Polkadot Parachains | Explained

Parachains are multiple autonomous layer-1 blockchains that run in parallel beneath the Polkadot ecosystem (on both the Polkadot and Kusama Networks). 

The cryptocurrency industry has put forth a lot of time and effort over the years trying to make blockchain technology useful to the general public. Of course, the keyword here is masses, because the blockchain was far superior to most, if not all, traditional systems on the day it was founded. However, since Bitcoin’s inception, its inability to scale has been regarded as its most serious flaw.

With that in mind, the industry tried many different approaches to try and overcome this problem, and one of the solutions that developers came up with was Polkadot Parachains – a groundbreaking concept exclusive to Polkadot’s ecosystem. However, before delving into the parachain ecosystem, it is useful to quickly examine Polkadot’s function as a multi-chain network, interoperability enabler, and true DeFi pioneer.

What Is Polkadot?

Polkadot, developed by Ethereum co-founder Dr. Gavin Wood, is a protocol that allows data to travel between different blockchains, hence establishing a fresh ecosystem to kickstart DeFi architecture for diverse sharding, adaptation, and transparency.

Polkadot’s parachain technology allows it to function as a multi-chain network, processing multiple, parallelized transactions on several chains at the same time, reducing the one-by-one transaction bottlenecks that plague traditional networks. Polkadot can offer increased scalability solutions to its projects and create the best conditions for them to achieve future growth and adoption due to its usage of parallel processing power.

Polkadot Mechanism

Polkadot’s elementary chain and fundamental layer is known as the Relay Chain, which represents the underlying architecture and contains all of the protocol’s validators and authenticators staked in DOT. The Relay Chain is made up of a small number of transaction types and has a purposely low layer of functionality.

For example, smart contracts are not supported. In reality, Polkadot’s Relay Chain’s main task is to coordinate and maintain the ecosystem as a whole, which includes parachains. Any specific work is delegated to parachains, each of which has a unique implementation and set of features.

Polkadot was created as a Layer-0 multi-chain network, which means that its Central Relay Chain can provide Layer-0 security and scalability for up to 100 Layer-1 blockchains linked as parachains. This is a game changer since it allows a myriad of blockchain infrastructures to form and evolve within its ecosystem, while also providing Polkadot with a value-rich, dynamic, and eventually interoperable network.

Indeed, it is primarily due to this multi-chain hybridity that Polkadot is able to completely alter the DeFi environment and cultivate a whole new set of value propositions via its built-in, parachain-based layer of interoperability.

What Is Polkadot Parachains?

Parachains are multiple distinct Layer-1 blockchains that run in parallel inside the Polkadot ecosystem, on both the Polkadot and Kusama Networks. Parachains, which are linked to and guarded by the Central Relay Chain, share and benefit from Polkadot’s security, interoperability, scalability, and governance. 

Furthermore, Polkadot’s cross-chain composability allows any form of data or asset to be exchanged between parachains, opening up a new range of use cases and possible applications not only in DeFi but also in the broader crypto ecosystem.

Parachains are structurally maintained by a network maintainer known as a collator. The collator collects parachain transactions from users and generates state transition proofs for Relay Chain validators. Collators essentially keep parachains running by combining parachain transactions into parachain block candidates and generating state transition proofs for validators based on those blocks.

Polkadot Parachains Working

Because of the inherent interoperability provided by Polkadot, parachains can also connect to external networks such as Bitcoin and Ethereum via cross-network bridges. Clover Finance, a project that uses a unique 2-way peg system to effortlessly shift assets and data from the Polkadot Network to Bitcoin and/or Ethereum, is a prime example of a parachain providing cross-chain bridge capabilities.

Furthermore, due to their inherent versatility, parachains can be specifically designed to fit any specific use case, such as:

▪️ Decentralized Finance (DeFi)

▪️ Decentralized Data Storage 

▪️ Internet of Things (IoT)

▪️ Identity Verification

▪️ Gaming

▪️ Non-Fungible Tokens (NFTs)

▪️ Digital Wallets

These parachain-native, changeable capabilities enable Polkadot to develop a truly dynamic digital asset infrastructure while also providing the scalability, security, and interoperability required to effectively transform blockchain’s promise into the next generation of the Internet, Web 3.0.

Benefits of Polkadot Parachains

Parachains offer a number of benefits and advantages because of their advanced properties, which include:

Benefits of Parachains

▪️ Scalability: Polkadot’s parachain model enables projects to achieve scalability at Layer-1 rather than relying entirely on Layer-2 solutions. This is a significant accomplishment since it enables the development of a significantly decentralized, more efficient way of implementing blockchain scalability.

This is partly because Polkadot parachains can execute transactions in parallel and uniformly distribute the burden over their whole ecosystem, enhancing overall transactional throughput and scalability.

▪️ Interoperability: Parachains enable blockchain communities to have complete control and sovereignty over their own Layer-1 blockchain while simultaneously benefiting from the ability to freely trade with other parachains and external networks. 

Polkadot Parachains can create an interoperable economic infrastructure by exploiting Polkadot’s cross-chain composability characteristics, allowing them to interchange assets, data, smart contract calls, and off-chain oracle information like as stock price feeds or real-time market developments.

This effectively ends the blockchain space’s compartmentalized character and opens up new potential for apps to interoperate and intercommunicate with one another, thus lowering the constraints of chain maximalism as well as the threats of Balkanisation.

▪️ Governance: Polkadot parachains are adaptable and free to use whichever governance model they see fit, and they have access to a number of ready-made modules for building multiple on-chain governance systems. Polkadot gives its parachains and teams a set of complex on-chain governance tools, which considerably decreases the likelihood of hard forks of their chain, which might possibly split their community in two.

Furthermore, on-chain governance ensures openness for parachain groups and is a crucial requirement for institutions and potential investors, who frequently want to see clear decision-making processes before getting engaged in a project.

▪️ Lower cost: Another advantage of employing Polkadot parachains is that they are linked to Polkadot’s main chain, allowing them to access as much computational power as they require. The advantage is that they do not have to pay any additional fees or gas fees.

How can a Parachain be run on Polkadot?

Anyone interested in establishing a Parachain-based project must first set up a Parachain on Polkadot. The first requirement is to lease a slot on the Relay Chain. Slots for leasing are available through a Parachain slot auction, in which interested parties must bid using Polkadot’s native token, DOT. A lease-out Parachain space on Polkadot is made accessible to the relevant team for a period ranging from six months to two years.

To participate in a Parachain slot auction, interested parties must secure the amount of the DOT bid for the duration of the lease period. When the lease period expires, the full DOT amount is released. However, while the DOT amount is reserved in the bidder’s original account during the lease duration, it cannot be used for staking, transferring, or any other purpose.

Interested parties can fund their bids in a variety of ways. They can fund themselves or seek out crowd financing, in which DOT holders contribute in exchange for a reward.


Polkadot Parachains is an advanced approach to addressing scalability and a host of other difficulties that have plagued the blockchain industry for a long time. They provide a variety of advantages, and understanding them requires familiarity with their characteristics. 

Parachains, which are particularly compatible with a variety of other blockchain solutions and technologies, including oracles, may pave the way for the next stage in the evolution of the blockchain industry. This is why Polkadot has gotten so much attention, and why it is one of the projects with the biggest future potential.

To know more about Polkadot Parachains, go check out SunCrypto Academy.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. All content provided is for informational purposes only, and shall not be relied upon as financial/investment advice. Opinions shared, if any, are only shared for information and education purposes. Although the best efforts have been made to ensure all information is accurate and up to date, occasionally unintended errors or misprints may occur. We recommend you please do your own research or consult an expert before making any investment decision. You may write to us at [email protected].

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