Polkadot Upgrade Locks in Parachain Messaging
Major Step Forward for Multi-chain Interoperability
By: Samuel HaigDeFi News
Polkadot’s parachain network has now become a fully interoperable multi-chain ecosystem.
On May 4, Polkadot completed an upgrade allowing parachain-to-parachain messaging via the XCM “cross-consensus messaging” format.
“This is a massive innovation not only for the Polkadot ecosystem, but for the entire crypto industry,” Dan Reecer, the chief growth officer at Polkadot’s first parachain winner, Acala Network, told The Defiant. “It marks the first time a multi-chain ecosystem has ever been connected with unified security and native, trustless interoperability.”
DOT and other Polkadot assets can now be transferred between parachains, while smart contracts, dApps, and other modules built using Polkadot’s native Substrate framework can also communicate with one another across Polkadot parachains. As such, Polkadot’s parachain ecosystem is now fully interoperable.
Polkadot is a multichain network created by Ethereum co-founder, Gavin Wood. Its design allows various Layer 1 networks dubbed parachains to enjoy shared security offered by the Layer 0 Polkadot Relay Chain. The Relay Chain supports staking and simple DOT transfers only, with parachains building out advanced functionality including hosting smart contracts and dApps.
Polkadots 100 parachain slots are leased through auctions where projects compete to lock up large sums of crowdsourced DOT in exchange for their native tokens. The DOT is returned to crowdloan participants at the end of a lease’s duration, which lasts up to two years before the parachain slot is again put up for auction. Fifteen auctions have already been completed.
The launch of XCM comprises a major milestone for the Polkadot ecosystem, transitioning it from a network of siloed chains to a multi-chain ecosystem boasting full interoperability.
Polkadot’s common good parachain, Statemint, has also been upgraded. The upgrade enables assets such as NFTs to be minted.
The news has received resounding support from across the Polkadot ecosystem.
Reecer said that the launch of XCM comprises “the end of Polkadot’s multi-year launch process.” He described the upgrade as allowing parachains to “trustlessly communicate value and data between each other.”
The launch of XCM also paves the way for Acala to launch its liquid DOT staking product, allowing DOT stakers to remain liquid while earning staking rewards, or to be used as collateral to mint Acala’s aUSD stablecoin.
Lucas Vogelsang, the co-founder and CEO of Polkadot parachain Centrifuge, highlighted that XCM offers interoperability without incurring the risks associated with cross-chain bridges. “Parachains are now able to collaborate and assets can move around fast and efficiently without the risks coming from bridges,” he said.
Vogelsang noted that the upgrade will make Centrifuge’s pool tokens composable with other parachain projects, such as enabling the tokens to be utilized as collateral for aUSD minting.
Moonbeam Network, a parachain focussed on EVM compatibility, noted the launch enables DOT to be used in its DeFi ecosystem.
“The ability to move assets across chains without bridging gives token holders options to conveniently interact with a multitude of DApps and projects, offering greater security and convenience,” the team wrote.
“Polkadot’s XCM technology uses a light client-based approach, which is the gold standard for secure cross-chain interactions,” Moonbeam Founder, Derek Yoo, commented.
Twitter user Nachortti emphasized that the launch of XCM makes Polkadot a “true multi-chain application environment where things like cross-chain registries and cross-chain computation are possible.”