How does Polkadot enable federated chains and what are its advantages?

Learn how Polkadot’s unique Substrate framework can be used for federated chains in one article.

Background
In March 2021, the 14th Five-Year Plan was approved by the 4th Session of the 13th National People’s Congress and officially announced to the public. In the chapter of “Accelerating Digital Development and Building Digital China”, blockchain is listed as one of the seven key industries of digital economy in the 14th Five-Year Plan, together with artificial intelligence, big data and cloud computing.

This is the importance of blockchain at the current stage, and the development of domestic alliance chain has been in the spotlight, and enterprises in the industry have been financing continuously. For example, in early April, Hangzhou Fun Chain Technology announced the completion of Series C funding of hundreds of millions of yuan, officially entering the ranks of unicorn enterprises; at the same time, another well-known alliance chain enterprise, Cloud Elephant, also completed Series B funding of over 100 million yuan half a month ago.

(Alliance chain: only for members of a specific group and limited third parties, its internal designation of multiple pre-selected nodes as bookkeepers, shipping blocks are jointly decided by all pre-selected nodes, the biggest difference compared with public chain is less Token and the mechanism that everyone can participate.)

As an important component of blockchain, the development of coalition chain has also received a lot of attention globally. Traditional technology giants like IBM have long established blockchain service departments and gained a lot, while Maersk, a shipping giant, has also cooperated with IBM to launch Tradelens, an open neutral supply chain platform based on coalition chain, and so far, more than 300 organizations have joined including more than ten shipping companies, covering data from more than 600 ports and terminals. The cost reduction and efficiency increase brought by it can directly reduce the transportation time, communication cost and storage cost, which has brought great returns to many participating organizations.

Therefore, we can see that although the Alliance Chain is very different from the public chain, it has not affected its development at all. Especially with the emergence of enterprise-level applications, the Alliance Chain has become the best choice for enterprises to enter the blockchain industry.

Then, Polkadot, which is also a “public chain” (of course, Polkadot is technically a meta-protocol with a lower level than the public chain), has also attracted much attention. We will try to elaborate on the current development of coalition chains and elaborate on its usefulness in coalition chains by combining the unique Substrate framework of Polkadot ecology for the readers.

Current Common Architecture of Alliance Chain
Before introducing Polkadot and the development of alliance chain, let’s first take a look at the well-known alliance chain architectures or organizations at home and abroad, as well as the ecology they are backed by, so that we can have a certain understanding of the current development of alliance chain, and also facilitate the possible chemical reactions between Polkadot and alliance chain later.

Commonly Used Alliance Chain Architectures

As early as 2015, banks, insurance, securities, business associations, conglomerates and upstream and downstream enterprises began to realize that emerging technologies like blockchain, with its decentralized and tamper-evident characteristics, are helpful in solving the problems of multi-process management and trust in multi-party collaboration, but the attributes of public chains, which are completely open and transparent and accessible to everyone, do not meet the needs of enterprises themselves.

Therefore, based on the thinking of blockchain and the needs of enterprises, a blockchain with distributed ledger and distributed consensus as the core, mainly for institutions and organizations, and requiring permission to join the network – the federated chain – has entered the stage of history.

At present, commonly used coalition chains are dominated by technologies such as Hyperledger, Enterprise Ethernet Alliance (EEA), R3 Blockchain Alliance, Golden Alliance, and Blockchain Service Network BSN, which we have briefly introduced below.

1.1、Hyperledger

Hyperledger (Hyperledger) is one of the largest projects in the blockchain industry, which consists of a set of open source tools and several subprojects. The project was launched in 2015 by the Linux Foundation and its members include 100 members such as Accenture, ABN AMRO and 100 contributors such as IBM and Digital Asset Holdings.

Hyperledger aims to define and develop industry-standard blockchain technology, enabling developers to use the technology to build standardized applications for multiple industries. Hyperledger hopes to help companies build private or federated permissioned blockchain networks where multiple organizations can share access to control and operate nodes within the network.

Currently Hyperledger has had extraordinary success in the financial, insurance and healthcare sectors, and its attempts in the supply chain provide a good model for blockchain applications to be implemented. The blockchain technology adopted by IBM, a world-renowned technology solution provider, is one of Hyperledger’s subprojects, Hyperledger Fabric.

1.2. Enterprise Ether Alliance (EEA)

The Enterprise Ether Alliance (EEA), established in 2017, was founded by JP Morgan Chase, Microsoft, Intel and many other large enterprises leading the way. From the initial 30 corporate members, it has grown to nearly 300 Fortune 500 companies, innovative companies, research institutions and technology service companies around the world, claiming to be the largest alliance chain in the world.

How does Polkadot enable federated chains and what are its advantages?

Its initial goal is to create a series of standards on best practices, security, privacy, scalability and interoperability based on Ether, making it easier for enterprises to use Ether blockchain technology, and is dedicated to developing an enterprise-class blockchain with Ether to help enterprises move towards the era of decentralized ledger systems, and is a large non-profit organization.

The Enterprise Ether Alliance (EEA) provides services and innovative startup communities for a variety of industries including banking, cell phones, pharmaceuticals, automotive, management consulting, and Internet hardware.

1.3. R3 Blockchain Alliance

The R3 Blockchain Alliance is known as the “top global blockchain alliance”. It was founded in 2015 by R3CEV, a blockchain startup based in New York. It is the first alliance chain to apply blockchain technology in the financial sector and introduce distributed ledger technology to global banks.

The R3 blockchain consortium aims to access nodes that are not trusted by each other globally and record the transaction information of people or institutions on each node, thus called a global financial database. It can facilitate code sharing in the global financial industry and reduce the cost of financial services for everyone.

Currently, R3 Blockchain Alliance has more than 80 international bank members, including Ping An of China, China Merchants Bank and other large domestic institutions. And there are attempts and applications in the banking and insurance industries.

1.4、Golden Alliance

FISCO BCOS Golden Alliance is an important blockchain alliance chain representative platform in China, led by Microbank, and more than 20 financial institutions and technology enterprises were jointly launched in 2016, dedicated to the research of alliance chain technology.

Golden Alliance is committed to the application of blockchain technology on the ground, creating multiple tools and solutions such as cross-chain collaboration, middleware, privacy protection, data governance and blockchain governance.

As an open source platform, FISCO BCOS Golden Alliance currently brings together more than 40,000 individual developers, more than 2,000 enterprises and institutions to participate in the common construction, and has pan-industry attributes, which has become the head of the domestic blockchain community organization also ensures its activity.

1.5 Blockchain Service Network BSN

Blockchain Service Network BSN is the world’s first infrastructure network independently innovated and controlled by China, which can be rapidly deployed globally. It is co-sponsored by State Information Center, China Mobile Communications Corporation, China UnionPay Corporation, and Beijing Red Date Technology Co.

The Blockchain Service Network BSN aims to change the current high cost problem of blockchain application development and deployment by providing a public blockchain resource environment for developers with the Internet concept. Developers can use their familiar programming language to publish blockchain applications in a situation where they have no blockchain development experience at all, which greatly reduces the development, deployment, operation and maintenance, interoperability and supervision costs of blockchain applications.

How does Polkadot enable federated chains and what are its advantages?

The blockchain service network BSN consists of public city nodes all over the world, and 128 public city nodes have been established, including 8 international nodes.

Substrate based federated chain

Through the above introduction, we can have a basic understanding of the current domestic and international federated chains. So can we build a federated chain based on Substrate framework that meets the needs of daily applications?

Fabi, the technical vice president of Parity Foundation, the core engineering of Polkadot project, once pointed out in a conference in Wuhan, China that Polkadot is not only a public network ecology, but also a technology stack. By joining the node authorization, it is possible to build a federated chain based on the Substrate framework.

What can be learned is that Polkadot provides a good conceptual model with high interoperability and security.

On October 29, 2020, Polkadot announced that it officially joined BSN Open Alliance Chain, and after technical adaptation, as one of the underlying frameworks of BSN Open Alliance Chain, it provides Chinese enterprises and developers with a compliant, low-cost and easy-to-develop blockchain application operating environment.

The spark between Polkadot and Alliance Chain

Although the development of global alliance chain is in full swing, there are many problems with alliance chain such as difficulty in upgrading, low scalability and monotonous ecology.

As we all know, after years of development and iteration of blockchain technology, there are now many mature underlying frameworks that can be used to build a federation chain. Common ones are Hyperledger Fabric, FISCO BCOS and so on.

Compared with these underlying frameworks, what is unique about the Substrate framework, the technology framework behind Polkadot? And how does it inspire developers to join it first.

Advantages of Substrate

In 2018, Dr. Gavin developed a new blockchain in just 15 minutes on an original factory Mac computer. In that year, this move brought a seismic and strong disruption to the blockchain industry.

The Substrate framework was the key to this feat.

How does Polkadot enable federated chains and what are its advantages?

Substrate framework proposes a new possibility, can we abstract the construction of blockchain, that is, to build a blockchain no longer need to start from the basics, but to modularize the basic code of blockchain, like assembling a computer, I don’t need to do every part myself, but directly use the ready-made motherboard, hard disk, CPU, graphics card, sound card, network card, you can quickly put together a computer. A computer can be assembled quickly.

Therefore, the Substrate framework is modular, diverse, scalable, free, interoperable, secure, and many other features.

Specifically, the Substrate framework first creates modules such as database, public/private key generation, data structure, settlement, timestamp, etc., which greatly saves the development cycle and development process of the R&D team. As a free and open source framework, Polkadot gives all developers around the world a very simple access mechanism.

This is especially important for enterprises, which often need to carefully calculate the time, effort and cost required to use a new technology and the potential return. Therefore, it is very convenient for enterprises to use the Substrate framework to make a blockchain to save time, effort and money, and it can also be customized, which can also motivate enterprises to innovate and explore with blockchain.

Meanwhile the Substrate framework, which consists of Substrate Core, Substrate SRML and Substrate Node three-layer structure, makes it possible for developers to choose the components they need from the modules for parameter setting while also ensuring that developers can switch between convenience and technical freedom at any time, maintaining a high degree of freedom.

The Substrate framework’s fork-free Runtime upgrade is also an important solution missing in the alliance chain, which solves the problems caused by the traditional fork of the blockchain and also improves the security of the blockchain. the existence of Runtime makes the blockchain based on the Substrate framework a true one-click upgrade for fixing important security vulnerabilities, adding new features restoring the on-chain ecology, and changing the core rules provides a basis that is very helpful for the rapid iterative upgrade of enterprise or institution-oriented alliance chains.

In 2020, Substrate FRAME created the node authorization pallet component, allowing developers to easily transform blockchains built on the Substrate framework into federated chains.

The team behind ChainX, in turn, has made it easier for developers to transform a Substrate chain into a federated chain by removing the Staking module and replacing the Balance module (which is responsible for managing tokens) with the Points module, and then replacing the consensus mechanism of a Substrate chain from babe+granpda to aura+grandpa (because federated chains need to design the node It does not need the randomness of babe, and aura is a better consensus for polling out blocks), so that a federated chain based on Substrate framework can be implemented in another way.

Building a federated chain based on the Substrate framework provides the advantages of the Substrate framework while maintaining its controllability, fast transaction speed, and no default data disclosure.

Advantages of Polkadot architecture

In addition to the Substrate framework, there are many benefits of using Polkadot to build a federated chain, and the combination of Polkadot relay chain and parallel chain makes the Polkadot ecosystem better for cross-chain collaboration, scalability and security.

The most distinctive feature of the Polkadot ecosystem is that the relay chain, the same security umbrella under which Polkadot combines different blockchains, is heterogeneous. Whether it is Bitcoin, Ether or Solana, etc., by building parallel chain slots can become a blockchain in Polkadot, i.e. a parallel chain, which lays the foundation for the ecology to prosper.

It enables the interaction and even value exchange between blockchains. Both public chains and alliance chains can keep their own verification nodes while allowing the characteristics of one chain to be used by another, so as to complement each other’s strengths. The design of parallel chains allows each chain to be optimized for a specific use case, creating the possibility for dedicated chains.

For a simple example, Polkadot’s relay chain is like a power board, and different blockchains as parallel chains can be connected to it through the construction of plugs, so both public chains and alliance chains will gradually become an unbreakable security network with the prosperity of the ecology.

Cross-chain advantages of Polkadot public chain and alliance chain

In addition to the above two points, Polkadot also has an advantage that other public chain ecosystems cannot match, that is, Polkadot’s cross-chain advantage.

As an ecosystem with heterogeneous parallel chains, Polkadot has a cross-chain design based on Rust programming language, which allows Polkadot to handle many transactions on multiple chains in parallel and provides stable cross-chain communication, which can also bring cross-chain and scalability to the alliance chains connected to Polkadot.

As Gavin said, there is no single chain that can achieve all functions, and there will be chains that specialize in certain functions in the future. Then, when an alliance chain is connected to Polkadot, it can get full support from Polkadot’s public chain for lending, insurance, wallet, DAO, prophecy machine, and so on.

This creates the possibility of communication between chains providing financial services and real-world data chains (prophecy machine chains), while the Polkadot public chain makes community governance more transparent, so you can see that the resources gained based on an ecosystem far exceed those of a coalition chain alone.

The current dilemma and breakthrough of Polkadot-enabled coalition chains
Although we have talked a lot about the advantages of combining Polkadot with a federated chain, back to reality, Polkadot still needs more support in federated chains, and the future is still bright despite some dilemmas.

Dilemma

Although we can see many advantages of Polkadot and Substrate in the field of federation chain, there are still very many difficulties in the practical process that obstruct the further development of Polkadot.

If it is involved in the field of federation chain technology, then the competition will become traditional technology giants and the customers will become traditional enterprises. For traditional enterprises, compared to cutting-edge blockchain technologies like Polkadot or Substrate, traditional tech giants like IBM or Ali, who have been practicing blockchain for many years and have enough credibility in the Internet field, will consider the technology of traditional tech giants to be more secure and credible.

Polkadot itself currently has limited influence in traditional circles, and there are fewer cases in the alliance chain field, so for enterprises, the previous advantages do not serve as a way to convince them to use this technology, and they value the steady lack of sufficient underpinnings to compete with traditional technology companies.

Breakthrough

Of course, the so-called dilemma is actually waiting to be cracked. In the face of the current dilemma, Polkadot still has many ideas to crack it, and we try to sort out these logics below.

Now, different alliance chains are self-contained. In China, for example, due to some geographical development factors, the Yangtze River Delta will be more affinity with blockchain technology companies in and around Hangzhou, such as Ant Blockchain and Fun Chain, while the Pearl River Delta will be more affinity with blockchain technology companies in and around Shenzhen, such as Golden Chain Alliance, Weizhong Bank and Tencent Blockchain, because to take orders often compete with the influence of technology companies in the local area.

But different companies use often their own developed blockchain, the data information of the two chains do not interact, so the alliance chain also forms many data silos, which, like the public chain, will also have cross-chain demand.

The goal of Polkadot itself is to link all blockchains, whether they are public or federated or private chains. Each chain is like an early LAN, even if the ecology is large, it is still limited. Polkadot aims to connect them all together to form a larger network, just like the Internet today.

It’s worth mentioning that cross-chaining itself is not that difficult, we once wrote in “Exploring Polkadot: Are Cosmos and Polkadot’s cross-chaining the same thing? We have introduced various cross-chain technologies in detail in the article “Is this article enough to understand cross-chains”.

There are still technologies that allow two chains to connect with each other in the field of coalition chains, just like some public chains that link Ether and BSC, but such a single point of connection is difficult to form a synergy. Polkadot ecology, because when many public chains are connected to Polkadot, almost all crypto assets, users and developers are in Polkadot ecology, which is a feature that other projects that only interconnect a few chains cannot compare.

Therefore, Polkadot still occupies a natural and largest ecological position, and there are basically no projects competing with it. Then, in the field of coalition chain, Polkadot can occupy the important ecological position of coalition chain with cross-chain logic, and provide cross-chain solutions to some well-known coalition chain technologies such as Hyperledger or FISCO BCOS, so that many mature coalition chain projects can interconnect; and with Polkadot’s own network effect, or with the ability to Polkadot’s network effect, or the scarce feature of allowing alliance chains to interact with public chains, attracts more alliance chain projects to join Polkadot’s ecology.

In this way, Polkadot is also in demand for alliance chains, and as the two most landed applications of blockchain, DeFi and NFT, are gradually accepted by the tradition, cases like DeFi and alliance chain + NFT, which allow traditional assets to be chained, are gradually appearing, which also indicates that perhaps in the near future, alliance chains and public chains will no longer be as distinct as before, like the boundaries of the Chu River and Han River. Instead, they will be like Tai Chi, where you have me and I have you, each with its own function and interconnection. At that time, Polkadot, as the infrastructure that connects the Chu River and Han River, will usher in a new wave after all.

Summing up the outlook

We dare not directly conclude how the blockchain will develop in the future, but we can still come up with some opinions by extrapolating according to the law of things.

In the future, it is likely that centralized enterprises and institutions will use alliance chains to build new business cooperation models, and there will be one or more huge alliance chain platforms in various industries to empower the development of the industry. On another level, the development of public chains is also unstoppable, with unlimited potential for emerging decentralized applications and decentralized collaboration projects in which everyone can participate.

Nowadays, coalition chains and public chains are still fragmented, but DeFi and NFT, the two most landed aspects of public chains, have quietly evolved and are no longer purely a paradise for decentralized assets, but gradually connect to physical assets or empower real industries, becoming a cross-frame between centralized assets and decentralized assets.

With such a trend, it is only a matter of time before alliance chains are connected with public chains, and Polkadot, which aims to be the underlying infrastructure connecting all blockchains, is undoubtedly the technology most likely to realize this vision.

Perhaps one day in the future, we will no longer be stuck on whether a digital asset is based on a coalition chain or a public chain, and by then, blockchain must have become one of the most popular technologies like Internet technology.

At the present moment, the wave of domestic alliance chain seems to have arrived. At the capital level, many high-quality alliance chain technology enterprises such as Fun Chain, Xita Technology and Lotus Moon Technology have received huge financing. And policy level, just a few days ago on June 7, the Ministry of Industry and Information Technology, the Central Network Information Office issued a guiding opinion to accelerate the promotion of blockchain technology applications and industrial development.

Opinions proposed that by 2025, the comprehensive strength of the blockchain industry to reach the world’s advanced level, the industry is taking shape. Cultivate 3-5 internationally competitive backbone enterprises and a number of innovation-leading enterprises, and create 3-5 blockchain industry development clusters.

With a clear wind vane in policy, the development of alliance chain will definitely break through and set off a new wave of technical reform, and let’s wait and see whether Polkadot can participate in it and occupy a place, or even become a bridge between alliance chain and public chain.

Special Thanks: Thanks to ChainX team and Patract team for their support to this article.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/how-does-polkadot-enable-federated-chains-and-what-are-its-advantages/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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