The emergence of the blockchain is undoubtedly one of the most significant technological innovations of the modern era. The way we interact with technological systems and protocols has changed because of decentralization. Despite the innovative approach, there is currently no practical way for blockchains such as Ethereum and Bitcoin to communicate with one another.
Polkadot created an interoperable blockchain to connect multiple blockchains and allow them to communicate with one another. I wish to discuss Polkadot’s distinct key feature with our users in this article. We’ll go over the benefits of this feature and why it’s so valuable.
What is Polkadot’s parachain?
To truly comprehend Polkadot and its key feature, parachain, you must first understand the Ecosystem’s fundamentals. Parachains, also known as parallel chains, are autonomous individual layer-1 blockchains that function in the Polkadot and Kusama multichain networks. They are essentially parallel chains that use cross-network bridges to connect other blockchain networks like Bitcoin and Ethereum.
The relay chain is the main chain in the Polkadot ecosystem that ensures shared security and communication between the parachains. Polkadot can build bridges to other blockchains thanks to parachains and the relay chain. So, in essence, the protocols linked to Polkadot as parachains share the network’s scalability, security, and interoperability. Another feature of parachain that adds to its allure is its ability to support new use cases. Let’s look at the advantages of the parachain in greater detail.
The benefits of parachain
Governance: The parachain’s ability to adapt to any governance structure is one of its distinguishing features. They can use the on-chain governance model and access sophisticated on-chain governance systems to reduce the likelihood of parachain hard forks. In addition, using the on-chain governance model ensures accountability and transparency.
Interoperability: Every parachain can communicate with other parachains as well as blockchain networks. Smart contract calls, off-chain information, and token exchanges are now transferable to other blockchains, putting an end to the siloed nature of blockchain networks. This attribute allows for free and open trade between protocols, opening the door to innovations and developments. Every parachain can communicate with other parachains as well as blockchain networks.
Scalability: Blockchains can now scale at layer-1 rather than layer-2, thanks to the parachain structure. Parachain has enabled transactions on another layer to run concurrently with the network, allowing the blockchain network to scale.
Any project that wishes to become a parachain on the Polkadot network must first lease a slot by winning a parachain slot auction. Only the Ecosystem’s native token, DOT, can be used to place a bid for the parachain. The projects can choose to lease the slot for as little as six months and as much as two years.
The Polkadot slot auction aims to democratize the process and return power to the users. Through the Substrate crowdfunding module, projects that want to become parachains can accept DOT loans from DOT holders. The users who contribute DOT to the auction control the entire process. If the project cannot raise the necessary funds for the auction, the bid is forfeited, and the funds are returned to the contributors. We understand that for users to contribute to the slot auction, they must first know how it benefits them personally.
When a user contributes DOT to the parachain slot auction, the funds are locked for the lease period, but contributors will be rewarded in the form of their native tokens. Aside from that, investors are rewarded with governance roles and block production. In other words, you get rewarded for contributing DOT to a project to secure a parachain spot, and you also get your DOT back at the end of the lease period. This is a key difference between parachain auctions and traditional ICOs, as those who contribute DOT do so without needing to transfer control.
News that Polkadot founder Gavin Wood has launched a $777-million fund ahead of the network’s parachain lease auctions to promote development has underlined the strength of the project. Gavin Wood tweeted, “The treasury currently has 18,936,300 DOT (DOT, not USD – do the math) in it ready to spend on your ideas for building, improving, educating and indeed, anything else that the Polkadot governance believes valuable.” The news, “just weeks before Polkadot’s highly anticipated parachain auctions, which are scheduled to begin in early November, suggesting the funds could be intended to kickstart development targeting Polkadot’s forthcoming parachain ecosystem”, confirmed a recent Cointelegraph report.
BigONE Chairman Anndy Lian said:
“A big driver of the growth of the Polkadot ecosystem is the parachain auctions, driven by projects looking to secure one of the in-demand network slots. There is certainly plenty of scope for growth in the ecosystem as blockchain startups seize the capability to connect with other projects on Polkadot, as well as Bitcoin and Ethereum. This allows projects to focus on what they want to develop, harness the wider security benefits, and build faster using Polkadot’s Substrate. It’s this win-win that will drive the ecosystem.”
We want our users to understand that investing in the parachain slot auction is an excellent way to participate in the growth of the cryptocurrency sector while earning more money. You can take advantage of the parachain slot auction by participating in our innovative parachain slot auction promotion on BigONE Exchange in November. Don’t pass up this fantastic opportunity!
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.