Blockchain technology has the potential to revolutionize a variety of industries, but so far, we have yet to see significant real-world deployment of the technology. One of the main reasons for this is the limitations of current blockchain systems in terms of scalability and isolatability. These limitations are caused by the synchronous consensus mechanisms and the desire to support slower implementations.
The Polkadot framework aims to address these limitations by decoupling the consensus architecture from the state-transition mechanism. By doing this, it allows for a more efficient and scalable system that can adapt to the needs of multiple parties and applications. This approach allows for a more optimal solution for a wide range of use cases, rather than having a one-size-fits-all approach.
What is Polkadot
Polkadot is a scalable heterogeneous multi-chain that aims to provide a solid foundation for the next wave of consensus systems. Unlike previous blockchain implementations, Polkadot provides no inherent application functionality and instead provides the relay-chain upon which a large number of validatable and globally-coherent dynamic data-structures, called “parallelized” chains or parachains, may be hosted side-by-side.
These chains can have different properties, and Polkadot allows them to be scaled out over a large number of parachains. The system also provides pooled security and trust-free interchain transactability which makes it scalable. Additionally, Polkadot will inherently support some sort of governance structure, where the underlying stakable token holders will have “referendum” control and the two chambers will be formed from a “user” committee and a “technical” committee. The goal is to allow for experimentation and innovation in the blockchain space.
Polkadot Consensus Roles
The four basic roles in the upkeep of a Polkadot network are collator, fisherman, nominator, and validator. The validator’s role is to help seal new blocks on the Polkadot network and is contingent upon a sufficiently high bond being deposited. The nominator’s role is to place risk capital and signal trust in a particular validator. The collator’s role is to assist validators in producing valid parachain blocks by maintaining a “full-node” for a particular parachain and providing it to one or more validators.
Fishermen are parties who monitor the network for any bad behavior by validators and report it to the network. They play a role in maintaining the security of the network by ensuring that validators are acting responsibly and not engaging in malicious actions such as double-signing or conspiring to provide an invalid block. They receive a reward for reporting bad behavior and can also participate in the reduction of the security bond of the guilty validator.
Staking
Polkadot is a multi-chain framework that enables different blockchain networks to interact with each other. The system utilizes a relay-chain that acts as a backbone for hosting a large number of data structures called parallelized chains or parachains. These chains can be used for different applications and have pooled security and trust-free interchain transactability, which makes the system scalable. Polkadot uses a low-level consensus algorithm that is inspired by Tendermint and HoneyBadgerBFT. It also uses a Nominated Proof-of-Stake (NPoS) scheme for determining a set of validators and incentivizing them to be honest.
The system also uses a Proving-of-Stake mechanism for measuring the amount of stake in any particular account. Misbehavior results in punishment, such as reduction of reward or, in cases which intentionally compromise the network’s integrity, the validator losing some or all of its stake to other validators, informants or the stakeholders as a whole.
Polkadot and Ethereum
Polkadot and Ethereum are designed to be interoperable with each other, allowing for transactions from Polkadot to be signed by validators and then fed into Ethereum where they can be interpreted and enacted by a transaction-forwarding contract.
In the other direction, the usage of specially formatted logs (events) coming from a “break-out contract” allows for swift verification that a particular message should be forwarded.
The cost for Ethereum confirming that an instruction was properly validated as coming from the Polkadot network would be no more than 6% of the total block gas limit at 5.5M.
An alternative to this multi-signature contract model would be to use threshold signatures, which are expected to be cheaper in the upcoming Metropolis hardfork, reducing the gas costs for forwarding a Polkadot transaction into the Ethereum network to a near zero overhead.
Polkadot and Bitcoin
Polkadot’s interoperability with Bitcoin presents an interesting challenge due to the limitations of Bitcoin.
A “two-way peg” would be a useful piece of infrastructure for both networks, but providing it securely is a non-trivial task.
Transactions from Bitcoin to Polkadot can be done using a process similar to that for Ethereum, where a “break-out address” controlled by the Polkadot validators can receive transferred tokens. However, the problem lies in how the deposits can be securely controlled by a rotating validator set.
Unlike Ethereum, Bitcoin is limited in terms of multisignature transactions, making it difficult to extend to the number of parties desired. One option is to alter the Bitcoin protocol, but this is a difficult task.
Alternatively, threshold signatures, a cryptographic scheme that allows a single identifiable public key to be controlled by multiple secret parts, could be used, but they are computationally expensive.
Another option is to reduce the multisignature key-holders to a heavily bonded subset of validators, which reduces the amount of funds that can securely run between the two networks.
Overall, while it is possible to place a reasonably secure Bitcoin interoperability “virtual parachain” between the two networks, it will require a substantial effort and cooperation from the stakeholders within that network.
To be continued …