The performance of Polka dot the past year has been impressive. The protocol is less than a year old and is already part of the Top 5 cryptocurrencies in terms of market value, an increase no doubt facilitated by the regulatory irregularity where Ripple and its signs, XRPhas been diving since December 2020.
But other factors have contributed to this growth. Since the launch of its mainnet in May 2020, Polkadot had become one of the most popular betting networks before being dethroned by Cardano. Polkadot is also the second largest DeFi ecosystem, after Ethereum.
Founded by Gavin Wood (one of the co-founders of Ethereum) under the leadership of the organization Web3 Foundation, Polkadot aims to solve one of the biggest problems in the crypto sector, that of scalability. For this, Polkadot has designed a “cross-chain” environment where it is possible to connect multiple blockchains, whether private or public, and allow them to communicate in a transparent and secure environment.
The Polkadot infrastructure is built around 4 functionalities: relay chain (“relay chain”), parallel chains (“para chains”), “parathreads” and bridges (“bridges”):
- The heart of the network is the relay chain, which coordinates network security, consensus and interoperability between all the other chains.
- Parachains are simpler, independent and independent forms of blockchains. They may have their own tokens that can be optimized for specific applications. Most Polkadot operations are performed on parallel chains. Slots on a parachain are available at auctions held every two years.
- Parathreads are similar to parachains, but have a payment model that allows them to participate intermittently in the operation of the network without the need to rent a dedicated slot. They are intended for projects that would not necessarily have the resources to secure a place on the parachain.
- Bridges are the means by which two chains can communicate and connect with each other, but also with external networks such as Bitcoin or Ethereum.
The platform’s original token is called DOT and has undergone a renomination, which has led to an increase in its supply: In August 2020, the old DOT tokens were divided by 100, bringing the available amount to 1 billion.
Polkadot is based on a variation of the Proof of Stake consensus mechanism. The model is based on two tools: GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) and BABE (Blind Assignment for Blockchain Extension). GRANDPA is the mechanism used on the relay chain, while BABE is the block production mechanism.
4 roles have been defined within the framework of this mechanism:
- Nominators who secure the relay chain by selecting trusted validators and betting DOTs.
- The “validators” also participate in securing the network in the same way as the nominators and validate the evidence transmitted by the “collators” in a set of blocks.
- The “collators” (collectors) maintain a complete node for a particular parachain: they therefore store all the information necessary for the execution of transactions and the approval of new blocks.
- The “fishermen” (the fishermen) act as bounty hunters. They confirm that the proposed blocks have not been compromised: in case the reported error is proven, they will receive a DOT reward. The role of fishermen is particularly important in the event that certain validators agree to propose a compromised bloc.
Bitcoin will soon be present on the Polkadot network in the form of a tokenized Bitcoin called PolkaBTC. A tokenized BTC is a copy of the one transferred from its original blockchain. The project has been developed by Interlay, and the corresponding BTC parachain is expected to be completed in the first quarter of 2021. Once the rollout is completed, it will be possible to mint PolkaBTC after pledging the corresponding amount of DOT tokens. To regain the BTC equivalent of PolkaBTC, the latter must be destroyed on the BTC para chain. PolkaBTC will be integrated with several projects, including Equilibrium, Moonbeam and Polkaswap.
While some wonder if Polkadot will eventually take the place of Ethereum, Gavin Wood himself has said that the two blockchains can perfectly coexist. But he also argues that Polkadot is an antidote to “blockchain maximalists”, the proponents of the existence of a single blockchain that rejects everyone else.
If Ethereum ends up being a chain that can be bridged […] I think there is a very good chance that Polkadot and Ethereum will happily coexist.
(translation: if Ethereum becomes an interoperable blockchain … there is a good chance that Polkadot and Ethereum will manage to coexist in peace)
Polkadot also has the backing of an industrial heavyweight, Binancewhich announced the $ 10 million in funding for projects built on this network.
But this unique development of Polkadot is observed with a skeptical eye by some who accuse it of being overrated.
A Reddit user indicates that according to Polkascan data, the network only processes an average of 6 transactions per minute (compared to 850 for Ethereum). Transactions on Polkadot represent only 0.7% of Ethereum transactions, while Polkadot’s market value is estimated at 11% of Ethereum.
So that would mean that either Polkadot is overrated or Ethereum is underrated. At this point, it is impossible to say with certainty which of these two hypotheses is correct. And the more important question would rather be to what extent Polkadot will be able to make a sector as obscure as DeFi available to the general public, which would be a guarantee of its longevity.
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