Polkadot: from zero to 15 billion in four months
Graphical visualization of what Polkadort could look like once.
Polkadot (DOT) did not go live in mid -2020 – and has already conquered fourth place in the ranking of cryptocurrencies. It is a hype? Or the long-awaited Ethereum competitor? Or something completely different? We take a thorough view of the promising project that looks back on a strong year 2020.
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Polkadot did it. The new cryptocurrency with the ticker Dot only landed on the first stock exchanges in August 2020. The debut was already strong with $ 3 per token, but after that it only went more further.
Polkadot slipped further and further up in the ranking of the cryptocurrencies to pass Bitcoin Cash, Litecoin and Cardano and finally even overtake ripple. The price of the token, which was shortened with Dot, rose to almost $ 17, the market capialization to almost 15 billion.
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Admittedly – Ripple had better days and suffers from the fact that the SEC Ripple Labs is suing for the unauthorized publication of security (which massively endangers the whereabouts of XRP on most exchanges). But that’s why everything was in vain – the development, the establishment of an ecosystem, advertising at banks, the strategic investments?
Litecoin and Bitcoin Cash have also been established for a long time. Bitcoin Cash has a wide ecosystem, with good wallets, platforms and broad acceptance. Is that all now – nothing worth anything? What does Polkadot really do that it puts on such a start of vertical and in a few months everything that Ripple and Bitcoin Cash have built up over the years?
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Let’s take a look at what polkadot is about. The text will be long. We start to describe Polkadot from a technical perspective. Then we consider what the blockchain achieved in the past year, what projects are on it and where it is currently standing.
So – let’s go!
Similarities with and differences to Cardano
Polkadot is similar to projects such as Cardano, EOS, Avalanche or Tron: It is a “Next-generation blockchain” that has started to teach Ethereum the fear. She is also able to process smart contracts, but does not repeat the mistakes that Ethereum has made, scales better and has a concept for a sensible governance. That sounds good, but is actually an old hat.
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Eos and tron have already started with this concept and have now failed more or less. The two blockchain was promising, but could not assert themselves against the extreme network effects that Ethereum collected, and are currently continuing to seep into the depths of the coinmarketcap ranking. Avalanche (AVA) is too young to have failed, and Cardano presses before the decision by continuing to drive the supporting wheels of centralized servers.
However, Polkadot has a lot in common with Cardano: both Cardano founders Charles Hoskinson and Polkadot founder Gavin Wood were part of the Ethereum founding team and later got out to do their own thing; Both Cardano and Polkadot use the consensus algorithm, to which Ethereum wants to-proof of stake. Both blockchains finance the development through an extremely successful ICO, and both are extremely highly rated without seriously having users.
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But here the similarities end: While Charles Hoskinson got out of Ethereum at an early stage, to attract attention with strange podcasts and the support of Ethereum Classic, Gavin Wood stayed with it for a long time. He created the startup Parity in Berlin, long maintained the high-performance Ethereum-Node of the same name, which even saved Ethereum from falling. And while Charles Hoskinson mainly operates blockchain research, through which he then sells in YouTube videos as an important than Satoshi, Gavin Wood drives the practical development of Polkadot vigorously, so that the blockchain is already live and decentralized despite a much shorter development time.
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The prerequisite for Polkadot seems better than with Cardano. Therefore we take a more thorough view of the project. What is the blockchain – and why is it starting so much right now?
Polkadot’s technology
Polkadot would not be a next generation blockchain 2.0 or 3.0 if the concept was not a little complicated. Let’s take a look at the technology how the website and the light paper and white papers inform you.
With parachains and parathreads
First of all, Polkadot is not a blockchain in the real sense, but “a network protocol that allows you to transfer all kinds of data-not just token-between blockchains.“The website, explains the website, is a“ real environment for multi-chain applications, which makes cross-blocking directories or calculations possible.“Polkadot combines a wide variety of blockchains, which allows, for example, to replace data between a public blockchain such as Bitcoin and a private blockchain.
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For this, Polkadot forms a basic structure to which the different blockchains can dock. These are called “parachains” and “parathreads”. The focus is on the “Polkadot Relay Chain”, which ensures and coordinates the interwoven log grove. Bridges (“Bridges”) also allow to dock on external networks.
Conceptively, the whole thing reminds a little bit like Ethereum 2.0 is planned: In the center is the Beacon-Chain, which is supposed to rule a universe of blockchains. The concept is also called “Sharding” because the blockchain is broken down into many individual chains, which should better scale analogously to database technology.
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The Polkadot Relay Chain uses the DOT token as a native token. These tokens are what is currently being traded on stock exchanges and what it has managed to set up a market capitalization of temporarily up to $ 16 billion. The Relay Chain is “responsible for the shared safety of the network, the consensus and interoperability across the blockchains.”
Paracachas, on the other hand, are blockchains that build on the relay chain, but have their own tokens and are optimized for their specific applications. Parathreads are similar, but arrive with a “pay-as-you-go” model, which is “more economical than blockchains” because they “do not have to be continuously connected to the network.“This is still difficult to imagine, but it sounds interesting.
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After all, thanks to the bridges, paracitries and parath threads can communicate with external networks such as Ethereum and Bitcoin.
Grandfather Proof of Stake
Similarities to Ethereum 2.0 can also be found in the consensus algorithm. As already indicated, this “Proof of Stake” is. This means that there are no more miners that consume electricity to solve cryptographic puzzles, but stakers. These freeze a credit in the native currency of the blockchain in order to receive a kind of simulated hashpower in accordance with the proportion of their credit.
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Polkadot has developed its own consensus algorithm: “Grandpa”. This stands for “Ghost-Based Recursive ANCESTOR DERIVING PREFIX AGREEMENT”. But that probably doesn’t matter. It is more interesting how this algorithm works.
There are four parties in the Proof-of-Stake-System from Polkadot: First the collators (“Collators”). These come closest to the classic miners: they create a kind of block by checking the transactions of the users and equipping them with evidence. This evidence is checked by the validators, the second party,. If the validators agree, i.e. a consensus about the validity of transactions, finalize the transactions.
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This hybrid approach of the division of labor between validators and collators helps to keep the data that must be exchanged, while the blockchain can quickly reach finality.
Finale means a state from which a transaction is “final” – the time when it can no longer be undone. At Bitcoin there is no final, but only a probabilistic finality: you could undo a block at any time if you have enough hashpower. However, this is almost impossible and completely unprofitable after a few blocks. So finality is understood in economic incentives. This is not far enough for Polkadot. The blockchain strives for a “finality through liability”: if someone misuses the algorithm, this is provable and can be foreseen by a punishment. This punishment is that the deposits of the jack are burned.
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This concept of finality can also be found at Ethereum 2.0. Vitalik Buterin and his co -researchers have thought about it for a long time and also developed mechanisms that automatically punish misconduct.
Back to Polkadot: The collators select transactions and check them. They are the instance that stamps. But only the validators create finality. They are chosen by a third party, the nominators. In addition, there is a fourth party, the fishermen (“fishermen”) who observe the network and report violations of the validators. Every collator and every full node of a parachain can play this role. As a reward, the actors involved receive the native tokens of the blockchain named Dot.
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With this description, of course, we only scratch the surface. If you want to know it more precisely, you should look at the paper on the polkadot website or the document linked there.
Other technical features
In addition to the two fundamental technical concepts described, Polkadot comes up with a few other features:
There is a “governance” system that allows two parties, the council and the technical committee, to be sure to coordinate in a safe way via changes to the consensus. This is intended to help prevent harmful changes, but at the same time set incentives for further development.
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The blockchain was formed with “substrate”, a “framework for building blockchain”, which is “the distillate” of what parity technology has learned to develop software for Ethereum, Bitcoin and other blockchains. Substrate is a modular system that can be used to assemble individual blockchains depending on the requirements; It can also be used to relatively easy (relative!) to start high -quality and safe parachains.
The State Machine from Polkadot is written in WebAssembly. The State Machine is the environment in which the smart contracts are executed. While the rather uncomfortable solidity is used for Ethereum, WebAssembly (WASM) is a widespread environment that is used by Google, Apple, Microsoft and Mozilla, among others.
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Technology VS. Network effects
Polkadot is undoubtedly an ambitious project. The developers around Gavin Wood have a lot of experience, are considered talented and apparently drawn their lessons from the history of Ethereum. Technically speaking, Polkadot is likely to be one of the most promising projects that the cryptom market currently gives.
Polkadot is like Ethereum would like to be. And not tomorrow or in an indefinite future – but already today.
But – is that important at all? EOS, Tron, Binance and Cardano also compete with Ethereum and points through a more scalable technology; Lisk already invented the idea of running smart contracts on sidechains in more common languages; With the distributed proof of Stake Algorithm from EOS, Steem and Lisk, there has long been a highly scalable consensus algorithm; In addition to Ethereum, Ethereum Classic and Stellar are also available for tokens, both with significantly lower fees. Or the waves network. Or – there is really no lack of alternatives to Ethereum that can relieve the fee printing.
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We know the same phenomenon from Bitcoin: We have numerous blockchains to choose to avoid the high fees, be it Bitcoin Cash, Bitcoin SV, Litecoin, Dogecoin, Dash or many others; And even if it is about escaping Bitcoin’s rather transparent nature, there are a lot of private coins with ZCash or Monero, for example.
But neither Bitcoin nor Ethereum have so far been pushed out of the throne by other blockchains. The throne was not even scratched. No piece. The network effects that an established blockchain has, apparently weigh more than the most elegant, ideal, superior technology. Much more, even if the technology of the market leader is out of date.
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Has a chance to break this law? And if not – Polkadot is therefore overrated? Or enables Polkadot applications that have so far not been possible with Ethereum or Bitcoin and can thus find its own market niche?
In order to get closer to the answers to these questions at least a bit, we will take a look at what Polkadot has achieved.
A fairly strong year 2020
At this point you have to pay some respect to the Polkadot team. In his “Polkadot 2020 Roundup”, Gavin Wood summarizes what they achieved in 2020. And that’s so much that it is difficult not to drop the jaw.
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Start of Polkadot
Polkadot went live in May. It started with a Genesis block in a closed proof-of-authority network, but then quickly went into an open, decentralized network, which was so far at the end of August that the DOT tokens were on the first stock exchanges. The start went smoothly; Other projects such as IOTA or Cardano who have not been able to take this step for years can only be jealous here.
In addition to the mainchain, two tests also went live, Westend and Rococo.
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Growth of the network
After the start, the number of validators increased steadily. The number 197 was just 24 hours after opening the network; Today there are 274 knots behind which 7.000 individual accounts stand. If every validator is equivalent to a mining pool, what Gavin writes: that Polkadot is “the most decentralized” blockchain network.
Staking from DOT enthusiastically offers stock exchanges. At the beginning of 2021, 63 percent of the available DOT tokens are frozen in the staking system. This already makes Polkadot a blockchain with the most values in staking. But Gavin is not enough: “We will not rest on our laurels.“The“ 1000 Validator program ”started and is supported by the Treasury of the Web3 Foundation.
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Governance
The first governance suggestions were submitted and confirmed. According to Gavin, this shows that the governance system works.
Projects
Numerous projects based on Polkadot began and excited 2020. Most are still at the level of “basic research” – they mainly work on the infrastructure.
For example, the Web3 Foundation launched an automatic registrar service for Polkadot to help the participants of the system to win reputation. LimeChain works on Subsembly, a framework to form parachain with assembly script. Equilibrium has a first version of an integration of the Interplanetary File System-we know it from EnS-Domains-published for Polkadot. Meanwhile, Node Factory forms a metamask plugin that docks the popular Ethereum wallet on Polkadot. There are also around 100 other teams who work with Polkadot, 30 of them in China alone.
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Established projects such as Chainlink or Gitcoin also got involved in Polkadot in 2020. The first non-fungible tokens (NFT) also want to use Polkadot instead of Ethereum. The interest is there in any case.
bridge
Polkadot is entitled to connect your own blockchains to other chains. One of the projects that try this is Frontier, software that allows a paracitrian that looks exactly like Ethereum. This allows the existing tools such as Metamask or Truffle. Furthermore, bridges for Bitcoin and Ethereum were already being worked on in 2020, which will probably start in 2021.
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Substrate
Substrate 2 appeared in autumn.0, the upgrade of “Parity’s groundbreaking blockchain development platform.”
Events
Despite Corona, Polkadot managed to carry out more than 70 virtual and presence events. For example the Hackathon Hackusama, two developer conferences Subzero, the Web 3.0 boot camp, polkadot decoded and – even live – the web3 forum in Shanghai. This enabled Polkadot to reach and train thousands of developers, the published videos and texts were clicked more than a million times.
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statistics
Overall, the Rust code base increased by half a million lines of code. The substrate repository was researched by more than 1000 github users, the tech channel from substrate have 2.Subscribe to 600 readers. More than 200 projects were supported by the Web3 treasury, Polkadot has more than 100.000 dot released to 23 proposals.
Conclusion
All of this is an impressive list of achievements for a single year. Polkadot comes up with a strong technical concept that many should look at with a certain envy at Ethereum, and the team seems to be able to perform the plan quickly but carefully.
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The great interest from the developer scene, the first commercial projects that are interested in Polkadot, the strong rank under the staking coins-all of this is already making Polkadot a promising blockchain. Perhaps she actually succeeds in breaking the law of network effects; Maybe Polkadot will find a sensible niche that conquers and receives.
So it is worth keeping an eye on the blockchain. However, the high price is currently making the DOT token an option for risk-loving investors.
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