What is Polkadot (DOT) and why is it considered the Layer-0 of blockchain?

Polkadot is not an ordinary blockchain. It is designed with a Layer-0 architecture, functioning as a connecting platform for a multitude of specialized blockchains. To understand what DOT is, you need to grasp the concept of a “blockchain of blockchains” system—where Polkadot acts as the backbone connecting many independent chains into a unified network. This project was launched in 2020 under the guidance of Dr. Gavin Wood, co-founder of Ethereum and creator of the Solidity programming language.

Polkadot’s original mission is clear: to address two of the biggest challenges in the blockchain industry today—interoperability between different blockchains and scalability. Through advanced consensus mechanisms and parachain technology, Polkadot can process approximately 1,000 transactions per second (TPS), and this number is expected to exceed 100,000 TPS when the network runs over 100 parachains.

Understanding Polkadot Better: A Multi-Chain Connectivity Platform

Polkadot was developed by Parity Technologies, a company co-founded by Gavin Wood after leaving Ethereum. To support its long-term development journey, Wood also established the Web3 Foundation in 2017, a non-profit organization based in Switzerland. This organization is responsible for funding research and development projects related to Polkadot and Web3 technologies in general.

The vision of the Web3 Foundation is simple yet profound: to build a decentralized internet (Web3) where users have full control over their data and digital interactions. The foundation funds key research areas such as cryptography, networking technology, and other technological platforms supporting Polkadot’s development. As a result, a vibrant ecosystem has formed around Polkadot, with hundreds of projects building or integrating into this platform.

Polkadot’s development has been marked by significant milestones. In 2019, Polkadot’s canary network, Kusama, was launched—an active testnet where developers can experiment with new features before official deployment. Polkadot also introduced unique governance and staking mechanisms, positioning it as a leading platform for building highly secure, scalable, and interoperable decentralized applications.

Unique Operating Mechanism of Polkadot

Polkadot operates based on a consensus mechanism called Nominated Proof-of-Stake (NPoS)—an improved version of Proof-of-Stake. In this system, DOT token holders can nominate validators they trust to secure the network. This process ensures that only trustworthy validators have the right to confirm transactions and produce new blocks.

NPoS offers two main benefits. First, it enhances security because both validators and their nominators risk losing tokens if they engage in malicious activities. Second, it promotes decentralization: even small DOT holders can participate through nomination pools, making the Polkadot network more resilient and distributed. To incentivize participation, validators and nominators both receive rewards in newly issued tokens, creating passive income opportunities for the community.

Three-Layer Architecture: Relay Chain, Parachains, and Bridges

Polkadot is built on three main components, each serving a distinct but interconnected role.

Relay Chain is the core of the Polkadot network. It handles all shared security, consensus, and cross-chain communication for all connected parachains. However, the Relay Chain has a unique feature: it does not support smart contracts directly. Instead, it focuses on coordinating and managing the entire system. This design allows the Relay Chain to efficiently oversee the network while providing security for all connected parachains.

Parachains are independent blockchains running in parallel and directly connected to the Relay Chain. Each parachain can have its own design, token economy, and governance mechanisms. The strength of this architecture is that parachains benefit from Polkadot’s security without needing to build their own validator community. This enables parachains to specialize in specific use cases such as decentralized finance (DeFi), gaming, or NFTs, while still being able to exchange data and assets with other parachains on the network.

Bridges are tools that connect Polkadot with external blockchains like Ethereum and Bitcoin. These bridges enable cross-chain transfers and interactions, significantly expanding the ecosystem’s functionality. For example, an application on Polkadot can utilize assets from Ethereum via a bridge, creating interoperability beyond Polkadot.

Polkadot vs Ethereum: A Detailed Comparison of Two Major Platforms

Both Polkadot and Ethereum are powerful blockchain platforms, but they serve different purposes across various technological layers. Polkadot operates at Layer-0, acting as a platform to create and connect multiple Layer-1 blockchains (called parachains). This Layer-0 architecture allows parachains to communicate and share security, forming an integrated, interoperable system.

In contrast, Ethereum is a Layer-1 blockchain focused on enabling decentralized applications (dApps) through its smart contract platform. Initially, Ethereum faced scalability issues due to being a single chain. However, with the transition to Proof-of-Stake (PoS) and the implementation of sharding, Ethereum 2.0 has begun addressing these limitations.

In terms of performance, Polkadot can potentially process over 100,000 TPS when operating with multiple parachains, whereas Ethereum currently handles lower throughput on its main chain. However, Ethereum has a significant advantage in its ecosystem: as of September 2024, Ethereum hosts over 3,000 dApps—the largest dApp ecosystem in the industry—compared to over 400 on Polkadot.

The Future of Polkadot: Latest Developments in 2024-2025

Polkadot is entering a new phase with notable advancements. Polkadot 2.0 is a fundamental upgrade aimed at improving the entire network. One key enhancement is support for asynchronous backing, allowing the network to process transactions more efficiently. With this upgrade, Polkadot is expected to support over 1,000 parachains and handle more than 1 million transactions per second—a significant leap from current capabilities.

Agile CoreTime is another feature of Polkadot 2.0, enabling parachains to set flexible block times. This mechanism optimizes resource utilization across the network, reduces costs, and aligns with Polkadot’s goal of resource allocation similar to cloud computing services.

On the technological and partnership front, in 2024 Polkadot integrated USDC—Circle’s stablecoin—into its network. This move boosts liquidity and attracts larger DeFi projects. Additionally, collaborations with OpenZeppelin and Ink! (Polkadot’s smart contract language) have significantly improved development capabilities. Solidity contracts can now be more easily converted to Ink!, helping developers build safer dApps.

Snowbridge is a notable bridge project expected to launch on Kusama (Polkadot’s testnet) by late 2024. This trustless bridge will connect Ethereum and Polkadot seamlessly, enabling cross-chain transactions and greatly enhancing interoperability between the two major ecosystems. This development is key to expanding use cases for both networks.

Polkadot Decoded 2024, a major event held in Brussels, emphasized Polkadot’s leadership in blockchain innovation. The event clarified the vision for Polkadot 2.0 and reaffirmed its position as a key player in the Web3 space, especially in cross-chain communication and decentralized finance.

Polkadot continues to evolve as a powerful blockchain platform, capable of connecting the entire blockchain ecosystem in unprecedented ways. Upcoming upgrades like Polkadot 2.0 and new technologies will further drive adoption and establish Polkadot’s prominent role in the future of blockchain technology.