Parachains are an integral part of the Polkadot and Kusama ecosystems. They allow decentralized applications and custom blockchains to connect to the relay chain in these networks. By becoming parachains, these external projects can benefit from the shared security and interconnectivity of the Polkadot and Kusama relay chains.
Parachains enable a high degree of customization and flexibility for projects while still being able to communicate with other chains in the ecosystem. This interoperability is a key value proposition of Polkadot and Kusama.
The Concept of Parachains
Parachains are sovereign blockchains that derive security from the relay chain they are connected to, either Polkadot or Kusama. The relay chain provides consensus and cross-chain communication capabilities for all the parachains.
Parachains have their own tokens and optimize transactions for their specific use case. They can be application-specific chains, private enterprise chains, community chains, or experimental chains. By connecting to Polkadot or Kusama, they inherit the robust shared security of the entire ecosystem.
The parachain model allows decentralized projects to focus on their own goals and roadmap rather than building core blockchain infrastructure from scratch. They can outsource the heavy lifting of things like consensus, security, and cross-chain communication to the relay chain. This makes it much easier for projects to launch quickly and focus on their target users.
Becoming a Parachain
Projects have two options for becoming parachains — participating in an auction or leasing a parachain slot.
In a parachain auction, projects bid using the native DOT or KSM tokens to secure a slot to connect their chain. Auctions have a limited number of slots, so competition can be fierce to win a connection. Projects need a warchest of tokens along with community support to outbid other projects in an auction.
Leasing a parachain slot involves entering an agreement with a project who already won a slot in an auction. The lessee project pays the lease holder in DOT or KSM tokens for the right to use their slot for a specified period of time. This allows projects to get a parachain slot without needing to win an auction.
No matter if a project participates in an auction or leases a slot, connecting as a parachain requires technical integration work to make sure it can communicate properly with the relay chain. Parachains must stay up to date with the latest SDK software to take advantage of new features and upgrades.
Benefits of Becoming a Parachain
Joining Polkadot or Kusama as a parachain brings several key benefits:
- Shared Security — Parachains inherit the security of the entire relay chain rather than having to secure their own chain individually. The combined validator set from all connected parachains provides robust security.
- Cross-Chain Communication — Parachains can seamlessly communicate with other chains connected to the same relay chain. This unlocks huge potential for DeFi, NFTs, and other use cases.
- Scalability — Parachains spread transaction load across many parallel chains, allowing for higher overall throughput than a single monolithic blockchain.
- Interoperability — The relay chain provides universal interoperability between all parachains using XCMP protocol for trustless messaging.
- Sovereignty — Parachains control their own governance and economics. They are not controlled by the relay chain in any way.
By tapping into these benefits, parachains can focus on their target users and applications instead of reinventing blockchain infrastructure.
Examples of Existing Parachains
Several prominent DeFi, NFT, and infrastructure projects have already launched as parachains:
- Moonbeam — Ethereum-compatible smart contract parachain for developers to deploy Solidity apps.
- Acala — DeFi hub parachain bringing liquidity and financial applications to Polkadot.
- Astar — EVMs parachain focused on dApps, DeFi, and NFT projects.
- Parallel — Heavily funded parachain focused on DeFi apps for lending, options, and swaps.
- Clover — EVM parachain building bridges to apps on other chains like Ethereum and Cosmos.
- Phala — Confidential smart contract parachain using trusted execution environments (TEEs) for privacy.
These early parachains demonstrate the potential for custom blockchains in areas like DeFi, NFTs, privacy, and bridges between ecosystems.
Future Outlook for Parachains
Parachains are still in the early stages of adoption. More and more projects are likely to launch as parachains to take advantage of the connectivity to the expanding Polkadot and Kusama ecosystems.
Here are some upcoming developments to watch for with parachains:
- More parachain auctions opening up slots on Polkadot and Kusama.
- Competition between parachains in similar domains like DeFi and NFTs.
- Parachains using XCMP for new cross-chain dApps.
- Development of bridges between parachains and external chains.
- Emergence of parachain «hubs» around certain functions like smart contracts.
Parachains are poised to enable a new wave of innovation as more projects plug into the decentralized future offered by Polkadot and Kusama. The next few years will showcase the true power of these interconnected, application-specific chains.
Parachains provide a pathway for external projects to connect with the Polkadot and Kusama ecosystems. By inheriting shared security and cross-chain communication, parachains can focus on their own applications and users rather than core blockchain infrastructure.
The parachain model unlocks the potential for an internet of blockchains, each optimized for a particular use case. As more projects plug into these expanding networks, expect to see parachains enable new possibilities and use cases.