Polkadot 2.0 Overview

After wrapping up Polkadot 1.0 in July 2023, the blockchain community is now gearing up for Polkadot 2.0, backed by tech upgrades like Async Backing, Elastic Scaling, and Agile Coretime.

Core Components

The system’s core components include the Polkadot SDK, Polkadot Chain, and Polkadot DAO, enabling developers to create custom blockchain projects with ease.

According to Messari, these upgrades allow Polkadot to operate like cloud services such as AWS or Azure. This means that high-demand projects will benefit from increased transaction throughput, while early-stage projects will only pay for the coretime they actually need.

Polkadot Chain

The Polkadot Chain, which runs on a Nominated Proof-of-Stake (NPoS) consensus, serves as the network’s central hub.

Key Features

Agile Coretime is a central feature of Polkadot 2.0, aiming to address inefficiencies in the previous system by dynamically allocating computing resources according to network demand.

Elastic Scaling enhances Agile Coretime, enabling parachains to utilize multiple cores within a single Polkadot Chain block, boosting network throughput and efficiently managing higher transaction loads.

Asynchronous Backing improves block generation and validation by cutting block time in half and allowing for parallel transaction validation and block production.

“Polkadot 2.0 addresses high entry barriers and resource inefficiencies with Agile Coretime, Elastic Scaling, and Asynchronous Backing. The current slot auction model, where parachains rent blockspace for up to two years, will be replaced with more flexible on-demand and bulk models for purchasing blockspace,” according to the Messari report.

Operational Framework

The DOT token serves as Polkadot’s native currency, used for governance, staking, bonding, and paying transaction fees. With over 1.3 million on-chain wallets, DOT holders have full decision-making power through its advanced governance system, OpenGov.

Polkadot’s NPoS system allows DOT holders to earn rewards by backing validators, thus securing the network. Parachains must lock up DOT tokens to secure slots, a mechanism that will be phased out with Agile Coretime.

DOT also functions as the payment method for network fees, determined by base, weight, and length fees. The token has an uncapped maximum supply, with a current circulation of 1.4 billion DOT as of June 2024.

Economic Model

Polkadot’s inflation model incentivizes network participation through a 10% annual inflation rate, adjustable via on-chain governance. This inflation is divided among the treasury, validators, and nominators, with allocation percentages varying based on the proportion of DOT staked.