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What is Polkadot

November 29, 2021

Reading Time: 3 minutes

Polkadot is a blockchain project founded in 2016 to connect several specialized blockchains into a single unified network. It can best be described as the blockchain of blockchains as it facilitates an avenue where users can launch and operate their blockchains. Blockchains have previously been operating separately in silos. The new network lets several other blockchains connect to the Polkadot network to conduct interchain transactions. As such, blockchains that work parallelly in Polkadot are referred to as parachains.

What Necessitated the need for Polkadot

All blockchain networks strive to achieve superiority through three major aspects; Decentralization, security, and speed. Unfortunately, due to financial and technical limitations, trade-offs are inevitable. This instance is widely known as the blockchain trilemma. The commonly held belief states that for any decentralized network, only two of the aspects mentioned above can be provided at a time.

The Ethereum network presents a very accurate example of the trilemma. The network prides itself on its ability on decentralization and smart projects implementation. However, users often abuse this functionality by creating useless projects all over the network, slowing down transactions, and skyrocketing fees.

The EOS.IO blockchain protocol claims to eliminate transaction costs while conducting millions of transactions per second. Yet, the network has included network validators in its system, which threatens their decentralized nature while also opening doors to security compromises. Polkadot strives to remedy these setbacks.

How Polkadot Works

Polkadot started in 2016 as a white paper published by former CTO of Ethereum Gavin Wood. It operates differently from its Ethereum counterpart by using parachains and parathreads to link to the Polkadot relay chain. The chain could also connect to other external networks through bridges.

The Polkadot network runs on three chains

  • Relay Chain

The relay chain forms the backbone of the Polkadot protocol. The chain runs very few operations that affords it faster transaction speeds. Value transactions and transmissions are completed on this chain. The relay chain, like any other blockchain network, has validators

  • Parachains

These are independent blockchains that connect with the Polkadot network to work in parallel. Different parachains driving their specific objectives meet on the relay chain and share in the network’s security features. Individual parachains are free to create their own rules despite using Polkadot’s computing resources to validate their transactions. Aspiring parachains lease a spot on the relay chain only after successful auctions

  • Parathreads

Parathreads are essentially parachains that do need to lease a spot on the relay chain. They are built for projects that don’t require regular access to the network. Users can use the pay-as-you-go model instead of leasing.

What Makes Polkadot Superior to Ethereum

Ethereum and Polkadot share a high-profile founder, and this makes basis for the assumption that the two networks may end up very similar. Both of these networks operate a major blockchain where transactions and transmissions are completed for several other smaller blockchains.

Ethereum has continued to grow in popularity over the last few years. Customers flocking on the network has led to congestion and higher gas fees. The upcoming ethereum 2.0 upgrade has promised to settle these scores, but meanwhile, displeased customers have sought the Polkadot alternative. Also, the drag and drop template ability in Polkadiot to create new blockchains is continuously inviting developers.

Does Polkadot have a Cryptocurrency?

The DOT is the internal token in the Polkadot network. The coin was launched in 2017, and over 10 million DOT tokens were released during the initial ICO. DOT’s price peaked at $6.30 in May 2020 after the relay chain was rolled out. The prices continued to waver between $4 and $5 for the remainder of 2020. In May this year, the token reached an all high price of $49.80.At the time of writing, a Polkadot token is worth $41.66 today.

Does Polkadot have a Cryptocurrency Exchange?

Polkastarter is the decentralized exchange for the multi-chain token pools on the Polkadot network. The platform debuted in December 2020. It allows blockchain projects to create cross-chain swap pools to raise funds meaning swaps get executed through smart contracts, and users get to invest with minimal risks. POLS is the native token of the Polkastarter exchange, and it is used for liquidity mining and transaction payments.

Why Choose Polkadot

In less than five years since its launch, Polkadot has grown to be the 7th biggest cryptocurrency by market capitalization. To date, the network remains the best-funded blockchain project in history after its investors raised up to %200 million dollars from two separate sales of the DOT cryptocurrency.

Polkadot will be among the obvious choice for businesses that choose to venture into the Metaverse in the coming future. The network has already partnered with Chainlink to integrate smart contracts containing real-world data. Customers can as well stake their crypto rewards through Ankr parachain on their relay chain. The ability to stake tokes is a key feature in attracting investors looking to generate passive income from holding a token.

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