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Polkadot: Technology That Can Boost Your Blockchain Startup

06 Apr 2021 updated
11 min

Table of content

Everything in the crypto industry is happening incredibly fast. First, we witnessed a huge jump in bitcoin prices. Over time, one would notice a meteoric rise in defi development services that propelled Ethereum to the top. Ultimately, savvy investors are now looking for opportunities to diversify their investment portfolios. Hedge rates in tokens attract market share in the Ethereum network. In this article, we explain Polkadot (DOT), a relatively new token on the market.

blockchain technology

What is Polkadot?

Today Polkadot is considered a full-fledged technology developed to interoperate different blockchains. For example, the well-known cryptocurrencies Bitcoin and Ethereum are taken and combined into a single multi-blockchain. You also need to understand that blockchains can only process a limited amount of incoming data.

Polkadot is a segmented multi-chain network. That is, the system can process many transactions without any difficulty. The system eliminates bottlenecks in legacy networks. That is, it eliminates those transactions that were processed in turn. This general processing system greatly improves the scale. It lays the foundation for widespread adoption and future growth. The so-called chains connected to Polkadot are called parachains as they interact in parallel, regardless of the number of transactions.

This technology is designed to address the key barriers to blockchain development technology. Consider what happened:

  • Massiveness. The first blockchains created cannot handle many transactions today. This factor is holding back the further growth of the network.
  • Limitation. Blockchains remain discrete and independent. They lack multilateral communication and interaction with each other.
polkadot blockchain

What is making Polkadot unique?

The Polkadot system has partnered with several Relay Chain blockchains and the Parachains network. Let’s consider the difference between the two networks. And the only difference is that transactions are always in the relay chain. If we consider Parachains separately, we can say that using settings, you can configure it the way you like and even transfer data to the main unit.

The uniqueness of Polkadot’s design ensures, first and foremost, the security and accuracy of transactions. For this, computing resources needed for the operation of the main blockchain are used. There are other benefits of Polkadot. Users of this system can configure many parachains for different tasks.

Polkadot works. It integrates various blockchains, which are called parachains and para flows, into one network. These circuits can be connected both to external networks via bridges and to the Polkadot relay circuit. This Polkadot design provides additional options. The main components of the network are:

  • Relay circuit. At the heart of Polkadot’s functionality is a relay chain. This protocol is responsible for overall network security, consensus, and interoperability.
  • It is a system with its own tokens optimized for specific use cases.
  • Parachains function similarly to parachains but operate on a pay-as-you-go model. This model is more economical if the operation does not require a permanent connection to the network.
  • Bridges. Another important feature that allows parachains and para streams to connect and interact with external networks. Bridges extend the interoperability of the network.

Polkadot architecture

Polkadot has a complex control system, the ultimate goal of which is that every owner has a vote. Proposals that are put forward for consideration can take part in the voting. The sequence is as follows: the question is put forward for a vote, the so-called referendum, in which all participants vote.

All owners can apply to the Board for review.

The council consists of 20 members. The term of office is given for one month. The role of the council is only to present important proposals to passive members of the network.

In some cases, they have the right to cancel highly dangerous offers.

Council proposals have only the advantage of being in a referendum where fewer votes are required than a public proposal. Voting of directors shall be counted towards votes without the right to re-vote. Dangerous or malicious offers can only be canceled by the entire council.

There is also a manual in the technical department that implements the protocol in Polkadot. The committee was created for one task – to detect errors in the code and quickly track emergency updates or changes in the chain. 

relay chain


Polkadot networks and applications can exchange information and functionality. For example, like applications on a smartphone, without having to rely on centralized service providers with suspicious data transfer practices. Polkadot allows interoperability, as opposed to networks, which largely function as stand-alone environments. It opens up opportunities for new innovative services and allows users to transfer data between chains. For example, a chain that provides legal services may interact with another chain that provides access to real data. For example, such as data on prices in the stock market for tokenized stock trading.

Control DOT

DOT is the proprietary cryptocurrency of the Polkadot network and mainly serves three different purposes:


DOT tokens fully validate and govern the protocol. The main Polkadot code will allow DOT holders to participate in chain management and send various aspects of the network. For example, commissions, auction dynamics, parachain schedule, or updates and fixes for the platform.


DOT token staking is required to facilitate the Polkadot consensus mechanism. The platform relies on DOT holders playing an active role in the system through staking for valid transactions in the parachains.

DOT token staking encourages token holders to behave honestly by rewarding good participants with inflationary tokens and punishing bad participants by reducing their stake in the system. The DOT required for staking will vary depending on the activity undertaken, the length of the staking, and the total number of coins staked.


Brand new parachains can be added to the platform by linking tokens for a specific linking period. After the bonding expires and the parachain is removed, the associated DOT tokens return to the account linked to them.

Obsolete or useless parachains can be deleted by removing associated tokens to keep the network more productive and stable.

The DOT token is at the top of the Polkadot relay chain, not on the public Ethereum. As of today, the DOT system does not support some cryptocurrencies.

Cryptocurrency e-wallets must support the platform’s blockchain encoding and infrastructure, which is very different from the structure of Ethereum and Bitcoin.

That said, there aren’t many cryptocurrency wallets that support DOT yet, but as the popularity of Polkadot grows, you can expect many more wallets supporting DOT.

Parachain rollout

Parachain is the term used to describe an external system. To deploy the parachain, the team can build it using a Substrate based framework. Native parachains can leverage fast cross-chain transactions and the overall security of Polkadot. This saves you the hassle of creating your own currency. This is done in order to encourage miners to protect the network. You can see that the platform is getting closer to the start of the network every time. In turn, the Web3 Foundation receives requests for parachain. These are the first steps to become a full-fledged parachain.

rolling out parachains

The parachain leasing mechanics are still being researched, tested, and deployed. We hope that the projects will contribute to this process as it develops. Most of the system can be changed, but today we can guarantee the following:

  • A limited number of parachain slots will be available. It will start with a certain amount in the genesis and will gradually add over time.
  • Rent of slots will also be available. There will be an auction system where everyone can participate in the auction.
    To make it clear, let’s consider the winning option. Let’s say someone wins the auction, the main advantage is that they don’t need permission to deploy parachain.
  • Slots will have their own expiration date. Some slots will be reserved for a limited period of time for special parachains that will be managed by the Web3 Foundation. For communication between a bridge chain and a network, a block must be terminated in the bridge chain before messages can be safely transmitted. It is likely that multiple blockchains will be able to use the same bridge and therefore pay for its slot.

How to get a Parachain slot?

As mentioned, the principle of accessibility implies that there should always be parachains up for auction. These are not sales when bidders are buying something. They simply deposit a certain amount of DOT tokens. Thus, the effective rental value is just an opportunity cost, which can be defined as devaluation through inflation. As at the end of the rental period, the deposit will be returned.

The slot calendar is broken down into six months “lease periods.” The rental of all slots starts and ends at the same time. So for any given rental period, there are only a few of the same slots.

The auction gives the right to occupy a parachain slot in each of four periods, which are the next two years. These four six-month periods may belong to the same bidder. Or they can be owned by four separate bidders or some combination.

Parachain management

Polkadot does not have a clear governance mechanism for blocking or removing parachains. However, Polkadot is inherently a managed system and therefore the governance mechanism can modernize and change the blockchain in any way it wants.

Why build on Polkadot?

The platform is constantly under development. In the summer of 2020, they launched a genesis block with one chain. But, the goal was the launching of more than 90 parachains. The full launch was completed by the end of 2020. It is currently fully operational.

This project is aiming for a big leap forward offering a bridge structure. Consider the following benefits:

  • Volume. The platform can support a large number of blockchain technologies. The main thing is that it can connect them all. The so-called parachains;
  • Adaptation. Different blockchains operate on different consensus mechanisms. The platform provides an operating mechanism that is open to all users. This is done so that everyone can use this product;
  • Network. Frameworks can support network transfer between any blockchains. 
  • Convenient management and updating. The platform is very user-friendly and comfortable to use. 
  • Platform supports updates without resorting to focal changes;
  • Safety system. Blockchains connected to Polkadot can be protected by a single security network which is very handy for tech support. It can also help protect small networks that don’t have an effective security system.

Read also:
Cardano vs. Polkadot: Which ‘Ethereum Killer’ to Look Into?
Top 10 Projects on Polkadot You Should Watch Out
Polkadot vs cardano

Final thoughts

Polkadot is designed to connect private networks, consortium networks, and public networks. The Polkadot platform makes it a lot easier to surf the Internet. In the network, independent blocks exchange information and transactions without additional verification, that is, through the relay chain of the platform.

The platform makes it easy to build and connect decentralized apps, services and institutions. By empowering innovators to create better solutions, we strive to free society from its dependence on a broken web, where its large institutions cannot violate our trust.

The platform is rapidly gaining traction in the DeFi space and the broader crypto community. With easy integrations, available grants, and a broad layout, Polkadot projects are gaining value quickly, and the Polkadot Association seems to have a positive impact on the project’s token value. As the ecosystem develops further, Polkadot will become an integral part of the decentralized world and an ultimate choice of blockchain developers.

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