Editor's Note: This article comes fromGolden Finance, reprinted by Odaily with authorization.

Editor's Note: This article comes from

, reprinted by Odaily with authorization.

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While DeFi on Ethereum is in full swing, Polkadot has also made significant progress recently.

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background

Launched in 2016, Polkadot is managed by the Web3 Foundation, which is dedicated to building a free decentralized web. The Web3 Foundation contracted Parity Technologies to build its protocol. Its founders are Gavin Wood, eter Czaban and Robert Habermeier. Gavin Wood was one of the co-founders of Ethereum, thus bringing legitimacy and confidence in the eyes of many cryptocurrency enthusiasts, especially Chinese audiences.

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What is Polkadot?

Polkadot's protocol is similar to a bridged sharding protocol, with a focus on maintaining communication, value transfer, and collective blockchain security. It unifies blockchains into one network by allowing different blockchains to run in parallel and interoperate with each other. A unified network enhances the strengths of different blockchains and circumvents weaknesses.

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Components of Polkadot

Additionally, Polkadot uses libp2p for peer-to-peer discovery and communication. It is coded in C++, Rust and Golang languages ​​to facilitate development by a wide range of developers.

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The Polkadot governance model is clear on-chain. It aims to include all stakeholders in the governance committee. Users only need to hold native DOT tokens to participate in the system's decision-making. Currently, the Polkadot Council and Technical Committee have been established, so the project and its development direction are fully in the hands of DOT holders. Governance proposals are submitted by the Council, Technical Committee or DOT holders. A public vote is then held by DOT holders.

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Polkadot network status

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2. Adaptable consensus mechanism: Since different blockchains operate with different consensus mechanisms, the Polkadot platform provides an open and adaptable consensus mechanism to host them.

1. Infinite scalability: Polkadot can support an unlimited number of blockchains and connect them together. These are called Parachains.

4. Clear governance mechanism: It has a clear governance mechanism, which breaks the main problems faced by other blockchains.

5. Upgradability: Polkadot supports upgrades without the need for laborious hard forks to deploy protocol changes.

3. Cross-chain transactions: This framework can support value transfer between different blockchains. This is essential for interoperability and true integration.

4. Clear governance mechanism: It has a clear governance mechanism, which breaks the main problems faced by other blockchains.

6. Collective security: Blockchains connected to Polkadot can be protected through a unified security umbrella. This can help protect smaller chains that cannot be secured on their own.

• governance

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• Polkadot Token (DOT)

Polkadot tokens, represented by DOTs, are the native assets of the Polkadot platform. It has three main functions: governance, staking and bonding. The total supply of DOT is 10 million.

governance

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Decentralized networks require a consensus mechanism to ensure that only valid transactions are confirmed. Polkadot utilizes NPoS (Nominated Proof of Stake) as its validation algorithm. And, DOT holders can choose to participate in this essential network operation.

• Generally speaking, DOT holders can mortgage DOT to verify the Polkadot network. There is risk in staking DOT, and they can get rewards in return. This would also disincentivize bad actors from joining the network, as they would likely lose their staked tokens if they "misbehaved".

The requirements to participate in staking largely depend on the duration of the stake and the total number of tokens staked.

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The final use case for DOT tokens is bonding, the process of bonding DOTs to add new parachains. It is an extension of the proof-of-stake functionality.OKExOnce the Council and Technical Committee were established, a community poll was conducted to determine how many Plancks should be considered one DOT token. Planck is the smallest unit of exchange in Polkadot, and this value will not change. The community votes on how many Plancks one DOT is equal to. Now the community has decided that one DOT is equal to 1e10 Plancks instead of 1e12 Plancks. Therefore, the new version of DOT tokens will be equal to 1/100 of the old DOT tokens.

The token split will take place at approximately 13:15 (UTC) on August 21, 2020, at block height 1248328. At that point, the user doesn't have to do anything because it's just a front-end change. Likewise, most exchanges automatically increase users' DOT deposits after currency adjustments. That is to say, if you deposit 10 old DOT tokens before the currency adjustment, you will automatically have 1,000 new DOT tokens after the currency adjustment. In order to protect users from exchanging new DOTs, users must wait until the split to withdraw new DOTs.

Investors must remember that certain exchanges (such as

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Projects built on Polkadot

The Polkadot ecosystem has a wide range of services and uses. There are currently 188 projects under development on Polkadot. The areas of these projects include DeFi, cryptocurrency wallets, infrastructure, oracles, DAOs, privacy, exchanges, games, Internet of Things, scaling solutions, etc.

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The role of Polkadot in DeFi

Decentralized finance (DeFi) relies on composability, cross-chain communication, value transfer, and the integration of protocols with one another. This is actually the whole goal of the Polkadot project. Therefore, DeFi projects can take advantage of Polkadot.

Polkadot's Similarities to Upcoming Ethereum 2.0

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Phase 0 of Ethereum 2.0 is expected to go live in November 2020, and it will launch a highly anticipated staking mechanism. However, the full deployment of Ethereum 2.0 will not be completed until several years later. Polkadot, it seems, bears a striking similarity to Eth2.

For example, both blockchains support sharding, which means they can allow individual shards to take on the workload separately and communicate with each other to execute transactions in parallel. They both implement a hybrid consensus model, stake mechanism, and state transition functionality.