Why Polkaswitch Is Building on Polkadot
Cross-chain DEX aggregators are the next phase in decentralized exchange, providing the multi-asset accessibility required to disrupt the dominant centralized players. To deliver on that vision with Polkaswitch, we need a decentralized infrastructure that can provide scalable, interoperable, and upgradeable architecture to combat the bottlenecks, high fees, isolated ecosystems, and complex governance structures hampering the usability of existing networks.
As we’ll explore, Polkadot delivers on all three and is exactly why we are building on its blockchain of blockchains.
Most decentralized exchanges and DEX aggregators are isolated, predominantly based within the Ethereum ecosystem. Given speeds of just 15 transactions per second, any period of high demand can lead to a spike in fees, impacting the usability, affordability, and scalability of the applications built on top of it.
Polkadot’s heterogeneous sharded blockchain connects different chains, known as parachains and parathreads, to a central Relay Chain, creating a blockchain of various blockchains with a Nominated Proof-of-Stake (NPoS) consensus model secured by validators and nominators.
This multi-chain shard architecture can process transactions in parallel, keeping fees low and transactions fast, allowing for far greater throughput and limitless scalability, unlike synchronous networks, which is so vital to execute trade swaps at the best price.
As demand on the network grows, additional parachains can be connected for greater capacity, providing a flexible and scalable network for Polkaswitch without the high fees and bottlenecks of existing blockchains.
Polkadot builds with Substrate, a modular framework that enables the creation and deployment of purpose-built blockchains by composing custom or pre-built components. Using Substrate, Polkaswitch can leverage the same functionality such as peer-to-peer networking, consensus mechanisms, staking, governance, and an Ethereum Virtual Machine implementation, as well as compatibility with other Substrate-based protocols.
Through these compatible building blocks, Polkadot solves interoperability issues by creating a hub and spoke architecture of seamlessly connected parachains and parathreads with the pooled network security of the entire network, communicating with other chains using Cross-chain Message Parsing. By harnessing the attributes of each chain and building bridges between them, Polkadot avoids the limited functionality of isolated ecosystems.
More specifically, by integrating with Moonbeam, one of the parachains on Polkadot, Polkaswitch can then deploy contracts and manage cross-chain transactions with other permanently connected parachains or temporarily connected parathreads on the network. Polkaswitch can also leverage trustless bridges between Polkadot chains and external blockchains like Ethereum and Bitcoin, providing the level of interoperability needed to reach our cross-chain multi-asset accessibility and pooled DEX liquidity goals.
When it comes to upgrading blockchain protocols, complex governance structures in existing networks can make the process difficult or contentious. From the Bitcoin block size limit controversy to the Ethereum DAO hack hard fork, there are numerous examples of the trouble in navigating update stages.
The more complex the rules built into the protocol, the more difficult it is to make changes, especially when things go wrong. The upgrade process is also resource and time-intensive, requiring node operators and developers to ensure core software updates don’t break anything on-chain.
Polkadot works differently, managing upgrades automatically by utilizing a clear voting system controlled by DOT token holders and governance code that is part of the same blockchain protocol. That system means no hard forks are ever required, and the Polkadot network has the unique ability to upgrade itself, with updates as easy as deploying a smart contract once voting has concluded.
This form of governance means a far less complex updating process for Polkaswitch on Polkadot, providing easy upgradeability without the uncertainty surrounding contentious hard forks or wasted resources from excessive monitoring and management requirements, as well as a framework for our own governance structure and staking process.
Future Use Cases
Enabling the multi-chain evolution of DEX aggregation is just the first step. Our cross-chain liquidity protocol can later explore new verticals like lending/borrowing, staking, synthetic assets, and other yield farming opportunities, opening up the multi-asset potential of the defi ecosystem.
Polkaswitch is a decentralized multi-chain liquidity protocol on Polkadot, Ethereum and top layer 1 & 2 protocols.
Polkaswitch utilizes the scalability, interoperability, and upgradeability of Polkadot’s network of multiple connected blockchains and synergy with Ethereum’s network effects and mature developer toolset via Moonbeam to provide multi-asset accessibility for seamless cross-chain swaps.