What is Polkadot?

###1. What is Polkadot?
Polkadot is a technology designed to increase the interoperability of different blockchains, such as bitcoin and Ethereum, and combine them into a single multiblockchain.

###2. Who created Polkadot and when?
Polkadot was created by Dr. Gavin Wood, an iconic figure in the early history of Ethereum — he was the co-founder, first CTO and chief developer of Ethereum. Wood developed the code for the first implementation of the platform, wrote its formal specification, and created the Solidity programming language.
On January 11, 2016, Wood left Ethereum to pursue a project capable of meeting the expectations Wood felt Ethereum had failed to meet.
According to Wood, he got the idea for Polkadot in the summer of 2016, when he was waiting for technical documentation on sharding in Ethereum 2.0 to start implementing it. In collaboration with developer Marek Kotewicz [Marek Kotewicz], Wood began work on creating a “sharded” version of Ethereum as simple as possible, and by October 2016 had prepared the first draft version of the Polkadot white paper.
While still working on the Ethereum team, Wood and several colleagues founded EthCore, a commercial blockchain technology company. EthCore later changed its name to Parity Technologies. The company’s employees created the Parity Ethereum Client, the Substrate framework, the Polkadot network, and the Parity multisignature wallet.
In the summer of 2017, Wood and developer Peter Czaban founded the Web3 Foundation, a nonprofit organization dedicated to promoting the development of decentralized Internet software protocols.
One of the Web3 Foundation’s first tasks was to control the funds raised during the Polkadot ICO, which took place from Oct. 15 to Oct. 27, 2017. The project raised approximately $145 million by selling 5 million native DOT tokens.

###3. What problems does Polkadot technology solve?
Polkadot is designed to solve the key problems preventing blockchain technology from becoming a full-scale practical application, namely:

  • Scalability: so-called first-generation blockchains cannot process a huge number of transactions in the supposed decentralized world of the future. For now, network nodes process transactions in a one-to-one format. This factor holds back further growth of the network.

###4. How is Polkadot structured?
Polkadot is structured with the following components:

  • Relay Chain (linking or relaying chain) is the main Polkadot chain that connects all the individual blockchains (parachains) in the network.

###5. What functions does the DOT token perform?
A native DOT network token performs three main functions:

  • Governance: Token owners have full control over the protocol, with privileges that other platforms assign to miners — determining the transaction fee structure, deciding how to change the protocol, adding or removing parachains.

###6. How is the Polkadot project funded?
Although the project raised $145 million in its first token sale in 2017, there wasn’t enough money to develop it. In June 2019, the Web3 Foundation held an additional 500,000 DOT sale. The project’s projected capitalization thereafter rose to $1.2 billion.
In late July 2020, Web3 Foundation held another private token sale, raising $43.6 million.

###7. How is the Polkadot project evolving?
In November 2018, the blockchain startup platform Substrate, a tool designed to accelerate Polkadot’s development and enable corporate users to quickly launch distributed registries, was released.
In August 2019, the Polkadot development team launched an experimental version of the blockchain interaction protocol called Kusama. It was positioned as a testing ground “that would allow teams and individual developers to build and deploy parachains and test Polkadot’s management and distribution functionality in a real-world environment.”
The Kusama network ran on the Proof-of-Authority (PoA) consensus mechanism, with Web3 foundation responsible for the validator node functions. The functionality of the network remained limited.
At the end of February 2020, the Chainlink project completed its initial integration with the blockchain based on the Substrate platform. Polkadot developers called it a milestone in the implementation of Chainlink’s decentralized oracle network into the protocol ecosystem.
Oracles are necessary for the execution of smart contracts and the operation of dapps that use data from outside their own blockchain. Providing reliable third-party data feeds makes it possible to achieve interoperability across networks and expand the scope of smart contracts and dapps.
According to the developers, Polkadot ecosystem blockchains will be the first outside of the Ethereum system to use Chainlink oracles. Until Polkadot’s core network is fully launched, Chainlink’s information channels will serve the experimental Kusama protocol. For now, the parachain between Kusama and Chainlink is still under development.
On March 5, 2020, the Web3 Foundation awarded a grant to develop a “bridge” between bitcoin and Polkadot blockchains. The project is being handled by Interlay. The XCLAIM framework at the heart of the bridge BTC parachain will allow bitcoin-backed PolkaBTC tokens to be issued. These tokens will be transferable to other parachains. After burning PolkaBTC in a BTC parachay, users will be able to receive bitcoins at a 1:1 ratio or the equivalent amount in DOT tokens. The source code for the BTC parachain is posted on Github, and its specifications are also available.
On May 26, 2020, the Web3 Foundation, after more than three years of development, launched the first phase of the Polkadot blockchain core network, after which the network operated using the Proof-of-Authority (Proof-of-Authority) mechanism.
Web3 Foundation ensured the operation of nodes and block validation, and could intervene in the functioning of the blockchain in case of a critical situation. These measures were required to reduce the possible negative impact of bugs and security breaches. DOT token holders were given access to their accounts and the ability to request the deployment of a node or to propose a validator.
Transfers of DOT tokens remained unavailable. From a technical point of view, the launched first phase of the core network is more like a test phase.
On June 18, 2020, the Polkadot blockchain transitioned to the Nominated Proof-of-Stake (NPoS) phase following audits and finalization of final aspects. In addition, Interlay unveiled a “bridge” between bitcoin and Polkadot blockchains, so far in the Proof-of-Concept state.
In early July 2020, the developers of Polkadot, Cosmos and Terra promised to introduce the Anchor DeFi-protocol by the end of the third quarter of 2020, which will allow investors to earn interest income on deposits in Terra stabelcoins.
On July 20, 2020, the Web3 Foundation resigned as administrator of the Polkadot network, following a vote by community members. By that point, the number of validators had reached 197. This allowed the validation process to move to a decentralized model with community participation. The developers used the Proof-of-Stake algorithm, in which more than half of the issued DOT tokens are blocked.
A token-based control system was tested to approve a proposal to limit Web3 Foundation’s powers. Polkadot founder and Parity Technologies director Gavin Wood called the vote to remove the Sudo control module “poetic.
After the vote, the Polkadot network lost the “CC1” or “Candidate Circuit 1” designation. This marked the transition to the main network and the start of the third and fourth phase of the launch.
On July 27, 2020, the project tallied the results of the second validator vote. The vote determined that one DOT token should contain 10 billion Planck — the smallest share units. One old DOT is equivalent to 100 new ones. Web3 Foundation and Parity Technologies did not participate in the vote.
On August 4, 2020, Polkadot developers launched the Rococo test network to implement parachain sharding. Rococo is designed to test the Polkadot protocols that will enable communication between shards. Three separate parachains are available in Rococo: “tick”, “trick” and “track”, with developers being able to add their own parallel chains.
The test network supports horizontal messaging and uses the Proof-of-Authority (Proof-of-Authority) consensus mechanism. The developers warned that the system is still unstable, and promised to add new code to it in preparation for the full launch of the main network.

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