- October 28, 2022
- Posted by: Admin
- Category: Blockchain Development, Technology
It is surprising to encounter technologies that are governed by a particular group of companies. The businesses generally include the bigger organizations with incentives and interests that frequently conflict with those of the clients.
Most of the time, you may have consented to the terms and conditions of a particular application without even reading them. As a result, companies have better control over the data they generate with each interaction with their proprietary software.
Since Satoshi Nakamoto introduced the first blockchain-powered digital currency, Bitcoin, in 2008, the original distributed ledger technology has undergone significant transformations, providing the world with innovation-rich third-generation blockchains such as Polkadot, XDC Network, and Near Protocol.
With the mainstreaming of blockchains, the application of decentralized technologies has grown significantly. However, the blockchain world is increasingly buzzing about cross-chain or multichain technology as businesses and end users want an interoperable ecosystem that can exploit the unique features and capabilities of many blockchains.
The overwhelming popularity of cross-chain dApps corresponds to the growing requirement for interoperable blockchains. Enterprises may extend and enhance the applicability of their dApps across many blockchain ecosystems using cross-chain decentralized applications.
To create cross-chain apps, developers use Web3 blockchain networks such as Polkadot, which provide a backend for cross-chain or multichain dApps.
Features of Polkadot that make it Exclusive from other
Table of Contents
- Diverseness
Polkadot is a Blockchain, but it’s more than that, which is one of its best qualities. It is a blockchain that links networks or other blockchains together. Polkadot is simply a basic blockchain that other blockchains may be built on top of to collaborate. The networks can be oracles, smart contracts, bridges, private blockchains, permissionless blockchains, etc.
Polkadot uses the idea of a relay chain and para chains to accomplish this accomplishment. The hub that links the many chains (or network systems) together is known as the relay chain, and the linked networks are referred to as para chains.
An instance of this in action is the coexistence of two blockchains, one focused on privacy and the other on DeFi, on different para-chain slots. We’ll sum up how this coordination between distinct blockchains is made possible below.
The important thing to keep in mind is that the decentralization paradigm is exposed to a lot more intriguing use cases thanks to this heterogeneous property.
- Scalability
When the network is busy, bottlenecks occur because isolated Blockchains can only handle a certain amount of traffic.
Polkadot can process numerous transactions on numerous chains in parallel because it is a sharded multichain network, which eliminates the problems associated with legacy networks that process transactions sequentially. This parallel processing power greatly enhances scalability, which creates the ideal circumstances for increased adoption and future growth.
- Interoperability
Why have a world of isolated blockchains when you can have a network of blockchains that interact and collaborate?
Communication between all of the different ecosystems is essential to the success of Web 3. The network effect can only be maximized and widespread adoption can only be accelerated in this way.
Interoperability is accomplished by Polkadot primarily in two ways:
The relay chain will provide internal interoperability between para chains. This is possible because all para chains and para threads (more on them here) speak the same language.
Specialized para chains known as bridges will be used to achieve external interoperability with other chains. The bridges link various independent blockchains together.
- Shared security
Given that Polkadot uses a nominated-proof-of-stake scheme (in which any user can nominate validators to validate transactions on their behalf and earn rewards), shared security implies that all DOTs staked in the system are essentially backing all of the projects in the ecosystem.
The cost of strong security is reduced because all projects built on Polkadot are essentially pooling resources. This results in a win-win situation for all parties.
The alternative is for each project to try to bootstrap its own security with validators, nominators, and so on. For the average developer, this is both expensive and time-consuming.
What mechanisms does Polkadot use to support the creation of cross-chain Web3 apps?
Polkadot offers a multichain ecosystem to create a variety of cross-chain web3 applications because it was built as a web3 blockchain interoperability network. A decentralized web of blockchains is created by the network’s connections between various blockchains.
Polkadot-based cross-chain applications can communicate with web3 applications, carry out cross-chain computations, and uphold security across active chains.
Substrate Framework
Polkadot is built on the Substrate framework, so a blockchain and associated dApps built on Substrate are automatically interoperable with Polkadot’s para chains and para threads. The substrate provides a variety of tools and SDKs to aid in the development of cross-chain dApps.
Parachains
Parachains are layer-1 blockchains that have their runtime logic, native tokens, and requirements for implementations and economies. Any para chain that is built becomes fully interoperable with the Relay chain and other para chains. As a result, Web3 applications built on a para chain’s ecosystem can interact cross-chain.
Parathreads
Parathreads offer the same benefits as para chains, such as cross-para chain interoperability, para chain-to-para chain communication via XCM, and support for the development of cross-chain Web3 dApps. However, para chains can benefit from the Relay Chain’s security without the need to lease a para chain slot.
Bridges
Polkadot is committed to enabling true interoperability. While Substrate-based chains and para chains/para threads are inherently interoperable, Polkadot scales interoperability with external blockchains like Ethereum via Web3 bridges. These bridges allow blockchains to communicate with one another and seamlessly share resources, arbitrary data, and digital assets.
What cross-chain Web3 applications does Polkadot support?
Cross-chain NFT market
The need for cross-chain NFT marketplaces has grown over time as a result of NFT trading’s success as a multimillion-dollar industry. Enterprises are now looking for more ways to let users explore multiple NFT marketplace ecosystems rather than limiting their access to a single one, which is driving nfts’ widespread adoption worldwide.
By encouraging the creation of an interoperable NFT marketplace, Polkadot’s multichain ecosystem responds to the growing demand of NFT marketplace users. Users can explore, trade, and mint the nfts offered on different on-chain marketplaces through these marketplaces.
For instance, Argoran, a recently launched cross-chain marketplace on Polkadot, encourages businesses to bring more innovative projects to support the Polkadot Network’s expanding ecosystem.
Working on Cross-chain NFT Marketplace
NFT Minting
While single-chain-based NFT marketplaces limit NFT minting to a single marketplace, cross-chain NFT marketplaces solve the interoperability trilemma by allowing NFT traders or owners to mint NFTs on a variety of marketplaces that run independently on different blockchain ecosystems.
Trading
Allow marketplace users to trade digital assets via NFTs on multiple NFT marketplaces and non-fungible tokens. As a result, it avoids switching back and forth between unique marketplaces to use those marketplaces.
Live auctions
Live auctions on cross-chain NFT marketplaces are similar to online NFTs auctions in that they involve a bidding and buying process. However, it differs from the ability to support users’ access to various nft marketplaces that exist and run on independent chains. Users can view NFT auctions on these marketplaces and bid or sell nfts to profit.
Engagement
As cross-chain NFT marketplaces welcome nft traders from various marketplaces, user engagement is significantly increased.
Smart Contracts
Cross-chain NFT marketplaces are powered by interoperable smart contracts, which allow the marketplaces to optimize their features and functionalities by leveraging the capabilities of the parallel marketplace. For example, the marketplace can use the unoccupied space of the other marketplace to increase its existing storage capacity.
Cross-chain crypto lending platform
A crypto lending platform is a DeFi (decentralized finance) ecosystem that facilitates lending-related activities such as crypto loan processing and collaterals. A crypto lending or loan platform allows investors to lend cryptos to interested borrowers in exchange for interest.
When powered by the Polkadot Network’s interoperability attributes, crypto lending platforms enable cross-chain functionalities for their users, allowing them to make deposits, lend loans, and manage their investments on lending platforms running on different isolated ecosystems.
How cross-chain lending platforms work:
Loans
Borrowers can interact with loan providers across multiple loan platforms thanks to cross-chain crypto lending platforms. Similarly, lenders can explore various crypto lending platforms and earn the highest interest rates.
Lending pools
To address the shortcomings of the order book method, cross-chain lending platforms use lending pools and automated market makers (AMM) to automate the lending and borrowing process. Users from various platforms can withdraw the specified amount of assets from this pool in loan and repay as needed.
Collaterals
Cross-chain lending platforms enable users to submit collateral on one blockchain platform (built on Polkadot) and receive crypto loans from another (built on Ethereum). In this way, users do not perceive a lack of interoperability as a barrier. They can obtain loans in their preferred cryptocurrency, regardless of which platform they originally belonged to.
How cross-chain DEXs function:
Atomic swap
Atomic swap, also known as a cross-chain swap, is a technology that allows the exchange of two non-native tokens between distinct blockchain ecosystems. It is an essential component of DEX because it fuels the concept of complete interoperability in the blockchain space.
Automated market maker
The automated market maker AMM is built on blockchain and runs on smart contracts. Users of a cross-chain DEX can take advantage of quick trade matching, liquidity pools, and high interest on multiple DEXs that use AMM to automate trades.
DEX aggregators
To address liquidity concerns, cross-chain decentralized exchanges use DEX aggregators. Aggregators essentially serve as a platform that aggregates liquidity from various DEXs, allowing users to have a more unified and enhanced experience.
Cross-chain Web3 wallet
Cross-chain Web3 wallets are a more efficient form of the traditional decentralized wallet. Speaking a digital wallet is a blockchain-powered wallet that enables the purchasing, selling, and storing of crypto tokens and allows users to access it via a user-friendly interface. This wallet also serves as a portal to Web3 dApps, enabling developers to access a blockchain ecosystem directly from their browser without having to run a full node.
When equipped with an interoperability component, a cryptocurrency wallet transforms into a cross-chain wallet that can connect to various blockchain ecosystems and provide distinct wallet addresses to each blockchain, facilitating quick and easy transactions.
How do cross-chain wallets work?
Gateway to Web3 ecosystems
Users can access a variety of blockchain ecosystems with a single cross-chain Web3 wallet, eliminating the need to manage multiple keys and other credentials.
Data management and security
A cross-chain wallet generates passwords and keys for dApps running on various blockchain ecosystems, allowing users to keep track of their data while also ensuring IRS security.
dApp connectivity
Users can use a cross-chain wallet to connect to various dApps that run on different blockchain ecosystems. For example, connecting to Ethereum and Polkadot’s dApps requires only one wallet.
Cross-chain Web3 bridge
Cross-chain Web3 bridges are a viable solution to a blockchain protocol’s inability to directly interact with another blockchain that runs on its isolated ecosystem. The Polkadot, in particular, allows for para chain-to-para chain and parachain-to-substrate-based chains. Polkadot encourages the development of cross-chain Web3 bridges in its ecosystem for communication between non-para chains.’
How cross-chain bridges work:
Data and resource sharing
Cross-chain Web3 bridges are intended to support arbitrary data and resource sharing between independent blockchain networks. For example, a user can transfer smart contract logic and token details from one blockchain to another.
Token and digital asset sharing
Cross-chain bridges enable the exchange of digital assets and tokens between non-interoperable blockchains. Users on a decentralized exchange can transfer fungible and non-fungible tokens to other DEXs that operate on a different blockchain ecosystem.
Storage utilization
Aside from information and data sharing, cross-chain Web3 bridges allow blockchain projects to use unused storage from other blockchain projects, removing storage barriers during Web3 development.
Web3 application development services for Polkadot chains with DxMinds
We at DxMinds are a crew of Polkadot specialists driven to create cutting-edge solutions in line with changing market trends and the demands of particular blockchain projects. Our team is prepared to take on any challenge that results in successful projects, from DeFi to gaming and NFTs.
We develop a wide range of cross-chain web3 applications on the Polkadot ecosystem following enterprise-based requirements to drive innovation into businesses’ current business models.
Conclusion
Polkadot envisions an interoperable Web3 future in which blockchain networks and applications can interact seamlessly. It is being developed as a heterogeneous multichain architecture for Web3 that connects siloed networks by bridging multiple chains. Each para chain is intrinsically interoperable with the others and the relay chain. Furthermore, the XCM messaging format allows for chain interaction.