Our vision for Polkadex Orderbook was to build a fully decentralized cryptocurrency exchange that would combine the advantages of centralized and decentralized exchanges in one powerful, technological and user-friendly platform. Our vision for the Polkadex ecosystem is a fast, secure and usable range of tools that are scalable, interoperable and can be easily adopted by retail & professional traders, as well as teams in the decentralized world.
But why did we choose Polkadot out of all the other options allowing us to develop a product that we had in mind?
It is essential to grasp an understanding of what is Polkadot and how it works because its technology stack and ecosystem will help Polkadex become a real disruptor of the DeFi space.
What is Polkadot?
Unlike other blockchains, Polkadot is a next-generation blockchain protocol that consists of an entire network of separate blockchains operating as one mechanism.
In this way, Polkadot brings together the best features from multiple specialized blockchains and strengthens the whole ecosystem.
Due to advanced design Polkadot wins over existing and legacy networks on multiple fronts. We were attracted to build on the Polkadot network because of the following advantages that it offers:
It is already obvious by now that the future is decentralized. One blockchain can’t service all the transactions from tens and hundreds of decentralized applications without creating bottlenecks. The majority of modern blockchains suffer from limited throughput and lack of runtime specialization, aka lack of scalability. As transactions are processed in a sequence, one by one, the lack of scalability causes a kind of ‘traffic jams’ on the blockchain.
Polkadot solves the scalability issue in a non-trivial way. The network bridges multiple specialized chains together into one sharded network allowing for multiple transactions to be processed in parallel instead of a sequence. Polkadot is already more scalable than the majority of blockchains, but the network will further upgrade In the nearest future increasing the number of shards that can be added to the network.
Early blockchains were developing in isolation. However, soon it became obvious that the expansion of the decentralized world and with it the increased number of chains for specific use cases call for cross-chain communication and interoperability.
Polkadot makes it possible thanks to cross-chain composability and message passing. Shards in the network can communicate, exchange value, and share functionality, thus opening the door to a new wave of innovation.
Moreover, shards will also be able to interact with external networks like Ethereum through the system of bridges. This further opens up opportunities for interoperability.
All blockchains make different tradeoffs to support specific features and use cases, and as chain specialization increases, the need to transact between them will only increase over time.
Polkadot is a sharded blockchain, meaning it connects several chains in a single network, allowing them to process transactions in parallel and exchange data between chains with security guarantees.
Thanks to Polkadot’s unique heterogeneous sharding model, each chain in the network can be optimized for a specific use case rather than being forced to adapt to a one-size-fits-all model.
More chains and more specialisation means more possibilities for innovation.
⚫️ Forkless upgrades
Like any software, blockchains need to be upgraded to stay relevant. The issue here is that upgrading a blockchain is far more complicated than upgrading an app, game, or browser. Conventional blockchains are upgraded through the process called hard forking of the network, which often takes months of work and can potentially break apart a community if there is disagreement over the need for the upgrade.
Polkadot enables to upgrade the network without forks via a transparent on-chain governance system.
Hence, projects on Polkadot can stay agile and keep up to speed with cutting-edge technology.
⚫️ Governance and power of community
The Polkadot network is governed by anyone who owns its native currency, DOT. The governance process is fair and transparent. All DOT holders can propose a change to the protocol or vote on existing proposals, as well as elect council members to represent passive stakeholders within the governance system.
The Substrate is Polkadot’s framework that eases the process of building and optimizing custom blockchains for specific use cases. It is like a flexible system that consists of multiple ready-made modules. Teams can mix and match those modules to build core business logic. The rest will be done by the framework, thus saving teams lots of time and effort because they can focus only on their specific area of expertise.
Substrate makes adding new features easy and risk-free, allowing projects to innovate and evolve.
Polkadot was created by the best developers and key figures of the blockchain industry at the commission request of Web3 Foundation and is its flagship protocol. Web3 Foundation supports innovative technologies and applications in the field of decentralized web software protocols. Having such strong backers Polkadot has a strong ecosystem of various entities and projects.
The Polkadot network manages to keep all the benefits described above while maintaining a very high level of security.
How Polkadot works?
The Polkadot network has a very unique architecture that makes it stand out among other blockchains on the market. The Polkadot network consists of:
⚪️ Relay Chain
The core of Polkadot that is responsible for the security, consensus and cross-chain interoperability
Sovereign blockchains that can have their own tokens and optimize their functionality for specific use cases
Special blockchains that allow Polkadot shards to connect to and communicate with external networks
The whole system is run and governed by the following participants:
⚫️ Validators, who secure the Relay Chain by staking DOT tokens, validating proofs from collators and participating in consensus with other validators
⚫️ Nominators who secure the Relay Chain by selecting trustworthy validators and staking DOT tokens
⚫️ Collators who maintain shards by collecting shard transactions from users and producing proofs for validators
⚫️ Fishermen who monitor the network and report bad behaviour to validators.
⚫️ Council Members who are elected to represent passive stakeholders in two primary governance roles: proposing referenda and vetoing dangerous or malicious referenda
⚫️ Technical Committee that is composed of teams actively building Polkadot
Why did Polkadex choose Polkadot?
The core idea of Polkadex was being a highly scalable and fully decentralized platform for a peer-to-peer and trustless token exchange. Hence our platform must provide high-frequency trading, high liquidity and ultra-fast transaction speed to support DeFi applications. Moreover, we required an easy interface to make DeFi usable for people with any level of technological knowledge.
Aiming high, we also had very high requirements that are difficult to find in a single network.
Ethereum network has major scalability issues and is unable to handle the high volume of transactions that we envisioned for Polkadex. Other solutions such as NEO, TomoChain or Cardano also have limited scalability and interface development is not as great as we had in mind for Polkadex.
Polkadot, on the other hand, meets Polkadex requirements perfectly.
As transactions are processed in a parallelised way the network is considerably faster than the competition. Moreover, Polkadot is able to bring various tokens and blockchains together creating a vibrant ecosystem. This is definitely what Polkadex exchange requires.
Polkadot’s Substrate also allows us to add new features and constantly develop the Polkadex platform without going through complicated and lengthy processes. As we plan to be a single solution for all the DeFi users’ and project teams’ needs it is a crucial advantage for us.
Substrate framework allows us to focus all our attention on optimizing the network and reaching the performance that is second to none.
Polkadex also uses the full power of the Polkadot ecosystem to bring more liquidity to the platform through parachains. The technology adds to the Polkadex’s security: through Polkadot, parachain traders can bring liquidity without entrusting their assets to centralized services, lock their assets in Ethereum using Smart Contracts and bring the liquidity to Polkadex, without involving third parties.
Feel free to leave questions in the comments or propose any other topics related to the Polkadex ecosystem, that we can cover in more details for you.
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