The fourteenth ZB APP hot chat AMA|Why PolkaDot so hot this year?
The fourteenth “ZB.com Hot Chat AMA” launched by ZB.com opened at 16:00 on July 20th. In this AMA, ZB has invited co-sponser of PolkaBase to have an in-depth exchange with our host Journey, ZB VIP customer director and the community users, to share the technical knowledge of PolkaDot.
It is known that ZB.com Hot Chat AMA is an online live knowledge sharing program jointly launched by ZB.com, Mars Finance and Jinse Finance. ZB.com angels, including media, institutions, project parties, analysts, KOL and other crypto circle influenzers, are invited to share knowledge.
In the future, we will continue to cooperate with more international well-known organizations and medias to hold AMA to help you learn more about the industry and field trends. Please stay tuned.
The theme of this AMA is: Why PolkaDot so hot this year?
Host：ZB.com big customer director: Journey）
Organizer:
ZB.com(ZB)
Here are some of the highlights:
Host: Good afternoon, everyone!Welcome to the 14th ZB APP Hot Chat show. I’m Journey, VIP customer director of ZB. Glad to meet you all!Today we are honored to have Shawn, co-founder of PolkaBase, to share information about Polkadot with ZB community.The topic of this ama is Why DOT(Polkadot) so hot this year? firstly, could you introduce yourself to us?
Guest: Hello everyone, I am Shawn, the co-sponsor of the PolkaBase technical community. I graduated from University College London and the University of Liverpool. I used to be a member of UCL Blockchain Lab. In China, I am the co-sponsor of the Polkadot project PolkaBase community. I translate multiple technical content and organize multiple related offline and online sharing sessions for Polkadot. The PolkaBase community is an international Polkadot ecological community focusing on technology and value investment.
- What does Polkadot do? And compared with Cosmos, which is also a cross-chain project, what in5novation does Polkadot have?
Guest: The Polkadot project was founded by Gavin Wood, the former CTO of Ethereum, the creator of the Ethereum, and the founder of Parity. Gavin Wood believes that there are endless scandals of information shielding and black box operation in the existing Internet world. Therefore, Gavin proposed the vision of Web3.0, calling on people to build a network world with less trust and more truth in order to realize the ideal of people owning and governing the network independently. So Gavin Wood was inspired by the sharding mechanism to write the initial white paper version of Polkadot in October 2016. Polkadot’s unique cross-chain mechanism aims to connect the current independent blockchain networks in series, so that different chains can communicate and data， which may make it become the cornerstone of the next generation of value Internet.
Cosmos and Polkadot are both cross-chain projects, but Polkadot is innovative in the following ways:
(1) Higher performance: TPS: The number of transactions that can be processed per second. Now the main chain in the testing phase has achieved 1500TPS performance.
https://twitter.com/gavofyork/status/1270025498580656134
And Ethereum’s TPS is 8–20. In Cosmos theory, the limit of a Hub main chain is 400TPS.
(2) Upgrade with no need to fork
Substrate, another blockchain development kit developed by Polkadot’s development company Parity, does not need to fork for network upgrades for blockchains developed using this kit.
If the consensus mechanism is switched, one of the nodes in the network will be updated to the new consensus, and the other node runs the old version of the consensus, the two nodes will not be able to reach a consensus. Their consensus on the state of the ledger is inconsistent, leading to a fork.
Substrate also introduced the consensus mechanism into the shared ledger so that the consensus mechanism can be consistent across the network, thus avoiding this problem. This means that runtime upgrades of the blockchain can be performed on the real-time network in real time without the need for forks.
2. Host: For the current situation, where chains are operating separately, the cross-chain era seems to be far away from us. For us at this stage, we need to understand the usefulness of cross-chain. Can you introduce it?
Guest: Because the above Cosmos and Polkadot are the basic network protocols at the bottom of the application, cross-chain technology as the underlying network can empower the application layer of user terminals.
Only when industrial applications really need the attributes of blockchain and cross-chain, can cross-chain technology truly correspond to the existing pain points of a certain industry instead of increasing the bubble phenomenon of empowering industries.
In all the technical scenarios that have been implemented so far: a blockchain is an independent ledger, and two different chains are two different independent ledgers, and the two ledgers are not related. In essence, there is no way to transfer value between ledgers.
Under the premise of the development of alliance chain business in different industries of many industrial enterprises, chain affairs departments, and independent chain enterprise service providers in the future, cross-chain technology is the only way for the future of the combination of blockchain and industry.
This information exchange network is what the Polkadot cross-chain network can achieve, and is currently in the test network phase and is expected to be officially launched in late 2020. Finally, with low cost, high security, strong compatibility of multiple chains, and strong compilation capabilities of different programming languages in different chains, more value can be generated by data intercommunication between chains.
3. Host: Recently, China’s three mainstream exchanges Huobi, OKEx and ZB have all launched the polkadot mainnet token mapping function, and trading pairs will be opened in the future. Is there any use for Polkadot mainnet token DOT?
Guest: The definition of DOT: DOT is the native token of Polkadot, whose purpose is to perform the key functions of the platform, as described below.
4 uses of DOT：Governance, Operation, Interoperability, Bonding
Governance：DOT holders control the future of Polkadot. All privileges exclusive to miners on other platforms will be granted to DOT holders, including managing special events such as protocol upgrades and repairs.
Operation：Good participants will get rewards through this mechanism, and bad participants will lose their shares in the network. This ensures that the network remains secure.
Interoperability：For messages to be delivered from one blockchain to the next, the sender can pay a certain fee in the DOT. However, the cost is not required.
Bonding：Add a new parallel chain by binding the token. Obsolete or useless parallel chain can be deleted by deleting the binding token. This is a form of proof of equity.
DOT will play four key functions in Polkadot, namely (i) provide management for the network, (ii) run the network, (iii) create parallel chain by binding DOT, and (iv) cost of passing messages across parallel chain.
The first function of DOT is to give holders the right to complete governance control of the platform. This governance function includes determining network fees, auction dynamics and timetables for adding parallel chain, and special events, such as the upgrade and repair of the Polkadot platform. These functions have not been officially granted to DOT holders, but Polkadot’s basic code will enable DOT holders to participate in governance.
The second function of DOT is to promote the consensus mechanism supporting Polkadot. In order to make the platform work and allow effective transactions across parallel chains, Polkadot will rely on DOT holders to play an active role. Participants will put their DOT at risk (called “staking” or “binding”) to perform these functions, which is not conducive to malicious participation in the network. The DOT required to participate in the network will vary depending on the activity performed, the duration of the staked DOT, and the total number of staked DOTs.
The third function of DOT is the ability to add a new parallel chain by bundling DOT (called “binding”). Obsolete or useless parallel chain can be deleted by deleting the binding token.
iv. The fourth function of the DOT is to pay the verifier node to send messages across the chain. According to the market mechanism, users will pay for sending their messages to other state machines on the Polkadot network.
What rights will DOT give its holders?
DOT holders will have certain functions within the Polkadot platform, including:
i. The ability to act as a validator node, sorter, nominator or fisherman.
ii. The ability to participate in Polkadot governance.
iii. The ability to participate in the decision-making process about adding or deleting parallel chains.
iv. The ability to participate in the decision-making process regarding Polkadot global upgrades or changes.
4. Host：How can community users better participate in the Polkadot ecology? What suggestions do you have?
Guest：I will talk about how users of the trading platform participate in the Polkadot ecology from the three dimensions of network staking, Lending investment, and portfolio investment.
Staking is one of the most popular words in the crypto space in 2019, but what is staking, and why do you think it is inevitable for the industry to fully shift to POS and POS consensus mechanisms?
The operating model of the pledge economy means that node service providers (wallets, trading platforms, professional node service providers, etc.) accept the trust of token holders. As a verification node of the blockchain project, it receives rewards through block production or proxy voting. Node rewards include transaction fees, block dividends, commissioned management fees, etc., and token holders obtain certain dividend interest through pledge lock-up.
The nodes of the Polkadot network specifically refer to validators. It can accept the nomination of token holders (DOTs) to obtain token rewards by managing and maintaining the normal operation of the Polkadot network. Nominators can also share rewards. But if the verifier is found to have malicious attacks, it will be punished, and the punishment will be shared by the verifier and the nominator.
After the Polkadot mainnet is launched, a moderate inflation of 10% per year is planned. If the increase in DOT’s own price is taken into account, now since DOT opened NPOS, Staking’s annualized income is expected to be around 14%.
Lending investment
Crypto asset lending investment is also a good choice for prudent investors. Compared with entrusted nodes to participate in staking, currency holders entrust the currency to high-quality service providers with risk control endorsements to lend to speculators to obtain stable loan interest. At present, the annual interest rate of cryptocurrency lending is mostly higher than 6%, and some are as high as 25%. When the Polkadot mainnet is launched, exchanges will also launch DOTs lending services to meet the needs of speculators and steady investors.
Portfolio investment
As a star cross-chain project in the blockchain, Polkadot network will attract many high-quality projects to participate in the polkadot ecology. They serve as parallel chains or parallel threads in the polka network to share cross-chain information communication and security services provided by the polka relay chain. Investment in Polkadot is not limited to Polkadot network itself. Many projects behind Polkadot, the king of cross-chain, can construct an ETF portfolio investment to form a package of Polkadot ecological investment portfolios.
You can see that as a bridge, finance and operation interfaces account for the majority, and some projects that submit components and upgrade tools account for the general proportion. In the future, the PolkaBase community will build a more comprehensive Polkadot ecological map that integrates wallets, browsers, data tools, and CeFi platforms. Many projects that do not accept official bonuses are also participants of Polka Ecosystem. We will wait and see.
Host: Thanks Shawn for that wonderful answer!Next, it’s the Q&A section of exchanges. In this AMA, we have also invited Xiang Xiang, general manager of ZBG Exchange, and Cathy, CEO of BW Global Exchange.ZBG and BW are both new international first-tier exchanges. Next, please let Xiang Xiang and Cathy raise a question to our guests.
5. Xiangxiang from ZBG：The maintenance of the Polkadot network requires participants to play four basic roles, which are collator, fisherman, nominator and validator. Can you tell us what each role means in the Polkadot network?
Guest：Validator protects the relay chain by staking DOT, verifying the proof of the collector and reaching a consensus with other validators.
As a nominator, actively participate in voting to hold token mortgages, use their own token to vote for validators, indirectly support validators, and allow validators with good performance and stable performance to maintain the consensus algorithm of Polkadot relay for a longer time.
Collator-The validator participates in the election but is not selected for the time being, and can maintain the network algorithm in the form of an alternative validator. The collector is responsible for collecting and packaging all user transactions into blocks on the parallel chain, and then signing and providing state transition proof to the validator. If the validator node cannot be ranked, it can be converted into a collector.
Fisherman-Fisherman is actually the police in the Polkadot system, checking whether the verifier and collector have any irregular operations that affect the security of the system.
6. Cathy from BW Global：What is Polkadot’s consensus mechanism? What are the incentive mechanisms for validators and token holders?
Guest：Polkadot’s proof mechanism is the NPOS nominated equity proof mechanism. Polkadot’s consensus algorithm is a hybrid consensus of GRANDPA and BABE, where GRANDPA is responsible for block finality and BABE is responsible for block generation. I will mainly talk about how validator nodes and token holders participate in NPOS and what are the incentives.
The Polkadot blockchain will implement NPoS in the form of nomination, which is a relatively new type of scheme for screening validators who are allowed to participate in the consensus protocol.
NPOS will select a group of validator entities multiple times a day, and these entities will play a key role in highly sensitive protocols (Such as BABE block production and GRANDPA confirmation algorithms.) in the next few hours.
Their work is of restricted requirements because they need to carry out costly operations to ensure rapid communication response speed and establish a long-term reputation for high reliability. In order to regulate operation behavior, validators must also pledge their own DOT, which is the original token of Polkadot. Whenever their operation deviates from the agreement, their pledge will be reduced. On the contrary, when they abide by the rules, they will get high rewards.
https://www.stakingrewards.com/asset/polkadot/calculate
At present, the average annualized rate of return of the entire network as a validator node is 12%, but the rewards of different validator nodes are different. Some nodes have a high daily rate of return, and some are very low. But the income of a group of nominees pledged to the same node is the same. This is the game of NPOS. Many nominees are encouraged to vote for nodes. However, the more DOT pledged by the node, the rate of return will decrease（Award the number of DOT per node of 10000DOT per day）.
That’s because the node needs to continuously adjust the total pledge amount according to the network BABE algorithm and the GRANDPA algorithm, but at the same time Polkadot requires a 28-day lock-up period for the adjustment.
Therefore, professional nodes need to have sufficient DOT funds to meet the needs of increasing and reducing positions at any time, as well as adjusting the commission ratio according to the network algorithm. When the total number of pledges is small and the rate of return is higher, another node account must be added. Instead, remove an inefficient node account.
In short, it is not as simple as traditional POS. Not only does it have to be lawful so that it will not be punished, but at the same time, nodes getting more pledges does not mean a higher rate of return, because the network’s optimal setting will only be within a range of values. It requires different nodes to continuously calculate to make the node parameters close to this range value to ensure his rate of return.
The system also encourages any holder of DOT to participate in the campaign as a nominator. The nominator will publish a list of validator candidates it trusts, and pledge a certain amount of DOT to support them. If some of these candidates are elected as validators, the nominator will share with them the payment or penalty for each pledge of DOT. Unlike validators, countless nodes can participate as nominees. As long as the nominator is conscientious and only supports validators with good security practices as candidates, its role risk is small and it can obtain a continuous source of income.
