Will Polkadot save decentralized finance from Ethereum’s scaling problem? Indeed, Polkadot aims to achieve scalability without sacrificing network security. In terms of transaction fees, it appears to be beating Ethereum 2.0.
The terms Web3, interoperability, and layer 0 are all thrown around when discussing Polkadot. However, what do these regulations mean, and what impact will they have on cryptocurrency and the Internet?
Consider the possibility of replacing Facebook with a decentralized social media application, built on Polkadot. In particular, Projects such as Subsocial offer their users this capability with their platforms. Resulting in allowing them to decide what data to share and what to keep private. Furthermore, the Ocean Protocol enables users to profit from their data stored on the blockchain by releasing OCEAN tokens, which they can trade on a decentralized exchange like Polkadex and selling them to third-party companies.
Are you unsatisfied with the overdraft fee your bank charges when your account balance drops below $0.00? One Polkadot-based project, Acala, has built an onchain automatic scheduler that is analogous to a decentralized version of Stripe. Consequently, wallet addresses can link to physical credit cards and can be used to automatically transfer staking rewards. As a result, anyone can receive rewards for helping to secure a decentralized money and banking system. In addition, their earnings can be deposited onto a credit card which they can use to purchase a Starbucks coffee.
Does Polkadot Deliver What Ethereum Promised?
As part of Ethereum’s consensus algorithm, all nodes must validate transactions. Conversely, the Polkadot blockchain divides new transactions into shards for parallel processing. Hence, increasing the flexibility of the system is possible because blockchains that plug into the network may have radically different operating rules, transaction processing, and capabilities.
Polkadot aims for scalability without compromising security. It was Vitalik Buterin, the Ethereum founder, who first discussed this problem known as the ‘blockchain trilemma.
The Polkadot blockchain differs from Ethereum’s single blockchain structure. As it has many separate blockchains called parachains that connect to one main blockchain. As well, referred to as the Relay Chain or layer 0. Using the central Relay chain, we can send messages and transactions between disparate blockchains without causing any slowdown on the transaction highway. Similarly, to how hubs and spokes design works in airports. Using Layer 0 as a model, Layer 1 protocols, such as Bitcoin and Ethereum, might operate as spokes, while Polkadot might function as the hub. For instance, the NFT Bit.Country project is a substrate-based blockchain with a bridge to Ethereum. This enables seamless asset circulation between Ethereum and the metaverse built on Bit.Country’s TEWAI blockchain.
Blockchains that connect to Polkadot can activate smart contracts
Polkadot does not support smart contracts. As a result, it is up to the blockchains that connect to Polkadot to activate smart contracts. Moonbeam is one such parachain that can fully integrate into Ethereum contracts. Moonbeam’s developers offer the popular web wallet Metamask as a way to interact with Polkadot-based digital currencies. In other words, you can seamlessly send tokens built on Polkadot’s blockchain development tool to Ethereum wallets and smart contract addresses. Polkadot ecosystem’s next layer includes the blockchain-based projects that are built on the Relay chain. Ocean Protocol in this case is using the Moonbeam blockchain to deploy its smart contracts. Moonbeam technology will allow the OCEAN token to run on Polkadot and Ethereum blockchains applications.
Remodeling the Ethereum network on Polkadot
Polkadot’s increased scalability permit countless tasks do away with Etheruem’s high transaction costs and the limited number of transactions per second. Crust Network developed Polkadot to provide a decentralized storage system similar to FileCoin, Sia and Storj, which operate on Ethereum. In contrast to Ethereum-based tasks, Crust Network tasks are not constrained by Ethereum’s scalability limitations. Many of the applications we have actually concerned like on Ethereum are being re-built on the Polkadot network or incorporated through chain-agnostic entrances.
Several tasks are available in the Polkadot ecosystem. From decentralized cloud computing to cross-chain custodial wallets like the web browser-based Math Wallet. Deeper Network, a hardware-based virtual private network project, has actually provided over 10,000 physical gadgets on Indiegogo, Amazon, and BestBuy so far. Deeper’s blockchain service integrates all devices and routing in a privacy-preserving approach, holds the device registry (in the form of a public vital facility), and handles staking and trust subsystems.
Blockchain technology is still in its infancy, which means that only time will tell if it can achieve the necessary features for a fairer future in finance, communication, and technology.