What Is Polkadot 2.0?

The article “What Is Polkadot 2.0?” provides an overview of the upcoming changes to the Polkadot network and its native token, DOT. The focus of Polkadot 2.0 will be on applications, with Agile Coretime introducing a more flexible system for allocating blockspace based on developers’ needs. This shift aims to optimize efficiency and lower barriers for projects, ultimately creating more value for users of the network and DOT. The article also explains the architecture of Polkadot, its governance and staking mechanisms, and the upcoming introduction of a coretime marketplace. Lastly, it addresses the ongoing discussions with the U.S. Securities and Exchange Commission regarding the categorization of DOT as a security. Overall, the article provides insights into the developments and potential impacts of Polkadot 2.0.

Introduction to Polkadot and How It Works

Polkadot is a Layer 0 solution built from the ground up to tackle blockchain interoperability. It offers developers a platform to build applications and chains. The architecture of Polkadot consists of a main Relay Chain that handles the network’s security, consensus, and interoperability, and multiple parachains which are application-specific Layer 1 blockchains that can have their own tokens.

One key advantage of Polkadot is that parachains don’t need to develop their own consensus mechanism for security. Polkadot’s Nominated-Proof-of-Stake (NPoS) and its consensus mechanism secure these parachains. Additionally, any Layer 1 chain attached to Polkadot can enjoy Polkadot’s native interoperability, sharing information and resources with other parachains.

However, in its original form, Polkadot leased Polkadot parachain slots, providing the winner with access to a “freighter of blocks” regardless of whether they need it. This led to a potential waste of energy and resources, as well as high entry barriers. To address these issues, Polkadot 2.0 introduces key changes to the Polkadot network.

Polkadot 2.0 and Agile Coretime

Polkadot 2.0 is focused on blockspace redistribution, shifting from a chain-focused ecosystem to an application-focused ecosystem that treats all cores as resources to be used as needed by all applications. This change allows applications to reserve and purchase blockspace based on their needs, making the platform more attractive to potential builders.

The introduction of the coretime marketplace model is expected to lower barriers to entry for developers and improve the efficiency of blocks on Polkadot. Instead of relying on a fixed lease model, applications can purchase coretime using DOT tokens. This shift potentially increases the liquidity and reduces lockup periods for DOT tokens. It also contributes funds to the Polkadot treasury, as coretime purchase fees are sent to the treasury managed by the Polkadot DAO.

What Is DOT?

DOT is the native token of Polkadot and serves various purposes within the network. In addition to conferring governance rights on its holders, DOT can be used for staking and bonding to add new parachains to the Polkadot network. With the introduction of Polkadot 2.0, DOT tokens will also be used for coretime purchases, further expanding their utility within the ecosystem.

Staking

Validators on the Polkadot network are required to lock up a specified minimum amount of DOT tokens in their node. This locking of tokens helps verify transaction data and strengthens the network’s security. Validators are rewarded with DOT for their role in protecting the network. Additionally, other DOT holders can participate in governance through nominator staking programs, further strengthening the network.

Governance

The Polkadot OpenGov guides the operations of the Polkadot DAO, a decentralized governance system owned by every DOT holder. DOT holders can engage in proposal discussions and vote on the governance portal using their tokens. The Polkadot DAO votes on technical and financial issues, ensuring the community has a say in the future development of the network.

Auctions

Currently, new parachains are added to the Polkadot network through auctions where DOT tokens are used to bid for a parachain slot. This bonding structure helps ensure the commitment of DOT tokens to the network. While the slot auctioning model will be phased out in Polkadot 2.0, the bonding structure will still be used for staking programs.

Core Time Purchase (Coming Soon)

Polkadot 2.0 will introduce the ability for applications to purchase coretime using DOT tokens instead of bidding for a parachain slot. This allows applications to reserve bulk coretime or purchase just as much coretime as needed on-demand. The shift to this agile model is expected to lower participation barriers for projects and create additional revenue for the project.

DOT Morphing: Software Not Security?

The Web3 Foundation is actively communicating with the SEC on the status of DOT as a potential security. The Foundation argues that DOT is not a security but software, as it is used for bidding and securing parachains and facilitating on-chain governance. The process of re-categorizing DOT from a potential security into software, known as morphing, is still ongoing, and the SEC has not officially declared DOT not a security.

Final Thoughts

Polkadot 2.0 and Agile Coretime aim to create a more flexible network with a more efficient allocation of blockspace. The shift to an application-focused ecosystem and the introduction of the coretime marketplace model have the potential to attract more developers to the platform. As the network continues to evolve, it will be interesting to see how these changes benefit both builders and users of the Polkadot network. As users and community members, it is important to understand the provisions of the upgrade and the potential implications for the future of Polkadot and DOT.