A Primer on the Polkadot Network
Scaling blockchain applications through universal interoperability
Hello!
One year into our role as Lead Advisor to the Web3 Foundation, we thought it was time to share our learnings on the Polkadot Network. You can find our primer linked below, which provides a “just the facts” overview of the new interoperability-focused blockchain network.
Our primer on the Polkadot Network: SGC Polkadot Network Primer
In addition to the factual background on the project, we believe there are a number of key themes worth noting, exploring, and discussing further.
5 Key Themes
1. The Polkadot Network is a Layer-0 Metaprotocol, not an “_____ - Killer”
After a decade of siloed blockchain development, the bulk of users, developers, and liquidity currently center around two networks and their ecosystems: Bitcoin and Ethereum. Addressing the lack of interoperability that has led to this concentration, the Polkadot Network offers an alternative vision for open blockchain protocols. As a metaprotocol, the role of the Polkadot Network is to host and secure other blockchain protocols. Other blockchains that build on top of it do not need to provide their own security guarantees, or construct their own interoperability bridges to other networks, as a result. The networks that connect to the Polkadot Network are referred to as parachains and can either be bridges to existing networks or Layer-1 networks in their own right. The Polkadot Network effectively provides a way for newly built blockchains to merge onto the highway of broader Web 3.0 internet infrastructure. This allows for digital assets and application logic to transcend any single blockchain and ensures that future technological developments will not splinter existing blockchain communities.
2. Customization is King
Blockchains of different designs and functionalities can connect to the Polkadot ecosystem without having to follow a specific architecture. This allows both open and permissioned blockchains to benefit from the same network effects, even if their structures are quite different. Considering that two-thirds of global enterprises surveyed by Deloitte in 2020 had concerns regarding their ability to implement blockchain solutions with proper data and compliance protocols, such an ability to customize will be critical in the wider adoption of blockchain networks in general. Moreover, the customization done by any one network can be submitted to a wider open-source library, making it progressively easier to launch new blockchains within the Polkadot ecosystem over time.
3. “Blockchain” will be Happening in the Background
We believe that the network tribalism that exists today between blockchain networks is misplaced, and that we will see a shift in competition away from the base layer to the applications themselves. This allows for uninterrupted growth of the ecosystem like growth the internet has enjoyed for three decades. Polkadot's value proposition for a decentralized, privacy-protecting, and self-sovereign Web3.0 internet is well-positioned to be an arms provider to application growth. Future end users may understand more about the inner workings of the Polkadot Network than current end users understand about internet infrastructure when they send an email, but it will be out of interest, not necessity.
4. Positive-Sum Thinking will Define the Next Chapter of Blockchain Development
Polkadot makes blockchain development positive sum by aggregating resources around a singular agnostic interoperability protocol, ultimately unlocking a long tail of blockchain use cases. Just as economic globalization is facilitated by common business languages like English or Mandarin, even when they are not the native tongue of either party in a transaction, we believe interoperability is a key to facilitate wider blockchain adoption.
5. A Challenger to Big Tech
The Polkadot Network's launch comes at a pivotal moment in the history of the Internet. The drumbeat against Big Tech has grown louder globally, and entering a new Presidential term in the US, there is growing support from all parties to expand antitrust enforcement against the giants. While Bitcoin and Ethereum have made incredible strides in disrupting money and financial services, they have not made us any less dependent on centralized tech platforms. For peer-to-peer blockchain networks to truly take on today's corporate internet platforms, they will need a scalable alternative. The Polkadot Network appears to be well-positioned to attract the developers and users necessary to serve as the foundational layer for a decentralized internet future. The upgradability, modularity, and agnostic nature of the Polkadot Network make it the likeliest candidate to support a wider universe of other blockchain networks that has been bottlenecked by scalability and security limitations.
Many thanks, and please let us know if you would like to discuss in further detail.
Angie
Signum Growth Capital Team
Angela Dalton | Founder and CEO | angela@signumgrowthcapital.com
Max Fiege | Head of Digital Assets | max@signumgrowthcapital.com