July 14, 2020

Market News

Polkadot – future of blockchain interoperability?

The Polkadot blockchain is now under the independent administration of the community. The hunt for the dots has started – more precisely, the hunt for the dots! And that of Polkadot, because this is about the native cryptocurrency of the Polkadot blockchain.

Polkadot network goes live

The Polkadot blockchain enables the networking of different blockchain frameworks and is therefore one of the multichain application platforms. It should be possible to jump back and forth between different blockchains. The Polkadot project was founded by Gavin Wood, CEO of the Web3 Foundation and co-founder of Ethereum.

From now on, the Polkadot network will only be managed jointly by the DOT owners and the W3 Foundation is completely out. Instead of granting decentralization through the back door, as before, the DOT owners are now in control. Your respective holdings of DOTs determine who can manage the most important network functions through a process called staking.

The mainnet had gone live a month ago and now the final version of the Polkadot blockchain was released. Now the community is taking control of the network, because the Web3 Foundation apparently now sees sufficient stability.

PolkaBTC token for Bitcoin blockchain

Interlay ensures interoperability with the Bitcoin blockchain. In the final version that has now been launched, the previously used proof-of-authority PoA has given way to the nominated-proof-of-stake and the process of staking emerged with it. Greater decentralization can be achieved by increasing the validators from 20 to 100 .

In order to implement the eagerly awaited interoperability, the connection to the Bitcoin blockchain was a smart move of the Web3 Foundation. The cooperating company Interlay has developed a scenario in which the proof-of-concept blocks the BTC on the Bitcoin blockchain and has it minted on the Polkadot blockchain.

The result is a PolkaBTC token. According to Interlay, the key to the wallet on the Bitcoin blockchain is controlled by a smart contract and the protocol checks a certain number of PolkaBTC after content verification. These can then be transferred to safes and given to liquidity seekers. This means that income can be generated and decentralized financial products can be implemented on the Bitcoin blockchain. Another important step for future DeFi applications based on blockchain.

Staking process with PolkaDOT tokens

The crypto exchange Coinbase had reported some time ago that it wanted to join the Polkadot staking process. This allows holders of the DOT token to store their assets in Coinbase's offline safes. Holders who submit their DOT tokens as part of decentralized financial transactions receive a reward of up to 20% from Polkadot. So far, however, these have only been conceptual designs, since real use cases have so far not become known.

In later phases, token holders can participate in the governance of the network and use the so-called parachains for this. These parachains describe a technology for the effective distribution of databases. Parachain describes a simpler form of blockchain than a chain that can be parallelized, which represents security for the transfer of messages between data points.

Specialized parachains have the task of efficiently implementing data storage and transaction processes without the need for the blockchain-specific scripting language or a VM. With this technology, Polkadot is one of the four leading projects for an alternative implementation of the so-called sharding technology, which deals with the elimination of bandwidth problems with a blockchain without losing scalability.

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Sharding technology for scalability

The database partitioning method divides the database into several parts, but each part is managed by a separate server instance. This eliminates capacity problems and also divides the computing power required. The distribution of the data on several nodes ensures better scalability and a high fault tolerance. This also enables simple administration of the database systems and significantly better performance.

Interoperability is based on the trustless transfer of assets between different chains, as well as the interaction of cross-chain, intelligent contracts. Specialized chains, such as the parachains, can also be used by other blockchains. Polkadot is similar to a single relay chain and the chains that can be parallelized can ensure that, for example, trust-free interchain communication is possible.

Users communicate across chains and do not have to trust every single chain. The unique security of the entire Polkadot network is guaranteed by securing the simple chains when converting to parallel chains. Because every Parachain receives the same security level as the entire Polkadot network. Bridges (chains) can now be used to communicate with other connected systems. All parachains and relay chains work as a uniform system.

One parachain can contain the user-defined logic, while another receives messages and a third is responsible for processing its own status transitions. No two Parachains are the same, which is why Polkadot's communication framework is so trustworthy. By parallelizing transactions, Polkadot solves important scaling problems that have hindered numerous blockchain developments.

Polkadot

Source: https://redash.p2p.org/public/dashboards

Polkadot token DOT very popular

Users receive an interest rate from the banks for issuing the DOTs. Interest rates can vary and fluctuate over time, but are usually stable from month to month. In addition to Coinbase, one of the other major crypto exchanges, Blockchain.com , has already confirmed its collaboration with Polkadot.

The publication of the Mainnet and just a month later the handover of the network to the community represents an important success in the approximately three years of development in the Polkadot project. In the future, however, the plan is to continue to expand the platform. Especially since the big competitor Ethereum 2.0 also wants to introduce sharding. Interested in own DOTs? Then along here !