Polkadot 2.0 and the future of DOT, explained
The Polkadot network comprises three fundamental components that collectively form its intricate structure, including the Relay Chain, parachains and bridges.
The Relay Chain lies at the core of the Polkadot ecosystem, functioning as the primary blockchain of the network. It helps to safeguard overall network integrity and facilitate communication among parachains.
Parachains stand as parallel blockchains that represent the various Layer-1 projects building in the Polkadot ecosystem. They serve as hosts for decentralized applications and various blockchain-driven projects. The versatility of parachains lies in their adaptability to cater to the specific requirements of the hosted projects.
For instance, a parachain designated for a decentralized exchange could be configured to manage a high volume of transactions efficiently. Parachains such as the Astar Network also incorporate features such as Ethereum Virtual Machine (EVM) compatibility, WebAssembly (WASM) smart contracts and cross-consensus messaging (XCM) to facilitate seamless communication between decentralized applications (DApps).
On the other hand, bridges serve as vital conduits connecting the Polkadot network to other blockchain networks. The overarching goal of bridges is to enhance the interoperability of disparate blockchain networks so they can communicate and interact effectively.
To better illustrate how they work, consider the scenario where a developer seeks to construct an application harnessing data from two incompatible blockchains. Such an endeavor would be untenable without a bridge system, given the inherent incompatibility between them. In such a case, Polkadot acts as an enabler, facilitating communication and data sharing between the two disparate blockchains.
A real-world use case would involve a user aiming to transfer assets across different blockchains. Without a solution like the XCM messaging format, which allows blockchains to interact, such an operation would necessitate reliance on a centralized exchange. Networks like Polkadot allow users to migrate assets between blockchains directly, eliminating the need for third-party intermediaries.
Another unique property of the Polkadot network is that it operates as a layer-0 blockchain. A layer-0 blockchain serves as a foundational framework upon which subsequent blockchains can be constructed.
As a layer-0 blockchain, it provides infrastructure that empowers programmers to fashion their own blockchains while ensuring cross-chain interoperability. As such, blockchains developed atop the Polkadot platform can seamlessly communicate and engage with one another, regardless of technological variations.
This is a substantial advantage over conventional blockchains, which frequently exist in isolated silos, incapable of mutual communication. It makes the Polkadot network ideal for crafting decentralized applications utilizing data from multiple blockchains.
As Polkadot is already established as the foundational layer, it alleviates many of the problems programmers face when working with rigid layer-1 chains by providing a more adaptable base infrastructure. Governance of the Polkadot network is carried out directly by holders of the DOT token, whereby token holders actively participate in a voting process to vote on all proposals aimed at making changes to the network. The democratic approach, launched earlier this year and known as OpenGov, grants every token holder a voice in shaping the platform’s evolution.
When it comes to transaction validation, Polkadot employs a nominated proof-of-stake (NPoS) mechanism to select its validator set, focusing on enhancing chain security. Validator nodes are responsible for block production, parachain block validation, and finality assurance, while nominators can support specific validators with their stake, backing trusted candidates with their tokens.