Polkadot & the Internet of Blockchains explained in simple words
Throughout the past years, the blockchain technology has witnessed a tremendous increase in popularity, leading to the emergence of a vast landscape of specific blockchains: Ethereum provides smart contracts, Litecoin is 4 times faster than Bitcoin, Zcash implements zero knowledge proofs, etc. In a past article, I mentioned the reasons preventing cryptocurrencies from reaching a broader audience. In this article, I will explain, in simple terms, why connecting all these blockchains together could solve their main problems. This interconnection is called the Internet of Blockchains and represents a network where data and transactions can flow from a blockchain to another in a trust less manner.
Connect the crypto-silos
Today, each blockchain has its own features, its own community, its own consensus algorithm, its own actors securing the network (miners, stakeholders…). Because blockchains are evolving in their own ecosystems, they do not profit from each other. In fact, they are competitors. Bitcoin (BTC) for instance, became less secure from the moment when miners decided to mine Bitcoin cash (BCH) instead. While this transition isn’t significant for Bitcoin given the amount of miners it has, such moves could nevertheless harm blockchain’s security for smaller communities.
Transactions across ecosystems are not seamlessly possible without relying on 3rd party — often centralized — platforms. For example, investing in an ICO for an Ethereum-based token can not be achieved directly using Zcash (ZEC), leveraging its high level of data privacy. Data transfer between ecosystems is another challenge yet to be addressed. Several companies have now developed their own private consortium blockchains, using the technology to enhance internal processes. Think of an e-commerce merchant M using a private blockchain technology to manage the logistic of its goods. Think now of a packet delivery company P using a private blockchain to track its trucks and packets. Making the data from P available to M would be useful so that M can track its goods until the delivery to its clients. Now from the client’s perspective, following the goods bought from M and transported by P on a public blockchain would also be very valuable. Today, this workflow is neither seamless or transparent nor is it trust less. It would only work in a world where blockchains (private and public) are interconnected.
A protocol that allows independant blockchains to exchange information — Polkadot
Polkadot wishes to unify them all
Polkadot, a project by the Web3 foundation, developed by Parity technologies, aims at connecting blockchains together, but not only. I will explain its goals and the solutions it brings. What follows has been kept simple for the purpose of vulgarization; feel free to read the whitepaper or lightpaper to learn about the protocol in details.
Polkadot allows developers and enterprises to build blockchains — called parachains — using its protocol. All those parachains, as long as they are built on top of Polkadot, will share the same Proof of Authority (PoA) consensus. Because the consensus type is embedded within Polkadot, the parachain developers can focus on the specificities of their blockchain. All parachains are seamlessly connected to a common blockchain called the relay chain, the latter acting as the link between all parachains.
The security is guaranteed by several actors on the network: each parachain has the equivalent of full nodes specifically responsible for a parachain, they are called collators. These collators are collecting transactions from the users, verifying them and transmitting them to the actors responsible of the relay chain. Those actors are the validators, they run the equivalent of a light node on the relay chain. They are responsible for validating and broadcasting the blocks sent by collators. To do so, they have to stake their DOTs (the relay chain tokens) on each block they receive. To make sure that the validators are acting correctly and do not broadcast invalid transactions, a high reward is given to actors — called fishermen — who can prove misbehaviours of a validator. On top of that, validators need the approval of nominators, that stake DOTs on them. Validators can not only stake, but also vote for the approval or rejection of a parachain, it is therefore crucial to have them under good control.
In a nutshell, the workflow of a transaction from one parachain to another would look like this :
- A user creates a transaction on parachain A to send information to the parachain B.
- The transaction is sent to one of parachain A’s collators.
- The collator makes sure that the transaction is valid and includes it into a block.
- The collator presents this block, along with a state transition proof to a validator of parachain A.
- The validator verifies that the received block only contains valid transactions and stakes DOTs on it.
- When enough nominators have staked their DOTs on the validator, broadcasting its blocks to the relay chain will be authorized.
- The transaction is executed and the data from A is sent to B.
As this all needs to remain trust less, in the event of wrong information transmitted by the collator, the proof can be established and the collator can subsequently be punished or removed. Validators are also under the watch of fishermen, and in order to keep their tokens, nominators would better stake them good behaving validators.
Now, one may be sceptical about the idea to re-build any existing blockchain using Polkadot’s protocol. It is clear that current actors and blockchains will probably not re-build their ecosystem using Polkadot in the near future. There will be a chicken and egg problem, but new blockchain actors will certainly be interested in the technology as the use of Polkatdot protocol saves time and money. Zcash, Melonport and several other actors have already shown their interest in building or rebuilding their blockchain using Polkadot. Now, even if blockchains such as Bitcoin will not from one day to another convince their network of miners to become collators or validators, building bridges between existing blockchains and Polkadot’s parachains remains a possible option.
Since Ethereum is Turing complete, it should be one of the easiest blockchains to build a bridge for. The Polkadot whitepaper explains how the Ethereum mainnet could be connected to Polkadot network, using so called break-in and break-out contracts. To transfer data from Ethereum to a Polkadot parachain, some validators will either need to host a full node on the Ethereum mainnet and listen to a specific contract’s logs, or have a mechanism to receive proof of transactions from bounded 3rd party full-nodes. In the latter case, validators do not have to host the entire blockchain, but will rather rely on merkle proof to be able to validate transactions. To ensure the canonicality of the transaction, validators will need to wait a minimum amount of block confirmations before broadcasting the transaction on the relay chain.
To send information from Polkadot to Ethereum, one could give certain validators the right to stake their DOTs on outgoing transactions. A break-in contract knowing the list of authorized validators would create a transaction once a minimum required amount of validators have signed it.
In the case of Bitcoin, allowing some Polkadots validators to host a multi-signature wallet and transfer transactions from and to the Bitcoin blockchain doesn’t seem impossible. However, some limitations — such as the amount of signatures allowed by bitcoin wallets (generally not more than 16) — could reduce the security of such transfers. Unlike bridge-dedicated Ethereum contracts, Bitcoin wallets do not allow to programmatically edit an authorized list of validators. Such limitations could be circumvented by developing a bridge wallet dedicated to this purpose.
All in all, most of current blockchains can be connected to the Polkadot network thanks to specific bridges. Building these bridges for regular blockchains might not be as straightforward as for Ethereum, yet it is not impossible. These blockchains can keep their actual consensus type and network security actors while being able to exchange information with Polkadot’s parachains. Whether or not bridges will be developed will depend on the use-cases and needs. Parity technologies has open-sourced a bridge that allows to connect blockchains using Proof of Authority consensus (PoA) to any other Parity chain. A modified version of the library is already used today by Oracle Network, have a look at this article to learn more about this use case.
The benefits
The ultimate goal of Polkadot is to connect blockchains together. The protocol has several key benefits, particularly interesting for developers willing to build a blockchain on top of it.
The most obvious advantage is the protocol’s pooled security. No need for developers to create a community of miners/validators to ensure the blockchain’s security: the existing pool of validators and nominators takes care of it.
The second biggest argument concerns the scalability Polkadot allows. Bitcoin and Ethereum are the most popular blockchains, both still based on Proof of Work consensus (PoW) at the time of writing this post. Both have low throughput and suffer from network congestion. The consequences for its users are higher transaction fees as well as longer transaction broadcasting time. Similar to the idea of sharding, each Polkadot parachain should serve one single use-case. The parallelization of the chains (hence their name — parachain) and the use of PoA consensus not only helps to increase the throughput of the network, but also represents a massive advantage in terms of energy waste compared to common PoW based blockchains.
Despite being fairly hard to grasp at first glance, Polkadot protocol was designed to be as simple and as neutral as possible. Any blockchain technology can be built on top of it, as long as a proof of validity can be produced for its transactions . The protocol is agnostic to the underlying parachains and as a result it, is perfectly compatible with private consortium blockchains. Indeed, certain information can be kept encrypted and unreadable for collators or validators, and still benefit from their work. Yet, enterprises are able to share dedicated information to the outside world when needed. Think of the previous example in which the packet’s tracking information should only be revealed to 2 specific parties. Thanks to asymmetric cryptography, both an e-commerce merchant sending the good and the consumer receiving it could be able to read the tracking information. Only this information would be readable for them, whereas the transactions encrypted with another key would remain unreadable.
Polkadot is not the only protocol that wishes to unite blockchains. Cosmos, Blocknet, Aion, to name a few, have also been actively working to build an internet of blockchains. A next article will be dedicated to their comparison.
