How do polkadot parachain auctions make decentralized web3 possible?
Polkadot’s parachain auctions are sure to be successful and ensure Web3 is decentralized by connecting different blockchains.
Ethereum co-founder Gavin Wood used to do that to explain that it would “allow people to interact in mutually beneficial ways without having to trust each other.” In theory, such a platform would pave the way for Web3, which features distributed or decentralized network architectures and lays the foundation for a truly open Internet. There we don’t have to blindly entrust our data to proprietary companies or need their consent to participate.
However, since its inception in 2015, Ethereum simply cannot adapt and keep up fast enough. In particular, the transaction costs for decentralized applications (DApps) are too high, while the transaction speed is too slow. Wood left the Ethereum team in 2016 and founded the framework for decentralized Web3: Polkadot.
Average Daily Gas Fees on Ethereum | Source: Dune Analytics
As the mass parachain auctions gather momentum, the “mother of blockchains” is having a very interesting year, beginning with the launch of the Kusama Canary Network. Kusama’s motto is “Expect Chaos.” In retrospect, it is clear that the anticipated network turmoil in parachain auctions sets the stage for a solid Polkadot platform and ultimately a decentralized Web3 for years to come.
The ability to communicate contributes to what differentiates Polkadot from Ethereum and other blockchains. Polkadot’s focus is on parachains.
In theory, a parachain is a parallelized chain that is the driving force behind one of Web3’s core principles: the ability to communicate between disparate systems. Within the ecosystem, parachains run in parallel, and thanks to Polkadot’s cross-chain aggregation capabilities, all types of data can be sent between them, opening up possibilities for new use cases. Thanks to cross-network bridges, Parachain can also be connected to many external networks such as Bitcoin, Ethereum, etc. Parachains are unique, independent, and built for the specific needs of the blockchain, unlike Ethereum shards, which are identical in design and less customizable.
Basically, is built around the Relay Chain — core chain that ensures interoperability between other blockchains on the network and allows developers to build their own blockchain securely. While the current relay chain processes transactions, applies governance protocols, and provides staking services for the Polkadot network, an upcoming set of parachains is expected to offer enhanced functionality, including enhanced and cross-chain compatibility.
Auctioning parachain positions on Polkadot | Source: Huobi Global
If the relay chain is a focal point, the parachain is essentially Polkadot’s four-way spokes. Each parachain is a blockchain capable of running its own consensus algorithm, utility, token, etc. Since Relay Chain does not support smart contracts or any other specific functionality, these responsibilities are shifted to the parachains.
It should be noted that parachains are not bound by any rules other than being reliably authenticated. Polkadot limits the number of parachains to 100 – a hard limit that creates competition between projects hoping to connect with Polkadot. In order to connect, potential parachains must win a parachain position auction by outbidding other projects. After a parachain acquires a location, the project commits DOT tokens to pay for renting that location (parachain positions are never sold, only rented). If these auctions sound complicated or confusing, it’s because parachain positions are scarce and Polkadot wants to prioritize serious, high-quality projects.
In official parlance, Kusama is a network set up like a “canary in a coal mine” that takes the risks for its polkadot brother. As Kusama said:
“It’s a platform designed to switch agents to take back control, spur innovation and disrupt the status quo.”
The network touts enabling the creation of the most realistic testbed possible for blockchain projects and can adopt Kusama as a “dual platform” because it has almost the same architecture and structure with Polkadot, in addition to the ability to quickly upgrade. The network will not only be used for parachain candidates to innovate and test changes, but also as a proof-of-concept chain for Polkadot’s sharding model.
For Kusama, auctions have proven to be key to a scalable multi-chain architecture where parachains connect to the network by renting a spot in the relay chain through an auction that requires mutual consent. Initially, when Polkadot reportedly launched the parachain auctions, they shown How Kusama has successfully completed 11 parachain auctions since early June. Since then, more than 49,000 unique addresses have contributed more than 2.4 million KSM tokens, signaling quite enthusiastic interest from the community.
Furthermore, the fact that there were no technical issues during the parachain auctions proves that Polkadot was prepared for its own auctions. It is clear that incremental deployment is central to Polkadot’s success, with the total number of parachains going live on Polkadot not exceeding 75% of parachains running on Kusama, with the aim of prioritizing quality over quantity. Kusama’s success undeniably bodes well for a bright future for Polkadot.
In short, the journey to a decentralized internet begins with parachain auctions, originally inspired by Kusama. Web3 is focused on putting users back in control of the internet, and that’s exactly what’s happening with parachain auctions anyone can participate in. Polkadot’s ongoing parachain auctions will surely succeed due to rigorous testing on Kusama and ensure a decentralized Web3 by connecting different blockchains. In the future it is possible that Kusama will be bridged with Polkadot for cross-network interaction – which is the ultimate Web3 realization.
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