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24 January 2023

Polkadot Blockchain Development Trends in 2023

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Polkadot represents a promising and actively developing project, a full-fledged ecosystem with a heterogeneous multi-chain blockchain structure. The development is distinguished by the fact that users can create their own blockchains based on the network, adding unique features, properties, functions, determining the amount of commission but most importantly to connect existing ones to work in parallel.

ICO Polkadot

In 2017, a token sale (ICO) was held on July 30 which was required for the project to raise funds for further development and growth. Payment was made in ETN and investors could receive any number of ecosystem tokens at 29 cents each. The total issue was 10 million tokens, 50% of which were tendered.

The coin issue was planned for Q3 2019 but not all investors were willing to wait 2 years and their loyalty fully paid off. Investors could get a return of over 8,000% in dollar terms from the Tokensale through 2021, 1,400% in ETNs and 1,000% in VTCs.

Auction process was not perfect itself, as there was a bug in Parity's wallets that caused $150 million to be frozen. 100 million of which were funds from investors who bought DOT cryptocurrency. A smart contract bug caused a hacking attack, which resulted the destruction of the contents, along with the assets. Network executives have promised to fix the problem with compensation, saying that these circumstances are useless but instructive for them.

DOT token distribution

By 2021, blockchain and its native token had made it into the top cryptocurrencies by market capitalization with a total of $20 billion. The team is still actively working, providing clients with all the tools of the ecosystem.

Polkadot networking methodology

Blockchain technologies have already shown significant changes in the field of digital assets and are gradually being used in everyday life, simplifying many tasks. The main prospects are related to the following areas of activity:

  1. Governance and government.

  2. Finance.

  3. Asset control.

  4. Identification.

  5. Web decentralization.

  6. IoT.

Due to design features, many popular platforms, programs, and developments could not be widely used in ordinary life.

For example, the Ethereum 1.0 network lacked sufficient bandwidth until the transition to 2.0 was made. Transaction fees were $10-$50, which precluded full trade transactions and the use of blockchain as a new type of information base.

Polkadot was developed by the Web3 Foundation in the guise of an open-source decentralized network. The main task is to create the possibility of interconnection between different blockchains, to launch smart contracts, and DApps.

Polkadot and its structure offers a number of advantages over other blockchains at once:

The project is a heterogeneous multi-blockchain, comparing with Bitcoin, serving exclusively its own heights, Polkadot gives a relational chain. Such a solution helps to host and process multiple structures in parallel - parachains or parallel blockchains. At the same time, they may not be full-fledged networks in the full meaning of blockchain terminology.

Polkadot is segmented, scaling as the number of parachains increases. Relay circuits make adjustments to the validity of the network and there is the possibility of dynamic addition, deletion and stopping of parachains. Community quickly receives alerts on violations, penalizing such participants.

To work with other blockchains, such as Ethereum or Bitcoin, Polkadot shards can connect using bridges. In this way, VTC owners are able to burn them, receiving an equal equivalent in PolkaBTC and vice versa.

Features of the network, the principle of operation Polkadot

Gavin Wood, the head of Polkadot, is the technical director of the Ethereum network. He is the one who founded the Solidity language for Ethereum smart contracts. Robert Habermeyer and Peter Chaban also head the blockchain.

The architecture of the project is different from Ethereum, using 4 levels of protocols at its core and each type of chain is needed for a specific role:

  1. The Relay Chain is the basic element of the architecture. The others are connected to this chain. It helps in exchanging data between them. This level is needed for interoperability, the security of all connected elements to the ecosystem.

  2. Parachains - regular Tier 2 blockchains, which, once connected, run in parallel. Ethereum shards are analogous but in Polkadot they differ significantly in tokens, architecture and specification. In addition, there a collective security within the ecosystem.

  3. Parathreads are similar to parachains but operate on a pay-as-you-go model. They have no permanent connection to a relay chain, sometimes there is a connection for transaction checking or information exchange. The system is used for economy, as the payment is made only after connection to the main chain.

  4. Bridges (Bridge Chains) - protocols designed to connect to other networks that do not work within the Polkadot ecosystem (Ethereum or Bitcoin, etc.). Such an element in the architecture establishes the process of information exchange between different types of blockchains.

Polkadot network architecture. Source

Polkadot consensus algorithm

The main blockchain chain reaches consensus using a hybrid system of its own modification. The developers implemented 2 unique protocols GRANDPA and BABE with Proof-of-Stake at their core.

BABE is Blind Assignment for Blockchain Extension. This is an element of blockchain production with a random determination of possible validators. Blind Assignment is done for each slot with a life cycle of only 6 seconds. Any slot may have more than one validator at a time or no validators at all. Some validators, all the time, build up a parallel fork which disconnects after finalization. Such a mechanism gives a constant consensus without pauses and the probability of a network deliberate attack.

GRANDPA - GHOST-based Recursive Ancestor Deriving Prefix Agreement. The technology is used to fully finalize the Polkadot Relay Chain. BABE will continuously build exclusively on GRANDPA-approved circuits. The work is done in a partially synchronized network model and for normal operation it is enough to satisfy the honesty of the 75% validators. The main difference is that the model receives agreements on chains rather than blocks, positively affecting the speed of transactions, even in the case of long splits or other disruptions in the blockchain.


These network representatives are responsible for blockchain security by sending their native DOT tokens onto the stack. They confirm proofs, take part in consensus building. There are 2 important functions of validators:

  1. Validating the data that is in the parachain blocks.

  2. Participate in the consensus process by providing other validators with blocks in the relay chain for comparison.

In case of possible creation for blockchain state validation inconsistency, the validator is penalized and some DOT coins are withdrawn from the stack. If the performance is positive and the rating is good, a reward is provided for each block found.

Why we need validators in Polkadot blockchain


A blockchain element for protecting the relay chain during the selection of reliable validators and token placement in stacking.

Not every network user can provide constant access to a server or PC to perform validator tasks. If there are free network tokens on the balance, you can easily nominate them to a particular validator and keep track of the increase in coins.

It is important to choose carefully. Improper node behavior can lead to the loss of nominator coins. Any stacking is frozen for a certain amount of time after placement under validation and you need to calculate this factor. Even on request, the return of coins by the validator may not be before a month.


Needed to maintain parachains, collect information on transactions. Data is transmitted to relay chain validators for further validation. It is important for the collators to keep the full node functioning by keeping the parachain and the relay blockchain in sync all the time.

Fishermen (Fishers)

This network element monitors the behavior, if it is not compliant, the data is passed to validators. Collators can act as fishers, earning additional profits in the native token. Coins are withdrawn from consensus violators in favor of fishers.

Roles in Polkadot consensus mechanism

Supported Blockchains

Many blockchains existing in 2022 can connect in the Polkadot ecosystem using bridges. Creating such a connection for familiar blockchains is a challenge. Connected networks can retain their own consensus algorithm, security participants, while enabling convenient data exchange with Polkadot parachains.

The most obvious benefit is the pool of security achieved through using PoA consensus. Developers don't have to think about creating a group of miners or validators to protect the network with the pool of validators and nominators performing these tasks themselves.

Potential Polkadot parachains and their counterparts

The second important element on supporting blockchains is the scalability of Polkadot. Parachain and PoA provides the ability to improve throughput, positively affecting energy efficiency compared to PoW.

As of 2022, the list of parachains (Polkadot Network substrates) includes more than 100 projects.

History of DOT cryptocurrency

The founder of the Polkadot project is Gavin Wood, who co-founded Ethereum. In 2016, Wood presented documentation on the development of the Polkadot Protocol describing the basic concept of the next-generation network. The main parameters are next-generation sharding, multiple circuits, and the PoS algorithm.

Web3 Foundation is a corporation developing a new platform, the decentralized Internet. The list of tasks included:

  1. Metaprotocols with different levels of trust.

  2. P2P protocols.

  3. Universal languages.

  4. Transaction processing, which are not used for persistent storage.

  5. Data transfer algorithms.

  6. State channels.

  7. Complex calculations.

  8. Web3 browser.

The main leaders of the Polkadot team:

All of them bring years of experience in various fields, having worked at Parity Technologies and the Web3 Foundation commissioned Polkadot Network to develop. In the development of Web3, its role is as follows:

  1. Developing the peer-to-peer network.

  2. Integrating blockchain technology.

  3. Development of crypto-economic elements.

The earliest code development projects that have not been audited were created in the Kusama ecosystem. The network was used as a place to learn the technology fully.

DOT Token

DOT is the native token of the Polkadot ecosystem. The cryptocurrency's mission is based on 3 main functions:

  1. Voting within the network.

  2. Providing circuits connected to the blockchain in the form of a parachain.

  3. Stacking.

From August 19, 2020, open information about asset trading began to appear. On August 21, all investors received 100 times more tokens in their wallets and listing on various cryptocurrency exchanges was launched during this period.

The base capitalization was $5 billion but it grew steadily. By 2020, it was $20 billion. The first 5 million coins were sold at the ICO for 29 cents. The listing on the exchanges began with a prime of $3.

DOT asset value trends

As a reward to validators, token growth of 150 million coins is planned annually (inflation of about 10%).

The future trend of the native token and the ecosystem as a whole, depends only on the work of the community and users of the network. The creators have given every opportunity to unlock the potential of any startups:

The team is willing to sell 90% of its assets in the form of Crowdsale to ensure decentralized management. As of 2022, DOT has surpassed Polygon (Matic), AVAX, Tron (TRX) and several other projects in terms of its capitalization.

The main functions of the network's native token are:

  1. Governance - apart from selecting validators, coin holders use votes to determine amounts and types of commissions, have the right to add or remove parachemes from the ecosystem and take part in protocol changes. Holders have all the rights that miners have, they are in other blockchains on PoW.

  2. Stacking - The ecosystem pays token holders for making the right decisions and holding the asset according to all blockchain rules. The annual rate is 14.11% but it can vary, depending on a number of conditions.

  3. Bonding - the withdrawal of a token in exchange for a parachay slot, bridge or other useful functionality. The token is not taken away completely, it is temporarily frozen from the owner.

DOT Asset Stacking Calculator

Ethereum was launched in 2014, the Polkadot ecosystem didn't start operating until 2020. Given the 6-year difference, the first blockchain is going to have some advantage in terms of TVLs and other metrics. However, the gaps between the networks are narrowing rapidly, indicating the interest of investors and developers, in the DOT token and the entire network.

Full DOT asset price chart

Pros and cons of Polkadot

Like any project, blockchain, and development, Polkadot has a number of advantages and disadvantages compared to other networks.

Differences from Ethereum

Problems Polkadot solves

Many blockchains have the same problems. Often they relate to scaling, transaction processing speed, security and interaction with other blockchains. Polkadot can solve a number of problems:

  1. With Polkadot, you can work with other blockchains using bridges.

  2. The main chain can process 1000 operations per second without using parachains, other functionality. Multithreading and other technologies help significantly to affect bandwidth, the more parachains the better speed indicator. Such a solution allows you to solve scaling issues.

  3. High security. A network forms a common protection for all connected parachains, other networks have no dependence in structure, no limitations in functionality.

  4. True interoperability. The ecosystem enables cross-blockchain transfer of any kind information or assets, not just cryptocurrencies.

  5. Simple innovations. Users can create their own networks in minutes by applying Substrate. After that, connect to the ecosystem to use the full functionality of the blockchain. This solution is designed to simplify Polkadot's growth.

The project doesn't need forks to add new features or process data and fix bugs. As a result, the network adapts quickly to any changes and can update continuously as new technologies and developments emerge.

DOT Trends and Prospects

Polkadot ecosystem is a significant achievement in the field of digital technology, blockchain engineering. The project creates a complete decentralized application system that can already work together with classical technologies, businesses, etc.

The ecosystem combines several factors:

  1. An active community.

  2. The excitement, the demand for the project circle.

  3. The increasing number of projects that connect.

  4. The work of top developers.

Cryptocurrency experts interviewed by Forbes consider Polkadot a promising development of the future with a chance of being one of the most important ecosystems on the market. In an interview with Forbes, Reef Finance CEO Denko Mancheschi said that the ecosystem is now in a favorable position, which gives it the opportunity to take the lead among other cryptocurrencies.

The publication's analysts themselves noted great interest in the project among developers. They are sure in the great potential of development for different areas - exchanges, tokens, DeFi and others. Developers are often the ones who use the ecosystem, creating new networks, applications, linking chains with new methods of interaction, offering Polkadot.

System development and steps to improve blockchain

Polkadot is an equity-for-cash fund currently managed by Polychain. The exact amounts operated by the fund have not been disclosed. Any companies that form or plan to form parachains help to increase the impact of the development, receiving some benefit in the form of investments. Anyone who offers original solutions, developers, receives grants from the Web3 Foundation. More than 100 projects have already been assisted.
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