In part 2 of our Polkadot Deep Dive, we take a closer look at the network and governance structures. Part 1 can be found here.
Polkadot’s parachain auctions are in full force, and there is an immense interest for the event, with many industry flagships expected to bid for their parachain leases.
Solving Blockchain Scalability Interoperability Issues
Blockchain technology is, by design, a single shared ledger. While this initial structure is suitable for processes including transparency and immutability, scalability is a major flaw with the architecture.
Transaction throughput is limited to the speed of the blockchain network, so limitations exist on data processing capability.
Polkadot aims to solve this issue with a unique interoperable consensus model to achieve scalability without sacrificing security.
Let’s explore further:
The Architecture
The blockchain contains several consensus algorithms. Some are easier to implement than others, but they all have their pros and cons.
Some are better for anonymity, while others are better at ensuring the security of data.
Proof-of-Stake allows users to mine for blocks without having any specialized hardware. The creator of a block is chosen by chance through a random selection process called mining.
Polkadot has implemented an upgraded version of the PoS consensus mechanism abbreviated as NPoS.
This model of governance allows stakeholders to vote, proportional to the levels of their DOT staked.
The Nominated Proof-of-Stake mechanism allows for an efficient and secure way to run smart contracts on the Polkadot network.
DOT Token
DOT is the central currency of the Polkadot ecosystem and is used for parachain auctions. The token isn’t issued on a dilutive basis and has a fixed supply of one billion tokens.
The importance of DOT is embedded throughout Polkadot and serves several crucial purposes for the efficient operation of the network.
- Governance
The process by which stakeholders make decisions regarding how Polkadot functions. With DOT, holders can vote and actively participate in governance — whether making upgrades, setting fees, or establishing parachain connections.
- NPoS consensus
DOT is used as a currency to facilitate the NPoS consensus mechanism. To maintain the network, users can stake DOT to help validate the Relay Chain, parachains, and validator nodes in exchange for rewards.
- Parachain leases and crowdloans
Polkadot allows for a decentralized form of crowdfunding through a bidding system.
DOT holders can support listed projects by bidding on open parachain slots and making pledges. This system works to further decentralize Polkadot by avoiding centralization, thus increasing transparency
Parachain Leases: What are they & how do they work?
We introduced parachains as standalone blockchains responsible for defining the governance of the network.
Parachain leases are an offering process where users can create 96-week loans for their best projects in exchange for reward tokens.
Currently, there exist one hundred parachain slots for projects seeking to gain access to the Polkadot network and become fully integrated within the ecosystem.
Examples of projects granted access so far included Moonbeam, Acala, Astar, and Parallel Finance.
For the first round of Parachain Lease Offerings, Polkadot made the participation process simple for users, requiring a wallet or exchange account and access to a minimum of 5 DOT.
A Future with Promise and Expectation
Ethereum has grown so popular, and the resulting network congestion struggles to complete rudimentary transactions. Not to mention the high fees, which has further dissatisfied users.
Polkadot is a blockchain and development platform designed to be scalable, secure, and trustless.
There is strong anticipation and expectation among the crypto community, Polkadot will provide a superior solution by providing seamless data validation and trustless transfers.
About Master Ventures
Master Ventures is a blockchain-focused venture studio helping to build the next generation of blockchain-based Web 3.0 system innovations within the crypto industry. Launched in 2018 by Founder and CEO Kyle Chassé, the company’s ethos can best be summarized in the acronym #BeBOLD: Benevolent, Open, Love, Decentralized.
Master Ventures co-creates with entrepreneurs and businesses worldwide to turn the best ideas into innovative and disruptive products. They do this by investing as strategic partners through offering advisory services to the projects they believe in. To date, Master Ventures has invested in over 40 crypto projects, including the likes of Kraken, Coinbase, Bitfinex, Reef, DAO Maker, Mantra DAO, Thorchain, and Elrond.
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