Polkadot and Kusama: architecture and innovations

Polkadot is a protocol that combines multiple independent blockchains into a single interoperable network. In this article, we dive into the history, architecture, governance, and the main innovations of Polkadot and its canary network, Kusama.

Gavin Wood and the emergence of Polkadot

The creator of Polkadot, Dr. Gavin Wood, is an iconic figure in the blockchain industry. Together with Vitalik Buterin, he co-founded Ethereum and served as its CTO.

In 2016, Wood later left the project to build a new and more decentralized and scalable network: Polkadot. In October 2016, the first version of the Polkadot White Paper was published.

Polkadot architecture: Relay Chain and validators

At the center of Polkadot is the Relay Chain, which connects all other Polkadot-based blockchains (the so-called parachains). Relay Chain has a pool of validators who are randomly assigned the task of adding blocks to the Relay Chain and validating blocks in different parachains.

Validators must stake DOT tokens to participate in block confirmation. As long as they don’t break the consensus rules, the validator is rewarded. If the rules are broken, the deposit (stake) is lost.

The consensus itself consists of 2 mechanisms: one is responsible for producing the block and the other is responsible for finalization.

Parachains are individual blockchains whose operation is based on the Proof-of-Validity algorithm. And then there are bridges, designed to connect Polkadot with external blockchains, such as Bitcoin or Ethereum.

Roles in the Polkadot consensus and ways to manage the network

Now that we’ve learned about Polkadot validators and their tasks in the network, let's look at the other roles.

Nominators: they ensure the safety of the Relay Chain by selecting reliable validators. Validator selection is definitely an important task, since it’s them who bear the crucial responsibility for the network.

Nominators stake their DOT on the validators of their choice. If the behavior of the validators they choose doesn’t comply with the consensus rules, nominators may see their DOT confiscated (slashed). The risk of slashing is the key difference between Polkadot’s Nominated Proof-of-Stake (NPoS) algorithm and the traditional Delegated Proof-of-Stake (DPoS) algorithm.

Collators: they gather information about transactions on the parachains and  produce proof for validators.

Fishermen: Track the activity on the network and report malicious behavior to the validators. The role of a fisherman can be performed by collators or full nodes on any parachain.

The functions of DOT

The DOT token was created not just as a means of payment, but primarily as the network management token. Its main tasks are governance of the network, staking and bonding.

Governance. DOT token holders have complete control over the protocol, including the management of exceptional events, such as protocol upgrades and fixes.

Staking. Polkadot uses game theory to incentivize honest behavior by token holders. Conscientious participants are rewarded, while malicious participants can lose their stake in the network. This ensures that the network stays secure.

Bonding. New parachains are added through bonding tokens. Outdated or useless parachains are removed by removing bonded tokens.

Polkadot governance

Just like a Polkadot node (member) can play the role of a collator, validator, or nominator, nodes can play different roles in the governance system.

Council members: they are elected to represent the passive token holder side in two primary governance roles: proposing referenda and vetoing referenda that are dangerous or harmful to the community.

Technical Committee: it consists of the representatives of teams that actively create and develop Polkadot. Committee members can propose an emergency referendum, together with the Council, for a quick vote and implementation of technical proposals and refinements.

Innovation in Polkadot: parachains and parachain auctions

A parachain works as a separate blockchain, operating with its own token and rules, such as its own transaction fees, governance, rewards, etc.

The current limit of about 100 parachains increases the competition between blockchain projects that compete to get their chains connected to the Relay Chain, and thus to the entire Polkadot ecosystem.

To obtain a parachain slot, a project needs to win in a special auction. This requires a lot of resources, raised through crowdloans.

Many people make a parallel between crowdloans and ICOs, but this isn’t entirely true. In an ICO, you give your funds to a project team and don’t expect a refund if the project fails; but in a crowdloan, you get your DOT back if the project doesn’t win.

If the project does win, you’ll still get the funds back once the parachain slot lease expires. In addition, as a compensation for your crowdloan participation, you’ll receive the project’s native tokens.

Crowdloans are held on both Polkadot and its incentivized network, Kusama. However, while on the Polkadot network there is a serious competition for the right to get a slot with impressive DOT stakes, on the Kusama network you need to deposit a smaller amount to win. This is one of the reasons why Kusama can be a great alternative for a new project.

Kusama: the experiment that moves Polkadot forward

Like Polkadot, Kusama was founded by Dr. Gavin Wood. Kusama is a kind of a testing ground for Polkadot: it allows developers to experiment and test new blockchains or applications before releasing them to Polkadot. It works independently of Polkadot, although it was developed by the same Parity Technologies team.

Kusama is not so much a test network as it is a "canary" network: it is an early, experimental version of Polkadot, representing real economic conditions. It isn’t economically centralized like a typical testnet, and it does not have a single point of failure.

Kusama will exist as long as the community supports it, and we anticipate that it will serve new, early, high-risk features and projects in preparation for development and deployment on Polkadot.

The main difference between Kusama and Polkadot is Kusama’s flexibility in everything. For example, it takes 7 days to vote and 8 days to implement changes on Kusama, whereas on Polkadot it takes a month just to vote.

For validators, Kusama also has advantages, because the requirements are lower than on Polkadot. Since Kusama is a blockchain of new possibilities and bold ideas, it can sacrifice stability and security for the sake of increasing network speed.

Kusama also has a lower entry cost barrier for development teams looking to deploy their parachains, as the network has lower connectivity requirements than Polkadot.

Although Kusama was planned as a platform to develop projects before launching on Polkadot, it may happen that many projects will want to continue growing on Kusama. Kusama could also become an ideal environment for ambitious experimentation with new ideas and new innovations in areas such as governance, incentives, DeFi and DAOs (decentralized autonomous organizations).

How does governance work in Kusama and Polkadot?

Polkadot is a technology designed to increase the interoperability of different blockchains, such as bitcoin and Ethereum, and combine them into a single multi-blockchain.That is, Polkadot is a layer 0 blockchain.

A founder who has already changed the world of cryptocurrency is trying to change it again.The emergence of Polkadot.

Dr. Gavin Wood, an iconic figure in the early history of Ethereum, created Polkadot - he co-founded On January 11, 2016, Wood left Ethereum to pursue a project capable of meeting the expectations Wood felt Ethereum had failed to meet. Later in October, he provided the first version of the Polkadot white paper.

The idea is that there is a relay chain, which is the main Polkadot chain that connects all other Polkadot-based networks (the so-called Parachain) Relay Chain is a blockchain with a pool of validators who are randomly assigned the task of adding and validating blocks in different Parachains. For each transaction, validators must make a deposit. If the transaction meets the consensus rules, the deposit is returned and the validator is rewarded. If the rules are broken, the deposit is lost. The consensus itself consists of 2 mechanisms: One is responsible for producing the block and the other is responsible for finalization. Parachain are individual blockchains whose operation is based on the Proof-of-Validity algorithm. And then there is the Bridge Chain - designed to connect blockchains that don’t use Polkadot control protocols (for example Bitcoin, Ethereum blockchains).

Roles in the Polkadot Consensus and Ways to Manage the Network.

What other roles are there in the Polkadot consensus? We have already learned about validators and their tasks in the network. Now let's look at the other roles.

Nominators. Ensure the safety of the relay chain by selecting reliable validators and steaming DOTs. Validator selection is definitely an important task, since they are the ones with the main responsibility for the network. They pay a deposit for the validators, which will be confiscated from them if the behavior of the validators they choose doesn’t comply with the consensus rules. The option to pay nominators distinguishes the Nominated Proof-of-Stake (NPoS) algorithm on which Polkadot operates from traditional Delegated Proof-of-Stake (DPoS) algorithms.

Collators. Provide and maintain shards, collecting transactions from users and producing proof for validators.

Fishermen. Track the net and report malicious activity to the Validators. The role of a fisherman can be performed by collators or full nodes of any parachain.

After we've covered the basics of Polkadot consensus, I'd like to talk about how governance happens in a network. First, we need to understand what the roles are in governance.

There are Council Members, elected to represent the passive token holder side in two primary governance roles: proposing referenda and vetoing referenda that are dangerous or harmful to the community.

The Technical Committee consists of representatives of teams that actively create and develop Polkadot. Can propose an emergency referendum, together with the Council, for a quick vote and implementation of technical proposals and refinements.

But, how is the Polkadot network managed? That's what the DOT token was created for. Its main tasks are governance of the network, staking and bonding.

Governance. Polkadot token holders have complete control over the protocol. All privileges, which on other platforms are exclusive to miners, will be given to members of the relay chain (DOT holders), including the management of exceptional events such as protocol upgrades and fixes.

Staking. Game theory incentivizes honest behavior by token holders. Conscientious participants are rewarded by this mechanism, while malicious participants will lose their stake in the network. This ensures that the network stays secure.

Bonding. New parachains are added through bonding tokens. Outdated or useless parachains are removed by removing bonded tokens. This is a form of Proof of Stake (PoS).

Innovation in Polkadot. Parachains and auctions for it.

Next, I'd like to talk a little bit about the Parachains in Polkadot.

A parachain works as a separate blockchain, operating with its own token and rules, such as its own transaction fees, governance, rewards, etc. The limit of about 100 parachains increases the competition between blockchain projects that compete to get their chains connected to the relay, and thus to the entire Polkadot ecosystem. These projects are competing to win the parachain auction. Many people are making a parallel between crowdloans and ICOs, but this isn’t entirely true. Since in an ICO you give your funds to the team, while in a crowdloan you only vote, if you lose your tokens will come back to you after about a month, and if you win your tokens will come back after the slot expires. So your tokens don't disappear anywhere, but are only blocked for a certain period. And in compensation for your vote, you receive project tokens in the amount specified in the crowdslot itself.

Crowdloans are held on both Polkadot and Kusama. However, while on the Polkadot network there is a serious competition for the right to get a slot with impressive DOT stakes, on the Kusama network it's much easier. And now I'd like to tell you why Kusama can be a great alternative early on in your project.

Kusama. An experiment that moves its parent forward.

Like Polkadot, it was founded by Dr. Gavin Wood. Kusama is a kind of Polkadot testing ground that allows you to experiment and test new blockchains or applications before releasing them to Polkadot. That is, Kusama is like Litecoin for Bitcoin, an opportunity for experimentation. So Kusama is not so much a test network as it is a "canary" network: it is an early, experimental version of Polkadot, representing real economic conditions. It isn’t economically centralized like a typical "test network," and it will not have a single point of failure. Kusama will exist as long as the community supports it, and we anticipate that it will serve new, early, high-risk features and projects in preparation for development and deployment on Polkadot.

It is worth noting that the network works independently of Polkadot. Although it was developed by the Parity Technologies team. The main difference between Kusama and Polkadot is the flexibility for everything. For example it takes 7 days to vote and 8 days to make changes. Whereas on Polkadot it takes a month just to vote.

As for validators, Kusama has advantages, too. Because the requirements are lower than Polkadot, because Kusama is a blockchain of new possibilities and bold ideas, it can sacrifice stability and security for the sake of increasing network speed.

Kusama will also have a lower entry cost barrier for development teams looking to deploy their parachain, as the network will likely have lower connectivity requirements than Polkadot. Validators will also benefit from Kusama, working there to improve their skills, build and test the infrastructure, and gain experience and community support.

Although Kusama is planned as a platform to develop projects before launching on Polkadot, it may happen that many projects want to continue growing on Kusama. Kusama could also become an ideal environment for ambitious experimentation with new ideas and new innovations in areas such as governance, incentives, DeFi and DAOs (decentralized autonomous organizations).