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Web3 Encyclopedia
  • Welcome aboard!
  • Source
  • 😀Evolution from Web 1.0 to Web 3.0
    • Web 1.0 Web 2.0 Web 3.0
    • Key Features
    • Current Limitations
    • Future of Web 3.0
    • Learn: What Is Web3?
    • Learn: Will Every Brand Have a Web3 Strategy?
    • Learn: Big Ideas in 2023
    • Learn: The Web3 Paradox: Why Scaling Usage Alone Won't Lead to Mass Adoption?
    • Learn: Is Web3 A Marketing Buzz or Tech Revolution?
    • Learn: What is the relationship between blockchain and Web3?
    • Learn:Empowering Women in Web 3.0: The Role and Contributions of Women in Blockchain, DeFi, and dApp
    • Learn: Web 3.0 and the Future of E-Commerce
    • Learn: 12 ways ecosystem projects can attract more developers
    • Learn: How Web3 is Impacting Education?
    • Learn: Web3 And The Future Of Digital Advertising
    • Learn: Web3’s impact on personalization, trust and engagement
    • Learn: Web3-Powered Identity Management -- Unlocking the Benefits of Decentralization
    • Learn: Why Web2 companies fail in Web3 while others made it?
    • Learn: To Identify or Not in a Web3 World?
    • 🤫[Insider Series] McKinsey x Web3
    • TL;DR 👀
  • 💲Blockchain Fundamentals
    • Why is Blockchain So Popular?
    • Introduction to Blockchain
    • Blockchain Misconceptions
    • Blockchain vs Bitcoin, Database, Cloud
    • Consensus Mechanism
    • Public and Private Keys
    • Hash Functions and Cryptography
    • Sharding
    • Types of Blockchains: PoW, PoS and Private
    • Understanding Cryptocurrency
    • Coins vs Tokens
    • Blockchain Trilemma
    • Legality
    • Learn : Google’s Cloud Based Blockchain Node Service
    • Learn: How Blockchain, Digital assets, and Web3 Unlock Financial Inclusion Globally
    • Learn: Will Chinese-Made Crypto Soar Higher?
    • Learn: What Does MiCA Mean for Crypto in Europe?
    • Learn: Unraveling the Intricacies of Blockchain Forensics and Asset Tracking
    • Learn: Promising blockchain use cases in healthcare industry
    • Learn: The Role of Blockchain in Authenticating and Provenance Art
    • Learn: Blockchain-Based Digital Identity: Benefits, Risks, and Implementation Challenges
    • Learn: The Future of Energy Supply Chains
    • Learn: Revolutionizing smart contracts and cryptocurrency
    • Learn: Nigeria goes blockchain
    • Learn: A Game Changer for Online Gaming?
    • Learn: Is blockchain technology ready for high-storage applications?
    • Learn: Will Blockchain Technology Mark a Turning Point in Fraud Prevention?
    • Learn: Why ZK-rollups need data availability?
    • Learn: How will generative AI disrupt blockchain?
    • Learn: A New Blockchain for Generative AI?
    • TL;DR 👀
  • 🏟️Web3 Utilities
    • Decentralized Applications (dApps)
    • Cross-chain Bridges
    • DAO
    • Artificial Intelligence
    • Learn: Is Community-building Essential for Web3 Startups?
    • Learn: ‘Decentralization Theater’
    • Learn: Crypto and AI- A yay or nay combination?
    • Learn: Dissecting the DAO
    • Learn: What is motivating Lido DAO to rise?
    • Learn: How to Turn Your Community Into a DAO?
    • Learn: The Key to Decentralized Decision Making
    • Learn: How Web 3.0 can disrupt the supply chain industry?
    • TL;DR 👀
  • 🪙Bitcoin
    • What is Bitcoin
    • Bitcoin's Blockchain Technology
    • UTXO Model and Transaction Fees
    • Bitcoin Mining and Mempool
    • Learn: What is bitcoin mining?
    • What are Hard Forks and Soft Forks
    • What is SegWit and the Lightning Network
    • Bitcoin Ecosystem
    • Can Bitcoin be Destroyed? Game Theory and Network Attacks
    • Learn: Crypto token supplies explained
    • Learn: What is crypto tax-loss harvesting, and how does it work?
    • Learn: Can Crypto Go Green? How to Invest in Eco-Friendly Cryptocurrencies
    • Learn: Why Did FTX Collapse? Here’s What to Know.
    • Learn: How Sam Bankman-Fried swindled $8 billion in customer money?
    • Learn: How much is Bitcoin worth today?
    • Learn: The Costs of Running a Bitcoin Node In Nigeria
    • Learn: Has 2022 Left Any Crypto Positives?
    • Learn: How Crypto Exchanges Can Be Free of Risk?
    • Learn: Greed, Lies and FTX: Is Crypto a Force for Good or Evil?
    • Learn: Is Crypto a Cultural Movement?
    • Learn: What are the consequences of crypto’s ongoing regulatory process?
    • Learn: Beyond the Crash and Embracing NFTs?
    • Learn: Understanding crypto bag holders and their mindset
    • Learn: Inscriptions: Just A Fad, Or A Real Threat To Bitcoin Becoming Decentralized Money?
    • Learn: How Bitcoin Ordinals Can Change the Future Of Mining?
    • Learn: What is a supernet?
    • Learn: Bitcoin Miners Celebrate 10 Years Since First ASIC, What Changed Since Then?
    • Learn: Bill Vs. CBDC – Why This US Congressman Wants To Block The Fed From Issuing A Digital Dollar?
    • Learn: Why Bitcoin Will Blow People’s Minds In 2025?
    • Learn: How the Howey Test Sheds Light on Cryptocurrency's Regulatory Gray Area
    • Learn: Cryptocurrency vs AI: A Complex Debate
    • Learn: Where the U.S. Government Went Wrong in Regulating Crypto?
    • Learn: The Nostr Privacy Paradox
    • Learn: Do algorithmic stablecoins have a future as centralized coins are under scrutiny?
    • Learn: Is Bitcoin Set To Revolutionize The Financial World With Its Superior Purchasing Power?
    • Learn: What is Shibarium, and what does it mean for Shiba Inu?
    • Learn: What is a crypto dusting attack?
    • Learn: Is the Adoption of Central Bank Digital Currencies (CBDCs) the Future?
    • Learn: How Artificial Intelligence Could Revolutionize Crypto?
    • Learn: What’s next for EU’s crypto industry as European Parliament passes MiCA?
    • Learn: Why the EU Has MiCA and the U.S. Has Securities Law Confusion?
    • Learn: Six New Projects Looking to Mitigate Bitcoin Mining’s Energy Footprint
    • Learn: Who on Crypto Twitter chose not to pay for a blue checkmark?
    • Learn: What is the wash-sale rule in Crypto?
    • Learn: What is Pepecoin and can it flip memecoins Dogecoin and Shiba Inu?
    • Learn: Can you recover stolen Bitcoin from crypto scams?
    • Learn: What the ‘anti-mining bill’ means for the crypto industry in Texas?
    • Learn: Does the US have a crypto ‘tax loophole’ problem?
    • Learn: How users can stay protected?
    • Learn: How Crypto Revolutionize Cheaper and Faster Transactions?
    • Learn: Can NFTs and CFDs be BFFs?
    • Learn: A PR expert’s tips for memecoin projects
    • Learn: Why politicians aren't convinced about the Digital Euro?
    • Learn: How A 90-Year Old TA Theory Predicted The Sudden Bitcoin Boom?
    • Learn: Social Trading Platforms and CFDs: A New Paradigm in Investment
    • Learn: How could the Chinese economic crisis impact Bitcoin and crypto?
    • Learn: How do they compare: Bitcoin IRA vs. traditional IRA?
    • Learn: Why Tokenized Assets Are Safer During a Banking Crisis?
    • TL;DR 👀
  • 🛢️Ethereum
    • Bitcoin vs Ethereum
    • What can Ethereum do?
    • What is Ether (ETH)?
    • What's Unique About ETH?
    • What are Smart Contracts?
    • Energy Consumption?
    • Ethereum Virtual Machine (EVM)
    • Pros & Cons of Smart Contracts
    • Decentralized Applications (dApps)
    • Ethereum Token Standards (ERC-20, ERC-721 and ERC-1155)
    • Evolution of Ethereum
    • How to Get Your First Ethereum
    • Learn: Next Ethereum Upgrade — Shanghai Upgrade
    • Learn: Tipping Scale for Crypto Adoption: Usability vs. Accessibility
    • Learn: Major Publicly Traded U.S. Bitcoin Miner Files For Chapter 11 – Impact On The Market?
    • Learn: 5 altcoin projects that made a real difference in 2022
    • Learn: How Tether Can Be a More Stable Stablecoin?
    • Learn: Are the Ethereum Killers Still Deadly?
    • Learn: What Ethereum Tech Trends Are Weathering the Bear Market?
    • Learn: How Ethereum’s token burns are making it a deflationary cryptocurrency?
    • Learn: A few things to know about Ethereum's Shanghai Upgrade
    • Learn: The Role of Enterprise Ethereum
    • Learn: Understanding Layer 2 Scaling Solutions for the Ethereum Network
    • Learn: The Battle of Giants: Bitcoin vs Ethereum
    • Learn: Cryptography, Smart Contracts and Distributed Networks
    • Learn: The Memecoin Grift and How It Threatens Ethereum Culture
    • Learn: What Is Ethereum’s ‘Data Availability' Problem, and Why Does It Matter?
    • TL;DR 👀
  • 👛Wallet
    • What is a Blockchain Wallet?
    • Hardware / Software Wallet
    • How to Get Your First Cryptocurrency
    • Setting up Metamask Wallet
    • Learn: How to connect the Avalanche network to MetaMask?
    • Learn: How to pass on your crypto when you die?
    • Learn: What are hierarchical deterministic (HD) crypto wallets?
    • Learn: Pros and Cons of Digital Wallets
    • Learn : How Web 3.0 Wallets Are Redefining Digital Asset Security?
    • Learn: Open source: Buzzword or real security for crypto wallets?
    • TL;DR 👀
  • 🌕New & Rising Protocols
    • Binance
    • NEAR
    • Solana
    • Fantom
    • Polygon
    • Cardano
    • Polkadot
    • Cosmos
    • Harmony
    • Cronos
    • Optimism
    • Terra
    • Who Will Win the L1 Wars?
    • Learn: New Layer 1 Blockchains Are Expanding the DeFi Ecosystem But No Eth Killers Yet
    • Learn: Is an Increased Focus on Layer-2 Scaling and ZK Technology Justified?
    • Learn: What Are the Stakes in the SEC vs. Ripple Case?
    • Learn: What is The Graph, and how does it work?
    • TL;DR 👀
  • 📈Decentralized Finance (DeFi)
    • CEX vs DEX
    • CeFi vs DeFi
    • Algorithmic Stablecoins
    • Airdrop
    • Liquidity Pool
    • Impermanent Loss
    • Swapping
    • Wrapped Token
    • Arbitrage Opportunities
    • Staking
    • Yield Farming
    • Total Value Locked (TVL)
    • Gas Fees
    • Lending & Borrowing
    • Useful Tools
    • Activity: Uniswap & Pancake Swap
    • Learn: Automated Market Makers (AMMs) in DeFi
    • Learn: Crypto Moving towards ESG: What Is Regenerative Finance (ReFi)
    • Learn: What Is dYdX? Understanding the Decentralized Crypto Exchange
    • Learn: It's A Wrap - DeFi in 2022
    • Learn: Why DeFi should expect more hacks this year?
    • Learn: The Security Challenges of DeFi
    • Learn: The Promising Future of Decentralized Social Media on Web 3.0
    • Learn: Can CBDCs, Tokenized Deposits, Stablecoins and DeFi Coexist?
    • Learn: The Increasing Popularity of DeFi and Its Potential to Disrupt Traditional Finance
    • Learn: The future of DeFi is ReFi
    • Learn: DeFi aggregation
    • TL;DR 👀
  • 🙈Non-Fungible Token (NFT)
    • What are NFTs?
    • Case Study
    • Storage
    • Who are the Players?
    • NFT Marketplace
    • NFT Useful Resources
    • Activity: Mint Your Own NFT
    • Learn: How You Can Prevent Hackers From Stealing Your NFTs?
    • Learn: What Is an NFT Floor Price?
    • Learn: Should Bored Ape buyers be legally entitled to refunds?
    • Learn: China’s view of NFTs different from rest of the world’s
    • Learn: NFTs IRL: How Digital Collectibles Are Forging Offline Experiences
    • Learn: How NFT Brands Can Cut Through The Noise
    • Learn: How Web3 disrupts the music sector?
    • Learn: Unlockable content in NFTs
    • Learn: Why Meta Matters in NFTs?
    • Learn: Should NFT Marketplaces Become Centralized?
    • Learn: Hermès vs. MetaBirkins: The NFT Case That Could Have Major Trademark and Artistic Consequence
    • Learn: What are phygital NFTs, and how do they work?
    • Learn: What is NFT ticketing and how does it work?
    • Learn: Why Solana NFT marketplace is seeing less active users?
    • Learn: NFTs and Intellectual Property
    • Learn: How AI Is Changing Artistic Creation and Challenging IP Laws?
    • Learn: The Future of NFTs: Exploring Dynamic NFTs and Their Versatile Use Cases
    • Learn: NFTs in the event and ticketing industry
    • Learn: What is NFT rarity, and how to calculate it?
    • Learn: What happens to your NFTs when you die?
    • Learn: Dogecoin-Like Spike in Milady NFTs After Elon Musk’s Tweet, But Will It Last?
    • Learn: What are NFT royalties, and how do they work?
    • Learn: How developers aim to store crypto inside NFTs?
    • Learn: Generative Art NFTs: What Are They & Why Are They So Popular?
    • TL;DR 👀
  • 💗Metaverse
    • What is the Metaverse?
    • Metaverse Economy
    • Metaverse Companies
    • GameFi
    • Learn: Are We in the Metaverse Yet?
    • Learn: Can the Metaverse exist without blockchain?
    • Learn: Can the Metaverse Facilitate Sustainable Growth of Defi Systems?
    • Learn: What is the role of biometrics in the metaverse?
    • Learn: Can metaverse be the future court?
    • Learn: Metaverse Fashion Is on the Rise, but for Whom?
    • Learn: Sustainability in the Metaverse: Challenges and Opportunities
    • Learn: How To Build A Responsible Metaverse?
    • Learn: What is a VTuber, and how do you become one?
    • Learn: How proof-of-identity provides human experiences?
    • Learn: The “Metaverse” Next Frontier for Business: Impact And Challenges
    • Learn: The 5 Biggest Misconceptions About The Metaverse
    • Learn: Why culture and ownership are critical to the metaverse?
    • TL;DR 👀
  • 👾Career in Web3 (coming soon)
    • Developers
    • Moderators
    • Community Managers
    • UI/ UX Designers
    • Digital Fashion Designers
  • 🌱Sustainability (Coming Soon)
    • Industry Effort
    • Co-author
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On this page
  • What is Polkadot?
  • How Polkadot formed
  • Polkadot’s native token (DOT)
  • Polkadot’s architectural technology
  • Polkadot's vision for the future
  1. New & Rising Protocols

Polkadot

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Last updated 2 years ago

What is Polkadot?

, created by Gavin Wood — a British computer scientist who also co-founded Ethereum — is a platform that allows different blockchains to transfer value in a trustless fashion and share their unique features while using one secure channel. Wood sees the Polkadot network as the to Ethereum’s 2.0 network upgrade currently under development.

Polkadot has concentrated its attention on becoming a fully scalable, heterogeneous network focused on creating a multi-chain technology. Web3 Foundation — the Swiss organization that runs the network — has described Polkadot as a 'next-generation blockchain.'

How Polkadot formed

Wood and Jutta Steiner, former head of security at Ethereum, also co-founded Parity Technologies, which was tasked with continuing Polkadot’s development.

Polkadot was first launched in May 2020 as a proof-of-authority (PoA) protocol. Its governance was controlled by a single Sudo (super-user) account. After launch, validators joined the network to participate in its consensus protocol.

Polkadot’s native token (DOT)

The governance function allows DOT holders to exercise control over the Polkadot network. DOT holders can determine the network’s operating fees, auction dynamics and schedule for adding new parachains. They can also decide when it may be necessary to execute upgrades and fixes on the platform.

Further, DOT plays an active role in securing the network. As a proof-of-stake protocol, DOT holders are tasked with the duty of validating transactions across parachains. To participate, DOT holders have to stake their DOT tokens.

The third role DOT plays in the network is the ability to add new parachains by holding DOT — which is known as 'bonding'. During this period, DOT tokens are unavailable for use and will only be released once the bonding period is over and the parachain is removed.

Polkadot’s architectural technology

Polkadot operates differently from the Ethereum network in its drive to become a heterogeneous blockchain network. It uses parachains and parathreads, which link to the main Polkadot Relay Chain. The chains also connect to external networks through bridges in the platform.

Polkadot comprises three types of chains:

  • Parachains

Parachains are standalone, independent blockchains hosted on the Polkadot platform. These custom blockchains are built to achieve specific purposes and address specialized challenges. They leverage Polkadot’s computing resources to validate the accuracy of transactions done on the network. Parachains are granted the freedom to develop their own governance systems while using Polkadot’s shared security feature.

To be eligible to run a parachain on Polkadot, projects have to lease a slot on the Relay Chain through a slot auction.

  • Relay chain

  • Parathreads

Parathreads share the same functionality as parachains, with a few differences. Parathreads are parachains built on a pay-as-you-go model, rather than by leasing a slot. Parathreads are primarily suitable for projects that don’t require continuous access to the network.

Polkadot’s other features include:

  • Bridges

  • Nominated proof of stake (NPoS)

  • Substrate framework

Why do some investors believe Polkadot can rival Ethereum?

Polkadot’s founders cut their teeth on Ethereum. Ethereum’s influence can be seen in the development of Polkadot’s ecosystem. Many industry experts see similarities between the two networks.

Polkadot’s idea of an interconnected blockchain ecosystem is a draw for developers who wish to leverage Polkadot’s established blockchain community to create awareness for their projects. Its drag-and-drop templates let teams build blockchain networks in minutes instead of building them from the ground up.

Polkadot's vision for the future

Polkadot appears poised to continue its mission of developing a blockchain network that operates in a trustless fashion for verifying data and value transfers in its quest for a decentralized internet.

Source

Polkadot began with a that Wood published in 2016. Wood, a former CTO of Ethereum, is reputed to have written Ethereum’s Solidity programming language during his stint with the Ethereum Foundation.

Working closely with Ethereum’s co-founder in 2015, Wood reportedly became dismayed when the proposed start for development was delayed.

Wood left Ethereum in 2016 to build a version of Ethereum. After that, he started the Web3 Foundation, which focuses on the research and development of decentralized technologies, including Polkadot.

Polkadot was birthed from precursor project in 2019 as an unaudited canary network. The canary feature (think “canary in the coal mine”) helps the development team uncover any major concerns before they’re launched on the mainnet.

The , which has faster governance parameters and lower entry barriers, is also a standalone, independent network. The company considers Kusama’s unabridged system a tool for experimentation and early-stage deployment.

The network quickly jettisoned the proof-of-authority consensus algorithm and adopted the well-tested (PoS) protocol on June 18, 2020.

With its blockchain network secured by a decentralized community of validators, its super-user account was abandoned in July 2020, with the network moving governance into the hands of its DOT token holders. This paradigm shift saw Polkadot achieve its goal of becoming a decentralized .

Polkadot’s token is currently the eighth largest cryptocurrency by at the time of publication. The utility token provides governance, bonding and staking functions in the network.

The Relay Chain runs very minimal operations at its interface with the mechanism, parachain auctions, and Nominated Proof of Stake (NPoS). Its lighter functionality base affords the Relay Chain greater speed to process new transactions. This unique method has seen Polkadot process 1,000 transactions per second (TPS), according to a 2020 .

The relay chain is the of the Polkadot protocol. It is responsible for the network’s shared security, consensus, and cross-chain interoperability. It’s the main blockchain in the network where value and transaction blocks are completed.

Bridges fulfill Polkadot’s goal. This important feature lets Polkadot connect and communicate with external networks like Bitcoin and Ethereum. Polkadot is currently working to extend bridges to other blockchains within the ecosystem so that tokens can be swapped without a central authority.

Polkadot uses a more modern consensus protocol in the nominated proof-of-stake algorithm. This is designed to maximize the network’s shared security so that no one parachain is corruptible. allows those staking DOT tokens to nominate validators they feel will best serve and secure the network. Unlike the similar delegated-proof-of-stake system, NPoS makes it possible for nominators to be subjected to a loss of stake if they nominate a bad actor.

is a software framework developed by Parity Technologies to create custom blockchains. Polkadot uses a substrate framework as part of its underlying technology. As developed by the Parity , Substrate allows developers to create purpose-built blockchains without spending so much time or requiring experts in the blockchain field to do so.

Substrate is further a toolkit allowing access to a library of custom templates to increase the ease of blockchain development. Its 'Wasm' (WebAssembly) allows dev teams to build smart contract platforms out of the box.

Ethereum’s overwhelming popularity, however, has also led to , and dissatisfied users seeking alternatives. The is expected to solve these issues when it launches, but Polkadot is thought by some to present a more viable and scalable solution. Its independent heterogeneous multi-chain network is said to make it easy for developers to create and deploy new projects quickly and affordably.

These functionality upgrades have seen developers and showing interest in Polkadot. Within four months of Polkadot’s launch, DOT had into becoming the seventh largest cryptocurrency, with a market cap of $3.7 billion. Today, Polkadot sits with an $8 billion market cap at the time of writing.

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white paper
Vitalik Buterin
Ethereum 2.0
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Nominated Proof of Stake
Substrate
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