Polkadot is a blockchain Network being built to enable Web 3.0, a decentralized and fair internet where users control their personal data and markets prosper from network efficiency and security. Polkadot is the flagship project of the Web3 Foundation.
Polkadot is a type platform that allows diverse blockchains to transfer messages, including value, in a trust-free fashion; sharing their unique features while pooling their security. In brief, Polkadot is a scalable heterogeneous multi-chain technology.
Polkadot is heterogeneous because it is entirely flexible and makes no assumption about the 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.
Polkadot may be considered equivalent to a set of independent chains (e.g. a set containing Ethereum, Ethereum Classic, Namecoin and Bitcoin) except with important additions: pooled security and trust-free interchain transactability.
Overview
Polkadot was founded by Robert Habermeier, Dr. Gavin Wood, and Peter Czaban. The Polkadot project was kickstarted in 2016, and its mainnet went live in May 2020.
Polkadot raised $145 million in 2017, selling 50% of the network’s then 10 million dots, according to Messari Crypto.
On February 11, 2020, Web3 Foundation announced that users of the Polkadot network could store their Dots with Coinbase Custody. The new partnership meant that individuals and organizations who bought “Dot allocation indicator tokens” during the pre-launch could claim the actual Dot tokens and have them appear in their Coinbase Custody accounts. They would also be eligible to earn rewards by staking the token in Coinbase Custody but could still contribute to Polkadot on-chain governance to improve the protocol.
On May 26, 2020, according to the network’s managing partner, Web3 Foundation, marks the first phase of Polkadot’s mainnet rolloūt. At this stage, Web3 Fouñdation, retäined control of the netwörk, running nodes, and validatîng blocks. Investors of Polkadot’s native token DOT could also acçess their accounts to express intent to become validàtors or nomïnate other validators, although they could not transfer DOTs at that time.
In July 2020, Polkadot raised $43 million in a 72-hour private sale. The token offering was not available in certain jurisdictions such as the United States, according to the sale’s website. The sale, which lasted for three days from July 24 to July 27, saw participation from several investors. They all contributed nearly 3,982 bitcoins via 1,059 transactions, according to an address associated with Polkadot. Dots were listed for $125 per token, according to Reddit users claiming to be involved in the sale.
Also in July 2020, сryptocurrency exchange OKEx listed the token of Polkadot on its trading platform. According to an announcement shared with CoinTelegraph, DOT spot trading against Tether’s USDT stablecoin on OKEx started at 8:00 AM UTC on July 17, 2020. Per the announcement, DOT deposits and withdrawals are not supported yet, and the tokens can currently only be obtained by claiming them on the mainnet from Ethereum’s blockchain. OKEx also recently published a detailed guide on how to claim the Ethereum-based ERC20 DOT tokens to Polkadot’s mainnet in a way that makes them available on the exchange. OKEx announced no date for the launch of DOT withdrawals and deposits. Still, the exchange promised they will be launched alongside additional DOT trading pairs in the near future.
On August 19, 2020, DOT tokens became transferable, making the network truly functional. DOT tokens listed on crypto exchanges after the network passed a resolution for a 100:1 redenomination to decrease token price and increase supply. In six days, Polkadot’s valuation overtook ghost chains like EOS and Cardano. Developers started flocking to build on Polkadot’s application layer, which is more than some of these other blockchains can claim. Stafi, Acala, and Sora Network are a few projects that are building a DeFi ecosystem on Polkadot.
On August 25, 2020, the developer house Snowfork announced Polkadot was weeks away from the release of the first viable bridge to the Ethereum blockchain. The bridge will roll out in phases and should be production-ready by March 2021. Phase one of three slated for release mid-September will include “a working demo of two-way transfer of assets state from Ethereum to our testnet chain and in reverse,” Snowfork developer Aidan Musnitzky told CoinDesk.
In December 2020, Binance announced establishing a $10 million fund to empower innovative projects to be built around the Polkadot ecosystem. In addition to investment opportunities, eligible Polkadot projects will benefit from resources available from the Binance ecosystem: access to a great number of customers, media distribution, knowledge sharing, financing, derivatives, financial management, and other resources and financial support. High-quality projects will also have the opportunity to get fast track review for Launchpool and Launchpad. Additionally, DOT, the native token of Polkadot, will be added as a part of the Launchpad token session and Launchpool pools. As a result, prices for DOT, the native token of Polkadot, rose more than 50%. DOT’s price increased greatly on December 28 after Twitter users noticed the ETH/BUSD pair on Binance’s homepage had been replaced by the DOT/BUSD pair, giving DOT a lot more exposure.
Technology
Polkadot is a network protocol that allows arbitrary data – not just tokens – to be transferred across blockchains. This means Polkadot is a multi-chain application environment where things like cross-chain registries and cross-chain computation are possible. Polkadot can transfer this data across public, open, permissionless blockchains as well as private, permissioned blockchains. This makes it possible to build applications that get permissioned data from a private blockchain and use it on a public blockchain. For instance, a school’s private, permissioned academic records chain could send a proof to a degree-verification smart contract on a public chain.
Polkadot’s relay chain is built with Substrate, a blockchain-building framework that is the distillation of Parity Technologies’ learnings building Ethereum, Bitcoin, and enterprise blockchains. Polkadot’s state machine is compiled to WebAssembly (Wasm), a performant virtual environment. Wasm is developed by major companies, including Google, Apple Inc., Microsoft, and Mozilla, that have created a large ecosystem of support for the standard.
Polkadot’s networking uses libp2p, a flexible cross-platform network framework for peer-to-peer applications. Positioned to be the standard for future decentralized applications, libp2p handles the peer discovery and communication in the Polkadot ecosystem. The Polkadot runtime environment is being coded in Rust, C++, and Go, making Polkadot accessible to a wide range of developers.
Polkadot uses its original GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) consensus for a more secure and resilient network. Under good network conditions, GRANDPA can finalize blocks nearly instantly. Under bad network conditions, like a network partition, GRANDPA can finalize large quantities of blocks at once when the partitions resolve.
Substrate
Substrate is the name used for Polkadot’s blockchain building framework. It provides developers with a variety of tools to design their custom blockchain for a variety of possible applications. The blockchains can then be launched stand-alone or integrated in Polkadot’s network of shards, or “Parachains.”
In September 2020, the Polkadot team released the update of their Substrate blockchain framework for Substrate 2.0., which now provides a way for blockchain applications to interface with the outside world without relying on external oracle providers. Off-chain workers leverage Substrate nodes to perform operations that would normally be outside of the blockchain’s capabilities. In a blockchain like Ethereum, a particular computation has to be quick and limited enough to fit into a block of instructions. This excludes many types of operations that are either non-deterministic – for example, web requests that may fail – or are just too complex for the resources available. Substrate 2.0 allows developers to unload these operations to the nodes running the network, which are able to perform web requests, encryption and decryption, signing of data, random number generation, and other CPU-intensive tasks.
The DOT Token
The DOT token serves three purposes: governance over the network, staking and bonding.
- Governance: Polkadot token holders have complete control over the protocol. All privileges, which on other platforms are exclusive to miners, will be given to the Relay Chain participants (DOT holders), including managing exceptional events such as protocol upgrades and fixes.
- Staking : Game theory incentivizes token holders to behave in honest ways. Good actors are rewarded by this mechanism whilst bad actors will lose their stake in the network. This ensures the network stays secure.
- Bonding : New parachains are added by bonding tokens. Outdated or non-useful parachains are removed by removing bonded tokens. This is a form of proof of stake.
Proposal for Redenomination of DOT
The proposal was to modify the denomination of DOT in the Polkadot chain stipulation. The referendum would alter the number of Plancks that create a single DOT. Plancks are the smallest unit in Polkadot. The referendum recommended modifying a single DOT from one trillion Plancks per DOT to ten billion Plancks per DOT. In other words, a 100x decline that would be balanced by a 100x rise in the number of DOTs. The official blog further stated that this has been the most voted-on (13%) referendum in the history of Kusama. This referendum caused active discussions on Polkassembly, Riot, Twitter, and elsewhere. Assessing the discussion and the voting exercise the Web3 found that the Kusama community was divided and felt quite firmly about the referendum.
In May 2020, Polkadot shared the result of voting on their website. The result was the following:
Informally, had the referendum recorded very little dissent, it is likely that Web3 Foundation, in its central role over the initial network launch, would have stood behind the redenomination proposal. However, given the non-negligible amount of opposition, including from some within the ranks of Web3 Foundation and Parity, the Foundation decided that we cannot, in good faith, sponsor redenomination at present.
On July 13, 2020, Polkadot posted on their blog:
Two months ago, a vote was conducted on Polkadot’s “wild cousin” network, Kusama. The vote was over a simple, non-binding declaration that the assembled Kusama community be in favor of changing the denomination of the “DOT” token, essentially multiplying all balances across the system by one hundred. The result was a resounding “yes”, albeit with a sizable minority contingent against it, and voices questioning why it should be 100 and not 10 or 1000.
Although there was clearly a large degree of support for it, the Web3 Foundation decided that the voting population of Kusama might reasonably be sufficiently different to that of Polkadot that the results could not be blindly enacted. That said, the Foundation undertook to do further research and, if reasonable, reconduct the vote on Polkadot with real DOT tokens.
The pool lasted the two weeks, and it was a simple approval vote with four options. The four options being polled were:
- No change from the original 2017 sale definitions; would mean a total of 10m DOT from genesis.
- Split of 10x from the original sale; would mean a total of 100m DOT from genesis. Apparent DOT price would be 10x lower.
- Split of 100x from the original sale; would mean a total of 1b DOT from genesis. Apparent DOT price would be 100x lower.
- Split of 1,000x from the original sale; would mean a total of 10b DOT from genesis. Apparent DOT price would be 1000x lower.
On July 27, 2020, Polkadot shared the result of voting on their Twitter:
The referendum to redenominate DOTs to 1:10, 1:100 or 1:1000 passed with 86% in favor of 1:100. From 43,200 blocks after DOT tokens become transferable, or approx. 72 hours later, DOTs shall be denominated at 1:100. This will occur in approx. one month.
Kusama Network
Kusama is an early, unaudited and unrefined release of Polkadot created to test the network’s technology and economic incentives in a real-world environment. It’s also the perfect place for parachain developers to test ideas before deploying to Polkadot.
Kusama launched on Aug 23rd, 2019. Polkadot and Kusama are indëpendent, standalone networks built on very similar codebases. They are bôth scalable, multichain networks built for rãdical innovation, autonomoüs governance, and empowerîng developers. Kusama is owned and goverñed by a community of supporters who hóld KSM tokens. There is no central kill switch, meàning it will live on as an independent community network. .
Teams Building on Polkadot
- ChainLink (a leading decentralized data oracles network; it connects smart contracts to the inputs and outputs it needs. )
- Lamina.
- ChainX (a community-driven project built on the next-generation blockchain framework substrate, the largest Layer-2 network of Bitcoin with smart contract support.)
- Kusama.
- Digix .
- Dock.io.
- Centrifuge
- Ocean Protocol.
- Energy Web Foundation.
- iExec.
- Edgeware.
- ZeroChain.
- Acala.
- Robonomics.
- pLibrap.
- MXC.
- Darwinia Network.
- Katal.
- Joystream.
- Ladder Network.
- Akropolis (provide tools for DAO creation, borrowing and lending, and DeFi-based saving ).
- Asure Network.
- KILT Protocol.
- PACTCare.
- 0x Protocol.
- Blink Network.
- LayerX.
- Plasm Network.
- Speckle OS.
- Totem.
- Framework Ventures.
- Mantra DAO (a community-governed DeFi platform focusing on staking, lending, and governance. ).
- Kadena.
- Polkaswap (a non-custodial AMM DEX designed uniquely for the Polkadot ecosystem and based on the SORA v2 network. ).