Polkadot (DOT) is a next-generation multichain network that links outside networks as well as customized Layer 1 protocols called "Parachains" or "Parallel Chains" which are built using the Polkadot framework. The protocol was launched in May 2020, co-founded by Gavin Wood, who is also one of the co-founders of Ethereum, and further developed in association with the WEB3 Foundation. He was also the inventor of the Solidity smart contract language which is now used by thousands of developers who are building on Ethereum and associated networks.

It has unique features like interoperability, scalability, security, customizability, staking, governance, and the best one - Polkadot can upgrade without any hard forks to integrate new features or bug fixes. If you want to know more, please check out the basic Polkadot (DOT) guide by @crypto-guides.

In this blog, we are going to explore briefly how Polkadot works and what are the different components that come together to support the operations of the Relay Chain and Multiple Parachains. Let's start!

Hybrid Consensus

Polkadot employs a hybrid consensus algorithm that uses two distinct protocols and they work together. It uses BABE for block production and GRANDPA provides finality. This gives Polkadot the best of both worlds - faster block time hence quick transactions & provable finality. Let's see how both of them work:

Polkadot Block Production - BABE

Polkadot uses Nominated Proof of Stake consensus called BABE (Blind Assignment for Blockchain Extension) that runs between the validator nodes. It assigns block production slots to validators according to stake. This maximizes the overall security and decentralization of the network. Also, the cost of mining equipment setup becomes low because anyone can act as a nominator to nominate the validators on their behalf and get DOT rewards for participating in the consensus.

Key Roles

Collators - They collect parachain transactions from users and produce state transition proofs for Relay Chain validators so that they can validate the blocks.
Validators - They accept incoming proofs from collators and perform consensus on the Relay chain to validate and create blocks.Higher the stake, the higher the chances to get selected in the validator set.
Nominators - These participants join hands with validators and increase their DOT stake. Since not everyone can run a full node 24/7, this is a great way to participate in consensus by nominating a validator on your behalf to produce blocks.

Validators participate in a lottery in every slot which lasts for usually 6 seconds. There can be multiple validators chosen to produce blocks per slot. BADASS BABE is now used in Polkadot instead of BABE that ensures the blocks are produced at regular time intervals.

Finality In Polkadot - GRANDPA

In a blockchain, a block is irreversible and final if all nodes agree and accept the integrity of the data. POW consensus provides probabilistic finality which means that eventual consensus and finality take a long time to reach. To solve this problem, Polkadot uses another protocol called GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) which provides provable finality i.e blocks go irreversible if the process of some random Byzantine agreements is completed. GRANDPA and Finality are two complex topics and they deserve a separate blog. Since this is a basic guide, we are not diving deep into how GRANDPA works in detail. It's vital to know its role on the Polkadot network.

Polkadot Architecture

Polkadot follows a sharded structure where there is a main chain called Relay Chain and there can be multiple parallel chains called Parachains, interconnected through the relay. Transactions can happen at the same time on these chains achieving high scalability without compromising the security of the network. Let's have a look at all the different components of Polkadot's architecture:

Relay Chain: This chain stays at the center of the Polkadot Network and validators create and validate blocks coming from different parachains (sent by Collators). Nominators safeguard the chain by selecting reliable validators on Relay. It is responsible for basic transactions like governance, parachain auctions, and participation in the consensus (BADASS BABE). Relay chain does not have smart contract functionality and all computation happens on various parachains which are also Layer 1 chains running in parallel.
Parachain & Parathreads: Polkadot allows a certain number of execution slots that can be used to run different processes. These slots are available in types: Parachain and Parathreads. Parachains come up with a dedicated slot and you can run heavy and time-sensitive processes on that. Parathreads are slots shared by a group so they can be used to run processes that are not required to be executed frequently. Parachain and Parathreads generate proof that is validated by the validators on the Relay.
Bridges: Bridges act as communication channels between parachains and the relay chain. This ensures interoperability among these chains. A bridge can be an independent chain with different protocols, customized rules & governance models. For example, if you want Polkadot to interact with the Ethereum chain, then you need a bridge. Collators are used to send data from Parachains to validators via bridges. This also improves the speed, efficiency, and decentralization of the network.

All computation is done on Parachain & Parathreads depending upon the use-case. This is handled automatically and you can make customizations while creating your own chain. This diagram will provide you a Top-View of Polkadot's Architecture and the role of each component:

Polkadot Architecture.png

_{Source: https://wiki.polkadot.network/docs/getting-started}

I hope this post helped you understand how Polkadot (DOT) works. Do you own DOT and stake it to earn DOT rewards? Please let me know in the comment section below.

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