What is Polkadot (DOT)? | CryptoNewsHerald

The structure of Polkadot includes the following components:

1. relay chain (Binding or Relay Chain) is the main chain of Polkadot that connects all the individual blockchains (parachains) in the network.

2. parachain (parachain, short for “parallelized chain”) – individual parallel blockchains that carry out transactions and transfer them to the original blockchain. Parachains build so-called collators: they collect user transactions and confirm blocks based on the Proof-of-Validity algorithm (proof of validity). For their work, collators receive a reward, the amount of which depends on the specific parachain. The activity of collators is similar to the work of miners in blockchains with Proof-of-Work and Proof-of-Stake algorithms.

3. Bridge Chain (lit., “chain bridge”) – designed to connect blockchains that do not use the Polkadot governance protocols (for example, Bitcoin, Ethereum and Tezos blockchains).

The Relay Chain mechanism controls the compliance with the consensus, is responsible for the delivery of messages between the participating chains, and also contributes to the finalization of transactions. Relay Chain is a blockchain with a pool of validators who are randomly tasked with adding and validating blocks in various parachains. For each transaction, validators must make a deposit. If the transaction meets the consensus rules, the deposit is returned and the validator is rewarded. If the rules are broken, the deposit is forfeited.

Consensus in the relay chain is achieved through two mechanisms based on the principle of personal responsibility. One of them is responsible for block production, the other for finalization. The separation of block production and finalization solves the scalability limitations in protocols with instant finalization (such as Tendermint), enabling faster block production and allowing more validators to participate in reaching consensus.

The names of these two mechanisms are acronyms: BABE (Blind Assignment for Blockchain Extension) is responsible for the production of new blocks, and GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) is responsible for finalizing old blocks.

BABE is an algorithm for creating relay chain blocks consisting of the headers of all valid and available parachain blocks produced by collators. The BABE algorithm works on the basis of slots (time slots): the right to produce a block in the relay chain in a certain time interval is randomly granted to a validator, known as the slot leader.
The right to issue the next block is granted by calculation using a verifiable random function. The BABE model is reminiscent of Ouroboros Praosthe block production component of the Cardano consensus protocol.

GRANDPA is a finalization mechanism in which each validator votes for the highest block that it considers valid (in fact, voting takes place for all block ancestors).

All blocks for which more than two-thirds of the validators voted with their stakes are finalized. Since many blocks can be finalized instantly, validators may take longer to reach consensus on finalization than it takes to create a single block. This allows GRANDPA to support a larger set of validators than traditional BFT algorithms, which must finalize each block separately.

Validators are found and approved by the so-called nominators [nominators]. They pay a deposit for validators, which is confiscated from them if the behavior of their chosen validators does not comply with the rules of consensus. The nominator payment option distinguishes the Nominated Proof-of-Stake (NPoS) algorithm powered by Polkadot from traditional Delegated Proof-of-Stake (DPoS) algorithms.

Nominators do not participate in the process of making and confirming transactions. Violations by validators are monitored by watchdog nodes, the so-called fishermen. [fishermen]: they identify (“fish”) cases of unfair behavior, create evidence containing data on conflicting validator votes, and receive a share of the violators’ confiscated stakes.

Such a scheme allows GRANDPA to provide asynchronous controlled security: the finalization of any two conflicting blocks will lead to the fact that the responsible validators lose their deposits (at least two-thirds of the total deposit). As long as the block production mechanism meets certain criteria, the finalized chain grows.

The GRANDPA finalization mechanism is used for all parachains in Polkadot. In exchange for the finalization mechanism, each parachain gets the option of interoperability with other parachains. This compromise allows Polkadot to provide a simple communication mechanism that allows parachain collators to communicate directly via incoming and outgoing message queues.

Although parachains use the same finalization mechanism, each of them can implement different block production mechanisms, with different features and parameters optimized for a specific class of applications.

Parachain Development Kits (PDK) are tools that greatly simplify the development of parachains for specialized applications. One such PDK is the framework Substratebundled with the Framework for Runtime Aggregation of Modularized Entities (FRAME).

Substrate includes built-in implementations of block production algorithms: BABE, Aura and others. Another PDK, Cumulus, contains the glue required to connect the Substrate-based circuit to the Polkadot network. Together, Substrate and Cumulus make it easy to create and connect parachains to the Polkadot network.

Depending on the block production algorithm and parameters, the transaction throughput of each network can vary, so the total transaction throughput of the Polkadot network can only be estimated.

The first version of Polkadot provides for the operation of 100 parachains. Assuming each parachain is capable of supporting at least 10 transactions per second, the lower throughput limit is approximately 1000 transactions per second.

Future versions of Polkadot will allow the parachain to function as a layer-two relay chain with additional parachains attached to form a tree structure that theoretically provides unlimited bandwidth.

At a certain stage, the main relay chain becomes the efficiency limiting element of the system, but only to validate the processing of the input queue, as the parachains communicate directly with each other. By some estimates, the tree structure device will allow Polkadot to scale up to 10,000x the capacity of a single PoS chain.

Polkadot Ecosystem.