Polkadot

Polkadot is a blockchain network designed to coordinate multiple application-specific blockchains. Its central relay chain provides shared security, consensus and message routing for connected parachains, while each parachain defines its own state and transaction logic.

The network's native unit is DOT. DOT is used for transaction fees, staking, governance deposits and access to network computation known as coretime.

History

Gavin Wood published the first Polkadot paper in 2016 after co-founding Ethereum and serving as its chief technology officer. The paper proposed a heterogeneous multi-chain framework in which independently designed chains could exchange messages while relying on a common validator set. Web3 Foundation was established to support the protocol, and Parity Technologies led much of its early implementation.

In October 2017, a sale of half of the initial ten million DOT raised approximately US$145 million. The following month, a flaw in a shared Parity multisignature-wallet library allowed a user to take ownership of the library contract and destroy it. This froze 513,774.16 ETH across 587 affected wallets, including part of the Polkadot fundraising proceeds; the ether was not transferred to the user. Web3 Foundation later conducted private sales in 2019 and 2020.

The initial Polkadot network launched on 26 May 2020 after a phased development process and the 2019 launch of Kusama, a related network used for earlier deployment of features. It began in a proof-of-authority mode controlled by Web3 Foundation. Validator elections and nominated proof of stake followed in June; on-chain governance took control and removed the temporary Sudo administrator in July; and token transfers were enabled in August. Parachain functionality followed as the network matured.

Early versions of Polkadot allocated fixed-duration parachain slots through auctions. The network subsequently adopted Agile Coretime, under which projects can acquire bulk coretime for a period or purchase coretime on demand.

Architecture

Relay chain

The relay chain coordinates the validator set, consensus, finality and availability checks for parachain blocks. It intentionally supports a narrower set of functions than an application chain. Validators stake DOT, participate in relay-chain consensus and verify candidate parachain blocks.

Polkadot uses nominated proof of stake to select validators from candidates backed by nominators. Block production and finality are separate parts of the consensus design: BABE coordinates block production, while GRANDPA finalizes chains of blocks.

Parachains and collators

A parachain is a specialized blockchain connected to the relay chain. Collators maintain a parachain's state, collect its transactions and propose candidate blocks with proofs of validity. Relay-chain validators check those candidates before their headers are included and finalized. Full parachain blocks remain in the parachain's own network rather than being stored in full on the relay chain.

Parachains can be built with the Polkadot SDK, which combines the Substrate framework, FRAME runtime modules and Cumulus integration components. A parachain can implement an Ethereum-compatible environment, another virtual machine or application-specific runtime logic; Polkadot does not require every parachain to execute the same kind of smart contract.

Cross-chain communication

XCM, the Cross-Consensus Messaging format, specifies instructions that consensus systems can exchange. Transport channels carry those messages between parachains and the relay chain. The security of an action still depends on the sending and receiving systems, their configuration and the meaning each runtime assigns to an XCM instruction.

Bridges connect Polkadot-based chains to networks that do not use the relay chain's validator set. They introduce additional verification and operational assumptions distinct from communication between parachains that share relay-chain security.

Oracles

Like other deterministic blockchains, Polkadot parachains may require oracle services to use off-chain data. In 2020, Polkadot demonstrated an initial Chainlink integration with a Substrate-based blockchain. Oracle availability and trust assumptions vary by parachain and implementation; the demonstration did not make Chainlink part of the relay-chain consensus protocol.

DOT and governance

DOT is used to pay relay-chain fees, back validators through staking, place governance deposits and purchase coretime. On 21 August 2020, a holder-approved redenomination changed one old DOT into 100 new DOT while leaving the underlying number of Planck base units and each holder's proportional share unchanged. The change is important when comparing pre- and post-redenomination supply figures.

Polkadot's current governance system, commonly called OpenGov, allows token holders to submit and vote on referenda across multiple decision tracks. Conviction voting lets participants increase voting weight by agreeing to lock tokens for longer periods, and holders may delegate voting power for selected tracks. Governance can authorize runtime upgrades and treasury actions, making governance decisions part of the network's security and change-management model.

Limitations and risks

Shared security does not make every parachain application equally secure. Defects in a parachain runtime, bridge, smart contract, oracle or user interface can cause losses without a failure of relay-chain consensus. Staking exposes participants to protocol penalties, and governance outcomes depend on participation and token-weighted voting. Cross-chain messages can also propagate the consequences of a compromised or incorrectly configured system.

The protocol and its economic parameters change through governance. Descriptions of slot auctions, staking rewards, inflation, coretime prices or supported bridges therefore need a date and should be checked against current network state rather than treated as permanent properties.

External links

• Official website
• Developer documentation
• Polkadot SDK source repository