PolkaDot is a decentralized internet initiative led by Parity that aims to drive interoperability, scalability and general practical adoption of blockchain.
Working towards a completely decentralized web, the Web3 Foundation has commissioned Parity Technologies to build the Polkadot network, which intends to facilitate scalability and interoperability between blockchains. Polkadot has licensed its protocol specification under Creative Commons and code under FLOSS. Polkadot aims to address scalability by decoupling the consensus mechanism from the state-transition mechanism and implementing a sharded architecture. The former design choice aims to reduce the time to consensus, thereby increasing transaction capacity, by dropping the requirement that consensus is synchronous, while the latter allows for additional transaction processing capacity. Consensus on the network is achieved through the GHOST-based Recursive Ancestor Deriving Prefix Agreement (GRANDPA) that theoretically offers high levels of security alongside fast time to finality.
Polkadot’s architecture will consist of a single relay chain, multiple parachains (Polkadot’s use of sharding) and bridge chains that offer interoperability with other networks. While every parachain can have its own governance mechanisms, the security across all chains in the Polkadot network is pooled via the single relay chain that is also responsible for handling communications throughout the Polkadot network. Ultimately Polkadot aims to be interoperable with a wide range of blockchain networks, but has so far focused its efforts on Ethereum and more recently, Bitcoin. Ethereum smart contracts are compatible with Polkadot parachains and the Web3 Foundation has commissioned a Bitcoin parachain to enable Bitcoin interoperability.
The genesis block launch of Polkadot was previously expected in Q3 of 2019, however, this has been delayed to a partial launch in Q2/Q3 2020, with the Kusama testnet having launched in August 2019. So far, several projects have started to use Substrate, Polakdot’s native framework. To augment Polkadot’s adoption, the Web3 Foundation in collaboration with Polychain Capital launched the Polkadot Ecosystem Fund that aims to nurture projects that build atop Polkadot.
The Polkadot network’s native token, the DOT, will serve functions of governance, such as determining fee structures and participating in decision making around network updates and will also be instrumental towards the operation and maintenance of the network. Participants can stake (bond) their DOT to nominated validators, who ultimately facilitate cross-chain transactions via the Relay Chain. Creating a new Parachain will require tokens to be staked, acting as a measure of the importance of Parachains and discouraging their arbitrary growth in numbers. Of the 10 million DOTs created, 5 million were purchased in the initial Polkadot token sale, raising $145 million while a further 500,000 were sold in mid-2019 in a private round at a target valuation of $1.2 billion. The remaining DOT tokens continue to remain under the control of the Foundation.