Skip to content

Overview

Introduction

Polkadot is a next-generation blockchain protocol designed to support a multi-chain future by enabling secure communication and interoperability between different blockchains. Built as a Layer-0 protocol, Polkadot introduces innovations like application-specific Layer-1 chains (parachains), shared security through Nominated Proof of Stake (NPoS), and cross-chain interactions via its native Cross-Consensus Messaging Format (XCM).

This guide covers key aspects of Polkadot’s architecture, including its high-level protocol structure, blockspace commoditization, and the role of its native token, DOT, in governance, staking, and resource allocation.

Polkadot 1.0

Polkadot 1.0 represents the state of Polkadot as of 2023, coinciding with the release of Polkadot runtime v1.0.0. This section will focus on Polkadot 1.0, along with philosophical insights into network resilience and blockspace.

As a Layer-0 blockchain, Polkadot contributes to the multi-chain vision through several key innovations and initiatives, including:

  • Application-specific Layer-1 blockchains (parachains) - Polkadot's sharded network allows for parallel transaction processing, with shards that can have unique state transition functions, enabling custom-built L1 chains optimized for specific applications

  • Shared security and scalability - L1 chains connected to Polkadot benefit from its Nominated Proof of Stake (NPoS) system, providing security out-of-the-box without the need to bootstrap their own

  • Secure interoperability - Polkadot's native interoperability enables seamless data and value exchange between parachains. This interoperability can also be used outside of the ecosystem for bridging with external networks

  • Resilient infrastructure - decentralized and scalable, Polkadot ensures ongoing support for development and community initiatives via its on-chain treasury and governance

  • Rapid L1 development - the Polkadot SDK allows fast, flexible creation and deployment of Layer-1 chains

  • Cultivating the next generation of Web3 developers - Polkadot supports the growth of Web3 core developers through initiatives such as:

High-Level Architecture

Polkadot features a chain that serves as the central component of the system. This chain is depicted as a ring encircled by several parachains that are connected to it.

According to Polkadot's design, any blockchain that can compile to WebAssembly (Wasm) and adheres to the Parachains Protocol becomes a parachain on the Polkadot network.

Here’s a high-level overview of the Polkadot protocol architecture:

Parachains propose blocks to Polkadot validators, who check for availability and validity before finalizing them. With the relay chain providing security, collators—full nodes of parachains—can focus on their tasks without needing strong incentives.

The Cross-Consensus Messaging Format (XCM) allows parachains to exchange messages freely, leveraging the chain's security for trust-free communication.

In order to interact with chains that want to use their own finalization process (e.g., Bitcoin), Polkadot has bridges that offer two-way compatibility, meaning that transactions can be made between different parachains.

Polkadot's Additional Functionalities

The Polkadot chain oversees crowdloans and auctions. Chain cores were leased through auctions for three-month periods, up to a maximum of two years.

Crowdloans enabled users to securely lend funds to teams for lease deposits in exchange for pre-sale tokens, which is the only way to access slots on Polkadot 1.0.

Note

Auctions are deprecated in favor of coretime.

Additionally, the chain handles staking, accounts, balances, and governance.

Agile Coretime

The new and more efficient way of obtaining core on Polkadot is to go through the process of purchasing coretime.

Agile coretime improves the efficient use of Polkadot's network resources and offers economic flexibility for developers, extending Polkadot's capabilities far beyond the original vision outlined in the whitepaper.

It enables parachains to purchase monthly "bulk" allocations of coretime (the time allocated for utilizing a core, measured in Polkadot relay chain blocks), ensuring heavy-duty parachains that can author a block every six seconds with Asynchronous Backing can reliably renew their coretime each month. Although six-second block times are now the default, parachains have the option of producing blocks less frequently.

Renewal orders are prioritized over new orders, offering stability against price fluctuations and helping parachains budget more effectively for project costs.

Polkadot's Resilience

Decentralization is a vital component of blockchain networks, but it comes with trade-offs:

  • An overly decentralized network may face challenges in reaching consensus and require significant energy to operate
  • Also, a network that achieves consensus quickly risks centralization, making it easier to manipulate or attack

A network should be decentralized enough to prevent manipulative or malicious influence. In this sense, decentralization is a tool for achieving resilience.

Polkadot 1.0 currently achieves resilience through several strategies:

  • Nominated Proof of Stake (NPoS) - ensures that the stake per validator is maximized and evenly distributed among validators

  • Decentralized nodes - designed to encourage operators to join the network. This program aims to expand and diversify the validators in the ecosystem who aim to become independent of the program during their term. Feel free to explore more about the program on the official Decentralized Nodes page

  • On-chain treasury and governance - known as OpenGov, this system allows every decision to be made through public referenda, enabling any token holder to cast a vote

Polkadot's Blockspace

Polkadot 1.0’s design allows for the commoditization of blockspace.

Blockspace is a blockchain's capacity to finalize and commit operations, encompassing its security, computing, and storage capabilities. Its characteristics can vary across different blockchains, affecting security, flexibility, and availability.

  • Security - measures the robustness of blockspace in Proof of Stake (PoS) networks linked to the stake locked on validator nodes, the variance in stake among validators, and the total number of validators. It also considers social centralization (how many validators are owned by single operators) and physical centralization (how many validators run on the same service provider)

  • Flexibility - reflects the functionalities and types of data that can be stored, with high-quality data essential to avoid bottlenecks in critical processes

  • Availability - indicates how easily users can access blockspace. It should be easily accessible, allowing diverse business models to thrive, ideally regulated by a marketplace based on demand and supplemented by options for "second-hand" blockspace

Polkadot is built on core blockspace principles, but there's room for improvement. Tasks like balance transfers, staking, and governance are managed on the relay chain.

Delegating these responsibilities to system chains could enhance flexibility and allow the relay chain to concentrate on providing shared security and interoperability.

Note

For more information about blockspace, watch Robert Habermeier’s interview or read his technical blog post.

DOT Token

DOT is the native token of the Polkadot network, much like BTC for Bitcoin and Ether for the Ethereum blockchain. DOT has 10 decimals, uses the Planck base unit, and has a balance type of u128. The same is true for Kusama's KSM token with the exception of having 12 decimals.

Redenomination of DOT

Polkadot conducted a community poll, which ended on 27 July 2020 at block 888,888, to decide whether to redenominate the DOT token. The stakeholders chose to redenominate the token, changing the value of 1 DOT from 1e12 plancks to 1e10 plancks.

Importantly, this did not affect the network's total number of base units (plancks); it only affects how a single DOT is represented.

The redenomination became effective 72 hours after transfers were enabled, occurring at block 1,248,328 on 21 August 2020 around 16:50 UTC.

The Planck Unit

The smallest unit of account balance on Polkadot SDK-based blockchains (such as Polkadot and Kusama) is called Planck, named after the Planck length, the smallest measurable distance in the physical universe.

Similar to how BTC's smallest unit is the Satoshi and ETH's is the Wei, Polkadot's native token DOT equals 1e10 Planck, while Kusama's native token KSM equals 1e12 Planck.

Uses for DOT

DOT serves three primary functions within the Polkadot network:

  • Governance - it is used to participate in the governance of the network
  • Staking - DOT is staked to support the network's operation and security
  • Buying coretime - used to purchase coretime in-bulk or on-demand and access the chain to benefit from Polkadot's security and interoperability

Additionally, DOT can serve as a transferable token. For example, DOT, held in the treasury, can be allocated to teams developing projects that benefit the Polkadot ecosystem.

JAM and the Road Ahead

The Join-Accumulate Machine (JAM) represents a transformative redesign of Polkadot's core architecture, envisioned as the successor to the current relay chain. Unlike traditional blockchain architectures, JAM introduces a unique computational model that processes work through two primary functions:

  • Join - handles data integration
  • Accumulate - folds computations into the chain's state

JAM removes many of the opinions and constraints of the current relay chain while maintaining its core security properties. Expected improvements include:

  • Permissionless code execution - JAM is designed to be more generic and flexible, allowing for permissionless code execution through services that can be deployed without governance approval
  • More effective block time utilization - JAM's efficient pipeline processing model places the prior state root in block headers instead of the posterior state root, enabling more effective utilization of block time for computations

This architectural evolution promises to enhance Polkadot's scalability and flexibility while maintaining robust security guarantees. JAM is planned to be rolled out to Polkadot as a single, complete upgrade rather than a stream of smaller updates. This approach seeks to minimize the developer overhead required to address any breaking changes.

Edit this page
Last update: December 17, 2024
| Created: October 16, 2024