Hong Kong, China -- (ReleaseWire) -- 01/19/2021 --Near the end of the year, although the raging COVID-19 has brought some shadows to life, the digital currency circle ushered in the climax of the bull market in early 2021, and the price of Bitcoin exceeded the $40,000 mark. Polkadot has also undergone an epoch-making update in technology, which lasted more than three years. Polkadot's two big moves in 2020 indicate that Polkadot has reached maturity, and 2021 will be a year when Polkadot will fully bloom.
Polkadot vs. Ethereum
Since the full launch of Polkadot, Ethereum's dominant position has been threatened. In 2020, Polkadot, as a blockchain project that has attracted much attention in 2020, can be said to be highly anticipated. In just 3 days, another round of fundraising worth about 43.3 million US dollars was completed.
The core reason why Polkadot is accustomed to being compared with Ethereum is that the layout of the two is basically the same, which means that the development routes of the two are essentially similar.
In terms of the team, Gavin Wood, one of the founders of Polkadot, was also the co-founder of Ethereum. Ethereum has now become the second largest blockchain project in the world. Based on this, it has always been Polkadot's biggest advantage at the team level.
In terms of technology, the Ethereum 2.0 beacon chain has been launched. After the beacon chain is the sharding chain stage, and the sharding technology is Ethereum 2.0 is also the core technology of Polkadot. Let's compare the difference between these two points. First of all, Ethereum 1.0, that is, at this stage, Ethereum and Polkadot are not comparable in sharding technology. The congestion of Ethereum 1.0 has become the most serious problem of Ethereum at this stage, and the sharding technology is a necessary means for Ethereum to solve the congestion. Sharding is an excellent expansion solution that can achieve a substantial increase in network performance and capacity without increasing node hardware requirements and reducing the degree of decentralization.
Regarding Polkadot's sharding technology, Polkadot founder Gavin Wood said: Polkadot's design logic does not directly associate with interoperability (cross-chain). We are waiting for the launch of Ethereum's sharding technology. But sharding has not been implemented, and it has not been launched now. Therefore, I want to build a more extensible "Ethereum" by myself, and push the concept of sharding to a more extreme level in the design process, so I don't want to shard at all, just design an independent chain. With this design, different chains can transmit information to each other, and the final result is to achieve communication through a shared consensus level.
Therefore, in the shard chain of Ethereum, each shard is composed of many nodes. In addition, information exchange is required between shards, and each shard is made to the extreme and becomes a chain. The intercommunication between different chains is Polkadot's cross-chain. Therefore, Polkadot is in a sense an evolutionary version of Ethereum sharding.
In terms of consensus mechanism, Polkadot is also clearly ahead of Ethereum. The conversion of Ethereum's consensus mechanism from POW to POS is a big change in blood. Polkadot's debut is the pinnacle. Polkadot's proof mechanism is called NPOS (Nominated Proof of Stake Mechanism). This consensus algorithm is a hybrid consensus of BABE and GRANDPA, in which GRANDPA is responsible for confirming the final state.
NPOS is a relatively new scheme whose purpose is to screen validators who are allowed to participate in the consensus protocol. NPOS will select a group of validator entities multiple times within 24 hours, and these entities will play a key role in highly sensitive agreements in the next few hours. At present, the annualized rate of return as an NPOS validator node is about 12%. The node rewards of different validators are completely different, which is obviously different from the POS mechanism of Ethereum. In other words, some nodes have a high daily rate of return, while others have a low rate of return, but the benefits of a group of nominees pledged to the same node are the same. This is the advantage of NPOS, which will encourage many nominators to vote for nodes, but the more DOT pledged by the node, the yield will decrease.
Compared with POS, NPOS obviously strengthens the concept of survival of the fittest. Not only must it be lawful so that oneself will not be punished, but at the same time, nodes can get more pledges and cannot get a higher rate of return. Because the optimal setting of the network will only be in a range value, this requires the node to continuously calculate to make the node parameters close to this range value to ensure its rate of return.
The NPOS mechanism also encourages all DOT holders to participate in elections as nominees. The nominator will publish a list of validator candidates it trusts and pledge a certain amount of DOT to support them. If some of these candidates are elected as validators, the nominator will share with them the payment or penalty for each pledge of DOT. Unlike the Ethereum verification node, countless nodes can participate as nominees. As long as the nominator is conscientious and only supports validators with good security practices as candidates, its role risk is small and it can obtain a continuous source of income.
Gavin Wood pointed out in the "Polkadot Summary 2020" that Substrate's next major version 3.0 may be released in the first half of this year. This will bring compatibility to Ethereum, as well as new improvements, more idiomatic Frame PalletAPI, and a faster database backend and end-to-end weighting system.
Polkadot ecology may explode in 2021
From the recent development of Polkadot, it can be seen that Polkadot ecology has become a gathering place for emerging projects, and the past ICO wave may rise again in Polkadot. 2020 is the year of the rise of DeFi nascent projects, and Ethereum has also become the biggest winner. Compared with the explosion of DeFi on Ethereum, Polkadot's DeFi ecosystem is still in a low value area. Although DeFi is only the blockchain industry and even part of the Polkadot ecology, it is the most anticipated part.
However, Polkadot's DeFi ecological development deserves sufficient attention. On the one hand, Polkadot has the genes of Ethereum. On the other hand, the multi-asset cross-chain DeFi will be more imaginative and rigid. Polkadot has absolute advantages in sharding technology and consensus mechanism. If Polkadot meets the automatic market and predictive price, then Polkadot's DeFi ecosystem will fully explode. A major contributor to the outbreak of DeFi in 2020 is the application of oracles, which has improved the price feeding mechanism of decentralized transaction protocols such as Uniswap, and realized the active market making of AMM, so that orders can achieve real and efficient matching purposes. At present, the oracle projects in the Polkadot ecosystem include ChainLink, Ares Protocol, Zeitgeist, ZK Oracle, PolkaOracle, Kylin Network, Clovyr and Noise Explorer, and Decentralised Information Asset.
Polkadot has officially announced that Substrate 2.0 will support the oracle mechanism. Substrate 2.0 version brings a new function "off-chain working machine and more than 70 combinable modules". The off-chain worker can safely integrate data into the blockchain. The most important function of Substrate 2.0 is the "off-chain worker". This allows Substrate 2.0 to allow the blockchain to perform advanced calculations or issue its own network requests to the outside world.
Polkadot's unique design provides more options for projects than previous blockchain networks. Polkadot has infinite potential in its application scenarios. Polkadot will subvert the blockchain circle and open up the channel of centralization and decentralization.