Polkadot: Best Ethereum Alternative
For the last few years, smart-contract cryptocurrency has become the center stage of the crypto market as the investors and the users have turned to Ethereum alternatives. One of the top projects in this regard is Polkadot, we are now starting to see the final stage of this project.
- Founder → Gavin Wood
- Native Currency → DOT
- Technology used → Parity
Polkadot has raised around $170 Million in the 2017 ICO, and to compensate for the money lost in a wallet hack, Polkadot again raised $100 Million in two token sales in 2019 and 2020.
The Polkadot main net went live in 2019 but the transfer of Polkadot native cryptocurrency coin (DOT) started in August 2020.
It is a smart contract-based cryptocurrency, that uses novel proof of stake consensus mechanism called nominated proof of stake. It can handle 1000 transactions/ second.
DOT is the native currency of Polkadot and is used in staking. It is used to pay for the transaction fee and also to participate in the governance of Polkadot.
Staking rewards for nominators are around 14% and for validators, it’s around 15%.
Smart Contract Functionality:
Relay chain is the base blockchain of Polkadot and is not smart contract compatible. Relay chain only handles DOT transactions including transaction-related to staking and governance.
Smart contract functionality in Polkadot comes through Parachains. Parachains are blockchains that connect to the relay chain for security.
Types of Parachains:
- Common good Parachain: Common good Parachains are the blockchains that provide a function that is crucial for the Polkadot ecosystem such as a cross-chain bridge to Ethereum.
- Parathreads: These are the blockchains that can be shared with multiple crypto projects.
- Standard Parachains: These are blockchains that are leased for up to 2 years by a single crypto project.
On the Polkadot relay chain, there is a limit of 100 Parachain slots, so there is some process for crypto projects to secure the relay chain type.
→ The project to get a Common good para chain is selected by community governance.
→ The project to get parathread slots is those who pay the highest.
→ The project to get the regular para chain slot is selected through auctions.
Auction in Polkadot:
The auction is the same as a regular auction but the only difference is, instead of bidding by dollars here bidding is done by DOTs, and the winner is selected at any random time near the end of the auction, to avoid last-minute bidding.
PLO is also known as Parachain Loan offerings like ICOs, in PLO’s some of the crypto project tokens are exchanged in return for DOT to use it in its para chain slot auction.
The carbon footprint of Polkadot is the lowest among all the other cryptocurrencies reported in a national report.
Next Milestone :
The next milestone in this project is Polkadot 2.0 to increase scalability, interoperability, treasury management, and para chain onboarding.
Polkadot 2.0 will focus on how much power chain a relay chain support and whether it is possible to link multiple relay chains together.