Polkadot is quickly becoming among the top well-known and the most effective cryptocurrency blockchains across the market. Here are some quick Polkadot Facts And Features that you must go through!
The buzz around Polkadot is only getting stronger. We’ve taken it upon ourselves to take the opportunity to create an extensive walk-through that will guide those who aren’t as informed about the concept and what it’s all about.
What is Polkadot In Simple Words?
Polkadot is the Ethereum co-founder Gavin Wood’s wager on blockchain maximalism. Its growth in popularity and growth has been astonishing since its introduction in May of 2020. Since then, it has become among the ten most popular cryptocurrencies by market value, according to CoinGecko.
But what exactly is Polkadot, and what impact has it had on the market? Who’s using it, is its hype true, or is it based on facts? In simple terms, Polkadot (DOT) can be described as an Ethereum-based blockchain network that
- Blockchains are connected
- Users can easily create an entire blockchain using their Substrate framework
- Blockchain hosts host blockchains and handle their transactions and security
- Bridges blockchains are on Polkadot alongside other networks such as Ethereum and Bitcoin
Let’s examine each of them in greater in-depth.
Features of Polkadot
Connections: The Relay Chain
A blockchain can be a great thing, but it will have limited applications for most projects unless they can effectively connect with the entire blockchain community. As a stand-alone thing, a blockchain-related project would likely require a substantial infrastructure to accomplish this effectively. However, numerous projects have failed because they couldn’t provide the seamless connections needed.
Polkadot is a “relay chain” – essentially an enormous blockchain whose primary objective is to connect other chains to it and to facilitate the ability to communicate between the chains. The “hub and spoke” structure also benefits smaller blockchains linked with the chain.
Empowering Construction: Substrate
The Polkadot framework has a robust tool known as Substrate, which makes creating the blockchain from scratch much simpler. The Substrate is designed to help teams develop the blockchain they wish to build. It includes the protocol connection points connecting to the relay chain’s features.
This is a great solution for two reasons. It lets teams concentrate less on constructing the fundamental infrastructure needed for a new blockchain project and permits them to concentrate their efforts on the value they can add to their venture.
It also allows access to the blockchain community for those with brilliant concepts but not the experience required to create a blockchain from scratch. Dual-enabling technology is extremely effective and has been mentioned as a key reason why teams opt for Polkadot for their initiatives.
Security and Speed: Host Platform
When blockchain-related projects are referred to as parachains because Polkadot handles transactions from all chains simultaneously, they are on the chain of relays. They are operating. They can enjoy one of the greatest advantages: Polkadot’s renowned security and its speedy and efficient transactions.
The freedom of not having to design their security that is top-of-the-line with complete audits and staying clear of the expensive costs of gas for other networks allows teams to make the most in their efforts and effort to maximize the benefits for their business chain.
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Connecting to the World: Bridges
Polkadot is created to function as a relay between parachains of its network. It also includes the ability to bridge with Ethereum and the Bitcoin network, which means that parachains have the ability to connect to and interact with a variety of systems and no need to decide which one offers the most connection for them. This way, Polkadot doesn’t have to be competing in a winner-takes-all contest with the best networks, such as Ethereum and Bitcoin, but rather in a battle for users while working together and bringing value to the users who are on the other side.
In a unique move, Polkadot has made public its capability to carry out updates within the chain, preventing the risk of a hard split for major changes. This decreases the chance of the community breaking up into two, creating a large amount of administrative cleaning and unwelcome token volatility.
Parachains and Crowdloans
Parachains form an integral part of the Polkadot network, as described above. On the 13th of October in 2021, the team announced they had been approved to implement parachains to the main net. This was a significant achievement and a significant event on the Polkadot roadmap, as para chains had been on the table for several years.
The first winner to get a para chain slot was the Acala protocol. In a head-to-head race against another popular Polkadot ecosystem player Moonbeam Moonbeam, the Moonbeam Acala won, winning the first auction for parachains that concluded in November 2021.
The way that parachains are secured is through auctions on parachains. In essence, the projects must bid for DOT tokens in competition. The winning bidder wins the slot. However, these tokens can be costly, and not every company can pay for the cost. This is why a unique crowd loan process is put in the picture.
In essence, each DOT holder who is a part of the project in question can secure their DOT for a payment from the team behind the project, typically by interest on the project’s native tokens. This is the most popular method to ensure that teams have enough funds to bid on para chain slots. There are a variety of exchanges that support Polkadot crowd-sourced loans, and the most prominent is Binance.
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Polkadot: The Risks Behind
There are plenty of positive aspects to Polkadot, and it’s clear to see why the platform has received lots of interest. But, it’s equally essential to look into the potential risks of Polkadot’s business model and tackle some of the major issues.
The most significant risk to Polkadot is the same as for other platforms it faces competition. Although Polkadot offers some simple, innovative ideas, its primary purpose is a Proof of Stake, a general-purpose platform that can create connections with other chains.
Several other platforms perform similar things, each with distinct methods of completing the task. Rival platforms are Polygon, Avalanche, and Cosmos alongside the two giants.
Like Ethereum, Polkadot has the ability to join any of these networks should it choose to do so and is therefore secure from its members being cut off from an appealing blockchain network. But, the competition for blockchains is raging right now, and the market is yet to reach an equilibrium.
The platform has experienced major setbacks, including the hack of 2017, which harmed its financial health and image. Although it’s certainly working to repair the flaws and maybe more diligently testing its software than other platforms due to the scars, it’s not pleasant to have confidence diminished on a platform where more than $150 million is at risk.
Then an aspect of the relay chain’s most interesting flaws is the potential for danger. The fact is that to join the Polkadot relay chain. Blockchains must bid for the space in a “slot auction,” where the winner is compensated in DOT and then stored throughout their time in the chain.
The year ahead will shed more light on this process and its potential consequences for smaller projects that don’t have the resources to fight for a slot.
Meet Some Leading Projects on Polkadot
The infrastructure at Polkadot can be described as impressive. Different projects that have been built and linked provide an interesting insight into the capabilities of the whole platform. Certain projects enhance Polkadot’s primary capabilities, while others utilize the parachain to sell their service or product. A list of the most popular Polkadot network projects includes:
- Karura Network (Acala) is focused on the creation and deployment of DeFi smart contracts to various users. In doing this, it has created a DeFi hub that allows cross-blockchain liquidity and applications.
- Moonriver (Moonbeam) is an Ethereum-compliant smart contract that connects Ethereum-based projects with Polkadot and Polkadot, focusing on allowing the smallest possible reconfiguration of smart contracts or the requirement for innovative development tools to connect across chains.
- Khala (Phala)Network concentrates on privacy-friendly cloud computing. It is built on TEE-Blockchain Hybrid Architecture. It offers users a balanced balance of computing power, flexibility via the cloud, and security based on blockchain.
- Bifrost was designed to function as a DeFi hub hosting software that allows users to gain access to a wide range of DeFi features and offer several different ways to earn rewards and options for liquidity.
- Shiden (Plasm) is another smart contract platform built to work with Dapps for Kusama/Polkadot. It was developed to be scalable and speedy as its primary goals, making its services a focus on the L2 chains.
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As the excitement over Polkadot is growing with its auctions of slots becoming available and the platform’s capabilities attracting interest from projects and investors alike, it’s possible to be caught in the hype and question what the unique platform might appear like within a year or two today.
Although the platform isn’t free of risks and potential downsides, It has been supported by an outstanding team, backed by several top partner projects, and has delivered on what it claims to deliver.