How parachains are changing a blockchain-centric ecosystem

Smart contract blockchains have played a central role in creating extensive functionality after the adoption of Bitcoin in 2009. Ethereum led the way in this regard, but innovative technology stacks such as Polkadot have brought a new paradigm to the sector.

It’s only been less than a year since the first parachains went live on Polkadot in December 2021, and the platform’s ecosystem continues to grow as interest in Web3 increases worldwide. Polkadot shares an inherent link with Ethereum given that its creator Gavin Wood played a role in co-founding the prominent smart contract platform around seven years ago.

Cointelegraph explored the burgeoning Polkadot ecosystem in a wide-ranging conversation with Parity Technologies CMO Peter Ruchatz at the Token2049 conference in Singapore in September 2022. From its inception to its growing use cases, the parachain pioneering Polkadot ecosystem suggests blockchain technology will continue to evolve through interoperable systems.

As a starting point, Ruchatz agreed that Polkadot and its older proof-of-stake (PoS) siblings Solana and Cosmos are in a state of harmony, coexisting despite offering similar blockchain-based use cases for decentralized applications (DApps) and projects run on their infrastructure.

Ruchatz highlighted the disruptive nature of the fundamentally new technology affecting various industries, drawing parallels to how Amazon Web Services powers Netflix while the end user is unaware of the underlying cloud technology:

“I think we are again at an inflection point and at the early stage of a technology shift, you have a lot of experimentation, a lot of new platforms and approaches, and shakeout will happen over time. Sometimes you continue to have five leaders, maybe three leaders or hopefully just a leading platform and it provides options and choices.”

There are fundamental differences between the concepts, capabilities and value propositions of Ethereum, Cardano and Polkadot, and Ruchatz believes a major hurdle is articulating and educating people about why each project is useful. In the case of Polkadot, potential use cases and needs for the parachain functionality are important to consider.

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Polkadot’s Relay Chain is a big attraction for potential users, according to Ruchatz, with the base layer providing a means to create custom blockchains with their own tokenomics or business parameters to suit specific needs.

This is a drawcard that he believes sets the platform apart from other general “one size fits all” blockchain protocols such as Ethereum, Avalanche, Cardano and Solana, which Ruchatz suggested are more geared towards building DApps and smart contract functions and services:

“If you really want to innovate and explore a whole new industry or use case and have the appetite to build something revolutionary, something new and build for the long term, you can’t build your own blockchain.”

Compound effects

Polkadot’s signature parachains are separate blockchains that run in parallel while achieving consensus and security through the network’s base relay chain. This differs from other smart contract blockchains such as Ethereum and Avalanche, which must facilitate all transactions, smart contracts and DApp activity on a single chain or through layered solutions.

As Ruchatz explained to Cointelegraph in Singapore, Polkadot provides the foundation, security mechanisms, validations and consensus through the relay chain. Developers use the ecosystem’s software development kit (SDK) Substrate to develop proprietary blockchains capable of interoperating with the wider ecosystem.

Parachains benefit from each other by importing functionality from other parachains that have been built, allowing code from other parachains to be used at the blockchain level:

“Another thing that we’re now seeing happen with so many parachains live is a compounding effect, a synergistic effect, because of Polkadot’s architecture of interoperability and upgradeability. We’ve upgraded the runtime already many, many times. I don’t think any other system can do the.”

This collaborative ecosystem is a key driver of new users, according to Parity’s chief marketing officer, with use cases emerging that have the potential to disrupt centralized products and services currently used by the wider public around the world:

“A good example is the DIDSign app built on top of the KILT parachain, which is an authentication service that disrupts DocuSign. That alone is a huge use case, but the build is something that other parachains don’t need to rebuild anymore.”

Ruchatz also highlighted innovations such as NFT 2.0, programmable non-fungible tokens (NFTs) that draw cross-chain composable architecture from multiple chains, as well as blockchain-based music marketplaces that compete with the likes of “Napsters or Spotify.” The team at Merklebot has even built a Polkadot-connected DApp to connect and control Boston Dynamics’ Spot mobile robots.

Interoperability and Ethereum

Ethereum’s long-awaited transition from proof-of-work (PoW) to PoS consensus finally came to fruition in September 2022. With interoperability as part of Polkadot’s DNA, Ruchatz said that connecting to Ethereum in certain ways was being explored by some ecosystem participants:

“We’re happy to see Ethereum finally join the proof-of-stake club. They still have a long way to go and have only solved one of their challenges. Still, this opens up collaboration and interoperability, and we have some parachains team already exploring it. We don’t want to be a closed shop.”

Part of the focus on interoperability and parachain functionality is part of a broader philosophical goal for the Polkadot ecosystem to become what Ruchatz described as “unstoppable.” A clear commitment to decentralization and transparency in the governance structure has been central to Wood’s goal for Polkadot to achieve “coded democracy,” as Ruchatz explained:

“It goes so far as to say that Parity and the Web3 Foundation should be redundant at some point and become obsolete. We want the community to carry Polkadot forward and make it something that cannot be stopped by any government or central institution because it truly is decentralized.”

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Polkadot had a strong presence at Token2049 in Singapore, with a large staging area showcasing various parachain projects being built in the ecosystem. The Asia-Pacific region is also home to a number of parachain development teams, with a healthy community acting as ambassadors for the ecosystem.

This was evident at the Polkadot expo, as the various parachain teams present had a chance to mingle and share thoughts and ideas with other projects woven into the parachain-powered ecosystem.