Polkadot might eventually beat Ethereum 2.0 in the transaction fee race, according to some industry experts. Web 3.0, interoperability, and layer zero are all the terms that are now being tossed around when describing Polkadot. But what do they all mean, and how will they affect the internet and the budding crypto market?
The team behind Polkadot says that it is tackling distributed ledger scalability and centralization of the web concurrently. First, imagine a world where Facebook gets replaced by a decentralized social media application that is powered by the Polkadot blockchain. That is what projects like Subsocial are trying to create within their platforms, which enables the users to determine what data to store privately and what they can share.
The users can share some profit from selling their data that is stored in the blockchain to third-party firms by minting some Ocean Protocol tokens, OCEAN, and selling them on a decentralized exchange like the Polkadex.
Anyone who is not happy about banks charging overdraft fees when their account balances reach below $1.00 needs to consider this technology. one Polkadot-powered project known as Acala has created an on-chain automatic scheduler that resembles a decentralized version of Stripe.
It enables the users to automatically transfer staking rewards to their wallet addresses, that can be linked to a given physical credit card. It means that a person can get paid for helping in securing a decentralized money and banking system and that this money they earn may be sent to a credit card and used for the purchase of a coffee at a Starbucks outlet.
Here you will get to learn how the slot auctions system enables projects to compete effectively for the right to remain linked to the network. Also, you will learn how Polkadot enables blockchains with various structures to co-exist in an interoperable nature with shared security. Readers will also know how the entire ecosystem surrounding Polkadot gave rise to many decentralized products, ranging from cloud computation to social network and prediction markets.
Does Polkadot Deliver On Ethereum’s Promises?
Ethereum’s consensus mechanism forces every node to authenticate all transactions. On the contrary, the Polkadot blockchain breaks up the batches of new transactions into multiple shards and processes them simultaneously. The blockchain plugging into the network may have different rules of operation, transaction processing, and different capabilities, providing the entire system with a lot of flexibility.
Currently, Polkadot is trying to achieve some scalability without having to decrease the network’s security. The famous issue, dubbed “blockchain trilemma,” was elucidated by Vitalik Buterin himself.
On the contrary to Ethereum’s single blockchain design, Polkadot appears to have many different blockchains known as parachains. These parachains plug into one main blockchain that is also known as the Relay Chain or layer zero.
Similar to the hub-and-spoke model that is commonly used in various airport designs, linking disparate blockchains through the central Relay Chain creates a way to send messages and transactions across many blockchains without slowing traffic down on the transaction highway.
Layer zero is the concept that layer-one protocols, like Ethereum and Bitcoin, maybe spokes and Polkadot might be the hub. For instance, the nonfungible token project known as Bit.Country is a Substrate-based blockchain that mainly uses a bridge with Ethereum. It enables assets to flow freely between Ethereum and metaverses built on Bit.Country’s TEWAI blockchain.
No Smart Contracts On Polkadot
Since Polkadot’s Relay Chain does not have any smart contracts, it is up to the blockchains that are plugged into Polkadot to support smart contracts. For instance, one parachain known as Moonbeam has full compatibility with Ethereum contracts. Moonbeam’s developers have created a strategy to interact with the digital currencies that are built on Polkadot through MetaMask, the popular web browser wallet that is used for decentralized finance.
It means that tokens built on Polkadot’s Substrate, which is a blockchain development tool, can be seamlessly sent on Ethereum wallets and various smart contract addresses. The next layer of the Polkadot ecosystem features projects that are building on top of the blockchains that are built entirely on top of the Relay Chain.
The next layer of the Polkadot network features projects that are building on top of the blockchains that are built on top of the Relay chain. For instance, Ocean Protocol is in the process of deploying its smart contracts onto the Moonbeam blockchain. By creating on top of Moonbeam, the OCEAN token becomes compatible with Ethereum and Polkadot blockchain applications.
Recreating Ethereum’s Network On Polkadot
The enhanced scalability of Polkadot enables a lot of projects to overcome Ethereum’s high transaction fees and the low number of transactions per second. In a similar way to Ethereum’s decentralized data storage projects like Sia, Filecoin, and Storj, Crust Network is creating a similar solution powered by Polkadot.
As opposed to Ethereum-based projects, Crust Network is not constrained by Ethereum’s scalability issues. Most of the applications that we have come to prefer to use on Ethereum are getting reconstructed on the Polkadot network or integrated through chain-agnostic gateways.
The Polkadot ecosystem is now brimming with projects that range from decentralized cloud computing with Phala Network to cross-chain custodial wallets like the browser-based MathWallet. Notably, the hardware-based virtual private network project known as Deeper Network has already sold more than 10,000 physical devices on Amazon, Indiegogo, and BestBuy.
Deeper’s blockchain solution coordinates all devices and routing in a privacy-preserving way, maintains the device registry in the form of public-key infrastructure, and mostly manages staking and reputation subsystems.