Web3 Foundation consists of two teams with more than 50 members. The research team is joined by an in-house research team in Zug, Switzerland, in collaboration with the group of industrial projects and academic research. The team consists of PhDs and specialists in cryptography, security models, and messaging protocols; They work closely with Parity, a development team in Berlin in the areas as follows: (Proof) Security, Cryptography, and Privacy Decentalization Algorithms: Consensus and Optimized Cryptoeconomics and Game Theory.

The other group is AdoptionSteam, which focuses on connectivity, community and growth (e.g., the Polkadot Ambassador Program, Polkadot Pathways), business partnerships (finding partners, creating partnerships, etc.). They work closely with the technical education team (launching Web3 MOOCs, webinars, etc.) and are also responsible for funding approval. More than 100 projects have been funded by the foundation so far.

Gavin Wood, the founder of Polkadot, is known as the invisible kingpin of Ethereum. He is a low-key, mysterious, yet incredibly important. He was the co-founder of Ethereum and the author of the Yellow Book of Ethereum.

He is an expert in English, Italian, French, Spanish, logic, likes taekwondo, skiing, and is the designer of the famous board game Mi Lton Keynes. He is also a PhD in visual music and the writer of CDRiplnPleace.

In fact, the idea of Ethereum was put forward by V God, and Gavin is the one who really realized and built the foundation of Ethereum. Those who have studied the technology and history of Ethereum deeply know the importance of Lin Jiawen as the founder of Ethereum. Lin almost single-handedly wrote the earliest C++ client for Ethereum. In 2014, V God launched the Ethereum project. He wrote the initial white paper by himself, then crowdfunded and organized the development. Gavin joined Ethereum as CTO, and later wrote the classic Yellow Book describing the logic and architecture of Ethereum in the most detailed detail.

Later, for some reasons, Gavin left the Ethereum community and founded Parity Technologies, which redeveloped the Rust language version of the Ethereum client based on cpp-ethereum. Parity’s CEO and co-founder is Dr Jutta Steiner. It is a UK-based blockchain technology services company or technology infrastructure provider. Rust represents the latest in programming language technology with its high performance, high security, and high difficulty in development.

In 2016, on the eve of the Ethereum 2.0 development conference, Geth client was attacked by hackers and large amount of spam. The system was crumpled. Parity, by contrast, survived thanks to Gavin’s excellent architectural design. Thus, Parity became well-known overnight. With all the major mining pool nodes rushing to join the Parity camp, and its place in the Ethereum system was firmly established.

In addition to the capability of Gavin Wood, the rest of the team members also have rich development experience for years of working.

IV. Ecology

The success of a project depends not only on technology but also on ecology. Among many public chains, the development of Polkadot ecology is second only to the Ethereum network. This year, the dark horse projects such as Chainlink and Kusama came out, showing high recognition in the market.

1.Kusama

Kusama, also known as the canary network, is Polkadot’s test network.

In short, any new functionality deployed on Polkadot needs to be deployed, tested, and when succeeds, moved to Poca.

Kusama, instead of a test network, is a highly experimental version of Polkadot in a real economy environment. You may see it as a Beta version of Polkadot.

With its own token system, the token of Kusama has rocketed to $30;

Kusama has its own community, with over 350 verifiers (including many well-known domestic and international investment institutions, staking institutions);

The vote of DOT’s 100 times split and proposals are all taken on Kusama;

Kusama will not disappear like the other test networks when Polkadot goes online. The Kusama network will survive as long as the community exists and will be the first parallel link bridge to the Polkadot network.

This year, KSM tokens rose more than 50 times as much as they did this year, and were welcomed by the market, even surpassing the growth of DOT.

Data source: https://www.bixiaobao.com/en/coinlist/kusama

2. Acala Network

Known as the Defi King of Polkadot as well as the leader Polkadot ecology, Acala is the first team to put DeFi on Polkadot. It has not issued its token though. Acala started to do DeFi on Polkadot in 2018, and was originally named PolkadotDeFi, and later changed to Acala under the suggestion of Cao Yin. In 2018, it started to work on the stablecoin agreement, and in 2019, after the expansion of ecology, Acala began finish the mortgage asset derivative agreement.

Why does Acala Network produce mortgage asset derivatives? This is because when you participate in Polkadot mortgage interest-bearing, you are unable to use your DOT to attend the DeFi. Then by staking assets bearing interests, Acala package an asset called Ldot. Like a bill, you can exchange it for AUSD, the stablecoin of Acala, and then join DeFi in other projects. This process resembles a pledge in MakerDAO where you stake ETH for stablecoin DAI.

Through Acala, DOT and KSM can be pledged in Polkadot ecology, and in the future, Bitcoin and ETH can also be pledged, and then AUSD can be obtained, and then assets can be pledged and replaced in other Polkadot ecologies.

According to an expert in Polkadot ecology, Acala basically makes MakerDAO+Compound+Uniswap+SNX. In one system, stablecoin casting, lending, DEX and derivatives are all made…

3. Stafi

STAFI is a middleware protocol that specializes in POS liquidity release.

In simple terms, a ETH2.0 XTZ, ADA, Cosmos, wave card PoS chain, such as pledge (Staking) has to be security guarantee, whether it’s worried about his money by issuing dilute, or want to contribute to the network security, a lot of people will choose to gaining, such as ATOM, however, redemption need 21 days, during this period in any currency price up or down, you can only look on, such as 312 that a wave, of pledge of many users were hit hardest.

So is there a way to choose Staking and still get 100% liquidity?

What Stafi does is, the user uses a Stafi agreement with Staking. You get a 1:1 bond with ownership and Staking benefits — an RToken, which can circulate freely on the secondary market completely unaffected. The yield on the corresponding token, Staking, is completely unaffected.

Mr. Casbaa, founder of Wetez, is probably the most knowledgeable PoS consensus team in the country, and Staking is one of the most prestigious proxy companies in the country.

4. ZenLink (launched by the Imtoken team).

As we know, there are parallel chains on Poka. If these parallel chains all develop their own DEX, the mobility will be dispersed and the mobility will be poor. The function of Zenlink is to allow each parallel chain of Poka to share the mobility of the DEX through Zenlink. So Zenlink can not only have the DEX for all parallel chains, but also group these parallel chain flows to the same location, so that users can enjoy the best mobility. We know that Zenlink is done by Imtoken’s team, and the wallet itself is an ecological project done by the team that knows the most about Dex.

Polkadot is like a city, huge and complex. It has put forward many cutting-edge designs, such as NPOS consensus, parallel chain, etc. It can be predicted that with the launch of Polkadot platform chain auction, the future Polkadot ecology will be even higher.

Blockchain Open Course is a series of introductory courses on blockchain by BiXiaoBao.

To know more about blockchains, follow the column of Bixiaobao.

References:

https://www.bixiaobao.com/en/coinlist/ethereum

For repost please cite the source.

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