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Arrington XRP Capital recently published a report on Polkadot's technical and philosophical thinking. Arrington XRP Capital is a digital asset management firm for blockchain-based capital markets. His investments include Polkadot and Polkadot's ecological projects Acala, moonbeam and Subquery. Here are some excerpts:

Polkadot proposes a new solution to the multi-chain problem of nation-state coexistence in an international system. Each nation pursues its own destiny and vision for the future, but these diverse cultures come together to form alliances, engage in trade and live in a world of diplomacy rather than war.

This is the idea behind the relay chain, which is Layer 0 of Polakdot. Developers can develop custom blockchains for specific application scenarios and user needs, and become Layer1 parachains. These parachains cooperate and interoperate while sharing the security of the relay chain. They each focus on building their Layer1 core capabilities, but share the security of the L0 relay chain together.

Polkadot aims to be the blockchain of blockchains, decoupling state from applications and allowing each L1 to focus on the customizability of its own chain. L1 outsources security to the relay chain: each parachain can enjoy the benefits of the relay chain "standing army" without the need to raise, maintain, and deploy a "standing army" (a metaphor for validator nodes that provide network security). Therefore, the parachain can redeploy the resources originally used for L1 security to the core competitiveness of its own chain. This shared security unlocks the customizability of parachains without sacrificing security and built-in interoperability between different parachains.

Polkadot also has a unique economic design. Parachains rely on the security of the relay chain, but security is not free, it is scarce. Therefore, parachain slots are scarce, so its entire economic architecture is designed around how developers acquire, maintain, and outsource security.To price and allocate scarce resources for network security, Polkadot usescandle auction

Turn to the free market. This enables a permissionless, fair and competitive allocation of resources, with parachain auction slots funded by future users of the network through the CrowdLoan process. Projects that cannot bid for parachain slots can also access relay chain security through a pay-as-you-go model.

In this report, we lay out the technical and philosophical foundations of Polkadot. The first part will focus on how Polkadot solves the blockchain trilemma, focusing on the customizability of parachains. The second part will unravel the financing process of parachains through CrowdLoans, candle auctions and Parathreads. In the third and final part, we explored early parachain projects and described how they leveraged Polkadot's architecture to build their own custom blockchains.