Review: DOT and the Polkadot Blockchain
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Review: DOT and the Polkadot Blockchain


Score: A

 

Summary

The primary use case for Polkadot is enabling interoperability between blockchains, regardless of their features or their status as a private or public blockchain. The Polkadot blockchain is an open-source platform founded by the Web3 Foundation and influential blockchain personnel including the former co-founder and CTO of Ethereum. Polkadot enables cross-blockchain communication and transfer of any type of data or asset via scalability provided by spreading transactions across multiple parallel blockchains (called “parachains”) using a common set of network participants. With this blockchain aggregation, the security of these parachains are also aggregated. The native coin of Polkadot is DOT, holders of which (called “Relay Chain” participants) control governance functions of the network which include decisions on upgrades, consensus, and new parachain creation via a Proof-of-Stake (PoS) mechanism. Additionally, upgrades to Polkadot can be done without a hard fork of the network. Independent blockchains can be integrated with the Polkadot network via “Bridges” as long as certain criteria or met; as a result, Ethereum could be upgraded to support interoperability with Polkadot, though it is unlikely that Bitcoin could do the same. Development for the Polkadot blockchain supports multiple languages, including C++, Rust, and Go, which, together with the modular plug-and-play Substrate framework provided by Polkadot, get compiled to the WebAssembly execution environment; WebAssembly was developed by companies such as Google, Apple, Microsoft, and Mozilla, and provides widespread compatibility across the Web. Though some information on Polkadot’s main website is outdated, overall the amount and detail of information that is present is quite satisfying. Similar to how Polkadot aggregates the security of its parachains, the use case for Polkadot aggregates the use case of all of these parachains as well. Overall, Polkadot is has a philosophical foundation that makes it an above-average platform.

 

Background

The primary use case for Polkadot is enabling interoperability between blockchains, regardless of their features or their status as a private or public blockchain. The Polkadot blockchain is an open-source platform founded by the Web3 Foundation and influential blockchain personnel including the former co-founder and CTO of Ethereum. Polkadot aims to provide ease of development of custom blockchains that have native compatibility with the Polkadot platform. The main blockchain of Polkadot is the Relay Chain, which is responsible for diverse blockchains to transfer arbitrary data including messages and assets in a trust-free fashion. Polkadot is heterogeneous because it is entirely flexible and makes no assumptions about he nature or structure of the chains in the network; even non-blockchain systems or data structures can become parachains if they fulfill a set of criteria. The founders of the platform aim to make Polkadot capable of supporting blockchain experimentation in the same way Ethereum supported decentralized application and smart contract experimentation. Polkadot launched the genesis block of its Relay Chain (the principle chain of the platform) in 2020 May, with the launch of parachains slated for some time in 2021.

 

Technology

Polkadot enables cross-blockchain communication and transfer of any type of data or asset via scalability provided by spreading transactions across multiple parallel blockchains (called “parachains”) using a common set of network participants that govern the “Relay Chain” (the primary blockchain of the Polkadot network). With this blockchain aggregation, the security of these parachains are also aggregated. The Relay Chain is responsible for the network’s shared security, consensus, and cross-chain interoperability. Parachains are sovereign blockchains that can have their own tokens and optimize their functionality for specific use cases. “Parathreads” are like Parachains, but use a pay-as-you-go model, and is more economical for blockchains that don’t need continuous connectivity to the network. Interactions on Parachains and Parathreads are processed in parallel, enabling highly scalable systems. This also means that transactions can be spread across multiple chains, allowing many more transactions to be processed in the same period of time. The final core technology of Polkadot is the GHOST-based Recursive Ancestor Deriving Prefix Agreement (GRANDPA) consensus algorithm, which is capable of instantly finalizing a theoretically unlimited number of blocks.

Independent blockchains can be integrated with the Polkadot network via “Bridges” as long as certain criteria or met. The criteria for whether an existing blockchain can connect to Polkadot are as follows:

  • the blockchain must have the ability to form compact and fast light-client proofs over the finality and validity of its blocks and state change information
  • there must be a means by which a large set of independent authorities can authorize a transaction, which could include recognition of threshold signatures or a smart contract able to structure logic against multi-signature conditions

With respect to Bitcoin, the first criteria can be met simply by a Polkadot “Validator” (discussed later) running a full Bitcoin node. However, the only ways for Bitcoin to meet the second criteria would be either for Bitcoin to introduce a soft-fork allowing extra-protocol controls over funds or for Bitcoin to introduce a hard-fork allowing a threshold-signature-friendly signing scheme. This means that it is unlikely the main Bitcoin fork will be support interaction with Polkadot. However, this is different for Ethereum. Currently, Ethereum conforms to both criteria, so all that is needed is the creation of a Bridge from the Ethereum community.

Where Polkadot works best is connecting new blockchains expressly designed to fit the parachain model, where Polkadot manages the chain’s consensus and validation activities, allowing the parachains to focus purely on innovation. Development for the Polkadot blockchain supports multiple languages, including C++, Rust, and Go, which, together with the modular plug-and-play Substrate framework provided by Polkadot, get compiled to the WebAssembly execution environment; WebAssembly was developed by companies such as Google, Apple, Microsoft, and Mozilla, and provides widespread compatibility across the Web. Rust was chosen as the primary programming language for the Polkadot platform in order to provide the highly parallel and performant solutions offered by the system. Polkadot’s Relay Chain is built on Substrate, a blockchain-building framework that is the result of lessons learned from Parity Technologies’ building of Ethereum, Bitcoin, and enterprise blockchains. Substrate also allows for the development of interactions between the on-chain (always online) Polkadot network and off-chain (primarily offline) systems.

 

Governance & Consensus

The native coin of Polkadot is DOT, holders of which (called Relay Chain participants) control governance functions of the network which include decisions on upgrades, consensus, and new parachain creation via a Proof-of-Stake (PoS) mechanism, where the weight of a vote depends on the amount of DOT staked by the voter. Additionally, upgrades to Polkadot can be done without a hard fork of the network via transparent on-chain voting of these DOT holders. Interestingly, Parachains are free to design their own governance mechanisms, allowing for maximum freedom without affecting other Parachains. DOT holders have complete control over the protocol as Relay Chain participants that hold governance over the Polkadot blockchain, entitling holders to determine network fees, scheduling of parachain additions, auction dynamics, and network upgrades. These governance functions are not formally granted to DOT holders; instead, it is the underlying code of Polkadot which enables this.

DOT holder may take various roles on the Polkadot blockchain. “Validators” add new blocks to the Relay Chain, and any instances of non-compliance with the consensus algorithms result in punishment by removal of some (or all) of the Validator’s staked DOT; good compliance is also rewarded. New Validators are chosen every 24 hours. In addition to this role, DOT holders may also be “Nominators.” Nominators perform constant analysis of Validators in order to select those which are the most likely to behave according to Polkadot’s rules by contributing to the security bond of their nominated Validators. “Collators” maintain Parachains by aggregating Parachain transactions into blocks and producing state transition proofs for Validators based on this. Collators also monitor the network and prove bad behavior to Validators. In order to retain all necessary information to be able to author new blocks and execute transactions (in much the same way “miners” do on current Proof-of-Work (PoW) blockchains), Collators maintain a full node for a particular Parachain. The final role DOT holders may take is that of “Fishermen,” which monitor activity across the platform to determine whether any other participants have acted in breach of the rules. While Fishermen bond significantly less DOT than Validators and Nominators, they also can receive significantly more rewards in the same proportion. These roles result in encouraging good actors and discouraging bad actors, as anyone found in violation of the rules may have their DOT destroyed. This helps to maintain Polkadot’s network as a vibrant, functioning system.

 

Conclusion

The Polkadot blockchain allows for cross-chain communication and transactions that enable a high-level of security and fast operability. Not only does it aggregate the security of each of its Parachains, it also similarly aggregates the use-case of each of these. While its PoS consensus mechanism has flaws (with respect to the possibility of hoarding DOT), the roles that DOT holders may take, combined with the selection of new Validators every 24 hours, help ensure Polkadot’s integrity. Overall, I’m giving the Polkadot blockchain with its associated DOT coin a score of A for its ability to stand out in the crowd.

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