Polkadot is an upcoming multi-chain framework platform — similar to Cosmos — designed to facilitate interoperability and scalability of blockchains that can plug into its ‘Relay Chain.’ Polkadot is an ambitious project that leverages a form of proof-of-stake (PoS) consensus for the broader ecosystem of blockchains that are connected to it and is scheduled for official launch in Q3 2019.

Importantly, Polkadot allows data structures — outside of solely blockchains — to connect to the network as ‘parachains.’ Originally conceived by Gavin Wood — creator of the Solidity programming language –, Polkadot is a heterogenous multi-chain framework where parachains operate through a trust-minimized federation structure.

The scalability problems of blockchain networks are well-documented, and platforms like Polkadot are striving to become the next generation of networks that foster enhanced scalability and interoperability through expanding the design concepts of public blockchains and standardizing the transfer of data.

The Polkadot Design

Polkadot explicitly identifies three primary areas that current blockchains struggle with to realize their full potential for providing practical applications:

Interoperability Scalability Shared Security

Polkadot employs a relay chain which functions as the hub through which the parachains connect to and coordinates the consensus as well as transferring of messages and data between the parachains. Notably, both public and permissioned blockchains can connect to the network, with the ability of permissioned chains to isolate themselves from the rest of the system while still retaining the ability to transfer data to other chains and leverage the network’s security.

Parachains can be blockchains or other data structures that plug into the relay chain for pooled security and interoperability with other chains. However, they must meet the following criteria to be compatible with the Polkadot network:

Can form compact and fast light client proofs Must be a method for a large number of independent authorities to authorize a transaction (i.e., Schnorr signature).

Parachains process their own transactions, which allows the network to scale based on concurrent independent processing of transactions per parachain which are secured via the broader network consensus.

The consensus of Polkadot is heavily inspired by Tendermint and HoneyBadgerBFT, but uses PoS as the primary method for incentivizing validators to be honest in the network.

Read: Beginner’s Guide to Tendermint: Byzantine Fault Tolerant Blockchain Engine

Polkadot can also form ‘bridges’ with other chains that have their own consensus — such as Ethereum.

The bottom layers of the Polkadot protocol are known as the Polkadot Runtime Environment and are common throughout all the parachains on the network. These 3 layers consist of the Wasm interpreter, consensus, and networking.

The upper layers are unique to each connected parachain. Substrate — from Parity Technologies — is the first implementation of the Polkadot Runtime Environment (PRE). Parachains will be written using the PRE, which is built on the Web3 technology stack.

An important aspect of Polkadot is that it employs the Libp2p networking stack, and is the first real-world use of its Rust implementation.

The dynamics of how Polkadot works are complex, so it is best to visualize the platform through the four primary participant roles in the ecosystem.

Validators Nominators Collators Fishermen

Validators

Validators finalize the blocks in the Polkadot network and play the most critical role in the ecosystem. Validators are required to run the full relay chain client and need to stake a significant ‘bond’ (in the native DOT token) to qualify. However, validators can nominate other validators to act in their stead.

Validators receive candidate blocks from collators — who propagate selected blocks to validator subgroups from parachains — and finalize the blocks on the relay chain through a deterministic selection process and final round of validating ratification.

Nominators

Nominators are parties that also hold a stake in the network, but function as a mechanism for selecting trustworthy validators through contributing their bond to a select validator’s bond. Their role is very straightforward and helps strengthen the pooled security of the relay chain.

Collators

The collators work on the parachain level rather than directly with securing the relay chain. They gather transactions from the parachains, produce a proof along with an unsealed block, and send it to the appropriate validator charged with finalizing a parachain block. The Polkadot white paper notes that the role of collators may evolve, and eventually they may be contracted to work closely with specific validators for verifying blocks from certain parachains.

Collators can also work to prove malicious behavior to validators on the network as an added layer of security. The general role of collators is similar to the work of miners in PoW blockchains.

Fishermen

Fishermen are independent of the block verification process and seek out malicious behavior on the network that they report to validators about bad validators. They are motivated as ‘bounty-hunters’ looking for substantial one-off rewards by proving that a bonded party (i.e., validator or collator) acted maliciously outside of the rule set.

Fishermen post small bonds to the network too, however. This is to prevent Sybil attacks, but is not nearly as high as validators and can be withdrawn at any point.

Image Credit – Polkadot Whitepaper

Polkadot achieves a standardized communication across the network through its interchain communication protocol. Transactions between parachains or between parachain and relay chain are fully asynchronous, and all data transfers (even between parachains) are referenced on the relay chain.

Blockchains that are ‘bridged’ to Polkadot rather than directly plugged in as a parachain can leverage the standardized intercommunication of the network without sacrificing their own consensus. However, these chains forgo the shared state and security guarantees of the Polkadot network. Ethereum will be the first example of such a bridge on the platform.

The DOT Token Role and Polkadot Governance

Polkadot employs an on-chain governance model that is entirely controlled by the relay chain stakeholders. Stakeholders (i.e., validators) stake the native DOT token and can control everything from direct protocol upgrades to bug fixes.

Like other PoS consensus models, the native token is used for bonding and to incentivize validators to act honestly through having a financial stake in the authenticity of the verification process. Further, parachains connect to Polkadot through bonding and can be removed via withdrawing their stake from the network.

Polkadot is currently in its testnet POC-2 phase, where testDOT were used to upgrade the protocol from the POC-1 network and introduced several other features, including using the Rust implementation of Libp2p.

On-chain governance is a fascinating concept and is not only employed by Polkadot, but by other networks that are already live such as Tezos and Decred.

Applications of Polkadot

Since Polkadot does not make assumptions about the parachains connected to the network, it offers a wide range of flexibility for developers to build application-specific blockchains such as privacy-oriented ones or some focusing explicitly on certain dapp development.

Polkadot is also designed to facilitate faster innovation cycles. Features of one parachain can be leveraged on another, sharing innovation between chains and not simply just token transfers as the sole form of interoperability. Parachains are also free to focus on application building rather than having to focus on their own security. Parachains explicitly designed to function within Polkadot are part of the larger pooled security, creating a crucial abstraction of one of the more complicated components of blockchain networks for developers.

An intriguing example that Polkadot provides is the ability for users of a decentralized exchange on one parachain to deposit BTC onto the exchange using zero-knowledge proofs (ZKPs) by leveraging a ZCash parachain.

The potential applications of multi-chain frameworks are enormous and should help foster much more experimentation with new technologies born out of the sheer power of interoperability. However, consensus — particularly PoS — is complex and tricky to design around and has yet to be proven at a large scale in a decentralized network over considerable time, especially within a multi-chain environment.

Polkadot offers another promising glimpse into what the future generation of blockchains will look like, and may prove a gravitating setting for public and permissioned blockchains to come together and mutually benefit each other.