Introduction

Parachains are application-specific data structures that run in parallel to the Relay Chain. They take their name from the concept of “parallelized chains.” Most commonly, a parachain will take the form of a blockchain, but they don’t necessarily have to be actual blockchains.

The scalability of the Polkadot system is due to its parallel nature. By parallels, I mean they inherit the security of the entire network and can communicate with other parachains through the XCM format.

Collator nodes are responsible for maintaining a full node of the parachain, storing all necessary information about it, and producing new block candidates to pass on to Relay Chain validators. These validators then verify the candidate blocks before they’re added to Polkadot’s shared state.

Incentivization of a collator node is an irrelevant detail to the parachain. They do not need to be staked on the Relay Chain or own the native token unless specified by the parachain implementation. The Polkadot Host requires that state transitions performed on parachains are specified as a Wasm executable file. 

Before Polkadot understands that a state transition has occurred on a parachute, validators must check new proofs of state transitions against registered STFs stored on the Relay Chain.

A parachain’s logic must be able to verify by Relay Chain validators. Verification typically comes in the form of a bundled proof of state transition called a Proof-of-Verification (PoV) block. This is submitted to the validators from one or more parachain collators.

Parachains are project-specific and customized data structures that notably add to the Polkadot and Kusama multichain environments. What’s more, parachains can have various implementations with diverse private or public clubbing of features, tokens, elements, etc.

Parachains are independent systems that work alongside the Polkadot ecosystem, helping to provide swift cross-chain interoperability. Parachains also offer quicker and more cost-efficient transactions. Using customizable tools, developers can design projects with exclusive use cases and tokens. The user-friendliness of parachain infrastructure leads to a surge in adoption rates for both Polkadot and Kusama among users.

How do parachains work?

On Ethereum, dApp developers are limited to working within the pre-determined parameters of the blockchain. However, on Polkadot and Kusama, developers have much more freedom to work independently and customize parachains that fit their needs.

This indicates that each parachain can have its own unique elements, such as block time, mining rewards, transaction fees, etc. Parachains are managed by collator nodes that keep a record of all the activity on each parachain and compile it into blocks to be added to the Relay Chain.

Parachains characteristics 

Improved interoperability 

Parachains are designed to enable different blockchains to interact with each other, regardless of their internal differences. This allows for a more efficient and seamless experience when using multiple blockchain applications. Polkadot only supports one criterion for creating parachains so that every block follows the same protocol.

Scalability

The topic of low scalability has always been popular among industry insiders. Scalability is the network’s ability to process transactions in a shorter period of time, which is determined by the block size and frequency. Parachains enable the parallel processing of transactions in various decentralized modules. This way, each parachain can distribute and process transactions at the same time as others, resulting in quicker throughput.

Governance Systems

With a well-designed governance system, users can help create an ecosystem that is accountable, transparent, and democratic. One of the major advantages Polkadot has over Kusama is that parachains are free to follow any governance structure they choose. This reduces the likelihood of hard forks. 

If a parachain does not want to have its own governance model, it can easily adopt one of the existing structures from Polkadot’s on-chain governance module. Users feel a sense of ownership and responsibility for the company when they participate in trusted blockchain technology courses that teach about the importance of community involvement in governance systems.

Cross-chain Interactions

The parachains in Kusama and Polkadot can interact with both external channels and each other, viewing and accessing data across the ecosystem. Cross-chain composability helps parachains to easily exchange tokens and data, including smart contracts along with off-chain data from oracles.

Shared security 

One of the key benefits that shared security provides to chains considering joining the Polkadot network as a parachain is referred to in documentation as pooled security. In short, all parachains connected to the Polkadot main chain by leasing a parachain slot will be safeguarded by the economic security provided by validators on the main relay chain.

Shared security protocols and those that rely on bridges differ in how they view sovereignty. Protocols with bridge architectures treat each chain as sovereign entities that need to support their own validator sets and financial security. 

However, this screams for the point of scalability when it comes to security. For example, people have proposed different ways blockchain can scale, such as through altcoins. The idea is that lower market-cap altcoins will take on more transactions as the bigger ones fill up their blocks.

A major issue with this concept is that the coins with lower market caps will have less economic security, making them more susceptible to attacks. A 51% attack recently occurred (Ethereum Classic attack on January 10, 2019), in which an attacker double spent 219_500 ETC (~1.1 million USD).

51% of attacks continued on ETC, however, Polkadot provides greater security since it incentivizes all economic aspects of the Relay Chain. This allows parachains to access stronger guarantees at genesis. Sovereign chains must put in more work to increase the value of their coin so that it will be secure against attackers with a lot of funding.

Use cases 

• Private Consortium Chains: These are chains that do not leak any information to the public, but can still be interacted with trustlessly due to the nature of the XCMP protocol.
• High-Frequency Chains: These are chains that can compute a large number of transactions rapidly by making trade-offs or optimizations.
• Privacy Chains: These are chains that use cryptography to keep information private and secure.
• Smart contract chains are those that come with extra logical components implemented via code, which is commonly referred to as a “smart contract.”

Parathreads 

Parathreads differ from parachains only in their economic model, which is based on a pay-as-you-go system. With parathreads, projects can connect to the Polkadot ecosystem on a temporary basis without making a permanent commitment.

Parachains also fit well for projects that don’t manage to take up a whole slot during an auction. Although they have a slower block time than parachains, they offer the same level of security and interoperability. Depending on what you need and whether slots are available, you can switch between using a parachain or parathread.

Final thoughts 

Parachain is a project-centric blockchain network that enhances the efficiency of Polkadot and Kusama. With parachains, Polkadot users can increase security, scalability, and interoperability. Projects can connect to the main chain by grabbing a slot at the parachain auction as part of the Polkadot training program. Several projects are struggling to get a lot on Polkadot’s parachain, but there are positive future growth prospects for Polkadot development.