Polkadot -Object, Tokenomics & Protocols
a more comprehensive look at Polkadot. It is highly recommended to read Polkadot briefly explained first.
Published on July 28, 2022 by Chen YanLong.
table of contents.
- Objects
- Tokenomics
- Protocols
Objects
We introduced about main objects of Polkadot briefly in last article, today we’re gonna look deeper into those paraobjects.
Parachains
Parachains are chains that are attached to the relay chain, it can be a blockchain, a smart contract chain, privacy chain, and so on.
Parachains are maintained by collators, collators collect information which need to attach to this parachain, and they provide candidate blocks to the relay chain validators. Parachains are not required to have their own native token, neither are they restricted to have one.
Polkadot provides 100 parachain slot, there are three types of objects to be allocated:
- Common good parachains
Parachain slots reserved for functionality that benefits the ecosystem as a whole. The governance system will decide whether to allocate or not.
- Auction parachains
these parachains gain slot by participating in an auction with two period candle auction ( see here )
- Parathreads
described below.
Parathreads
Parathreads are parachains that temporarily participate in Polkadot’s security without needing to lease a dedicated parachain slot. In fact, parachain is like paying the rent of a slot, and parathreads is like paying for the production of blocks. You can see it as a pay-as-you-go parachain .
Parathread is for those who does not need the whole use of a parachain but needs the participation of the shared security of Polkadot, they bid for the production of blocks ( it is kind of like paying gas fee to make your transactions included in Bitcoin ). Parathreads participate in the auction in parathreads pool, the one who wins gets his transactions onto the chain.
Bridges
bridges are special blockchains that allow chains on Polkadot to communicate with external blockchains (like Ethereum or Bitcoin). There are three ways to build a bridge.
- via bridge pallet (Kusama, testnet for Polkadot)
- via smart contract (Ethereum)
- higher-order protocol (Bitcoin)
Tokenomics ( mathematically )
a deep look at the native token DOT of Polkadot, inflation determination, reward to validators, and the usage of DOT included.
Parameters
- I am sorry that I have to do the paste thing since medium does not support mathematical expressions, if you want to see the original one, I’ll paste my notion site at the bottom.
Functions
- x- axis: staking rate
- y- axis: inflation rate ( for blue line), interest rate ( for green line)
- Blue line:
- Green line:
Payment mechanism
Validators are rewarded by performing the following actions, they get points for doing these things, and the points determines how much their rewards are:
- 20 points for each validity statement
- 20 points for each (non-uncle) block produced
- 2 points (to the block producer) for each reference to a previously unreferenced uncle
- 1 point to the producer of each referenced uncle
the rewards will be calculated every era, and will be the proportion of points earned by individual validator to points earned by all validators times the target total payout. That is, mathematically,
note that the target total payout is determined by the calculation of i(x), as mentioned above.
Validator slot
Each validator slot consists of 1 validator and multiple nominators. Validators and nominators gets reward in validator slot.
Simple explanation, if there are 26 validators, there would be 26 validator slot. Every nominators who nominates (stakes) for that validator will be count in A’s validator slot, if 5 nominators stakes for validator A, then there will be 5 nominators in validator slot A.
Each validator slot (A~Z) gets the reward as mentioned above (according to how many points the validator in that slot gets), and that reward will be distributed with two steps:
- commission fee
。the commission fee is announced by the validator in advanced
。commission fee will first be distributed to the validator
- remainder
。total reward minus the commission fee
。the remainder will be shared proportionally to their stake within the validator slot
。this part of reward will be shared to both staked-validators and staked-nominators
Mechanism advantages:
- Incentive to nominate less popular validators
。less popular validators means a more distribution of reward
。lower entering barrier to become a validator
。more decentralized
- market efficiency
。commission fee can be anounced at any price
。higher commission fee attracts less nominators, which could lead to a risk not being able to become a validator caused by low nomination.
。validators with high reputation can have the market power to charge more fee
Treasury
a fund which is raised to pay for developers, apply changes, and to keep the system running.
- +minting
- +transaction fees, slashing ( part of )
which, could leads to inflation
Protocol
NPoS
this cycle repeats everyday:
- nominator publishes a list of validators he trusts and stake DOTs.
- system select the validators with massive DOTs staked.
a. fair representation
the nominators who stakes at least “average DOTs staked per nominators” is guaranteed to have at least one validators trusted to be elected. As an example, the first nominator bellow will have validator A elected.
b. security
the level of security of an election = the minimum amount of backing of any elected validator
c. the system splits the nominators’ stake into validators’ backings of roughly equal size.(it is more secure)
d. the election rule is too complicated to explain, see this if you are interested in.
XCM(Cross-Consensus message format)
XCM is a “format” of how cross-consensus transfer should be performed.
Note that this is a FORMAT, I am sorry, but it has to be explained here.
The reason why I mention it here, is because it involves protocols that are important to transferring messages between chains.
1.VMP (Vertical Message passing)
this protocol allows message transfering between parachains and the relay chain. there are two part of it:
- UMP(upward)
- DMP(downward)
A message from parachain1 uses UMP to transfer to the relay chain, and then the relay chain uses the DMP to transfer it to parachain2. Then, it communicates.
2.//XCMP
Cross-chain message-passing protocol
! XCMP is still under development. HRMP is now implemented as a substitute of XCMP, and it is useful, only that it needs more resource than XCMP does. The lowest different is that whether transactions are stored as a Hash or not.
** HRMP=Horizontal Relay-routed Message Passing*
** I noticed that it said “XCMP (sometimes known as HRMP)” on github of XCM format , but it seems that it is a little bit different according to Polkadot’s website.
This protocol makes it possible for different blockchain ( parachains ) to communicate with each other, and it does NOT need to pass the relay chain. Once the parachains establish “channels” between them, they are able to transfer message directly. To open a channel, deposit need to be put down.
two types of channels according to directions of message flow:
- Unidirectional XCMP Channel
。messages flow in one direction
。unique configuration
。more flexible
- Bidirectional XCMP Channel
。messages flow in both directions
。same configuration for both directions
。more efficient
the message transfering process is briefly illustrated below, as the explanation would be too cumbersome, I’ll just skip it.
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Next part- Security(Cryptography), Networking and Others(Kusama)… on Polkadot, of course. Still working on it ( haven’t started actually ), cheers.
Any problem or mistake, please contact me, appreciate. And thanks for reading.
the original article I wrote on notion comes here, welcome to have a look if you need Katex version of mathematical expression.
