Parity Technologies, the company behind the Polkadot blockchain, has announced the release of parachains on top of Polkadot that will significantly increase throughput and scalability.
Learn how smart money is playing the crypto game. Subscribe to our premium newsletter - Crypto Investor.
Parachains are custom project-specific blockchains that run in parallel to the host blockchain. In this case, the host blockchain is Polkadot, the proof-of-stake crypto that aims to facilitate cross-chain transfers of data and assets and increase interoperability across chains. Polkadot is capable of running 100 parallel blockchains that will create a multi-chain interoperable network.
Polkadot has quickly become a popular project among crypto communities because of the technical problems it wants to solve. For that reason, parachains have long been anticipated and after five years of development, they have arrived.
Recommended for You
Slots, or positions, on Polkadot's blockchain are auctioned off, with winners of auctions granted the ability to develop on parachains. One of the first uses of a parachain is coming from Acala, a DeFi hub for Polkadot that offers a variety of dApps (decentralized applications).
The Co-founder of Acala, Bette Chen, said that Acala's team took a bet on Polkadot that is now paying off with its new DeFi platform running on a parachain.
"After taking a bet on Polkadot and the Substrate framework when we started building over two years ago, we couldn't be more excited to be launching Acala's parachain to provide a DeFi platform and native, decentralized stablecoin (aUSD) to the Polkadot ecosystem and beyond," said Chen.
Gavin Wood, a co-founder of Ethereum and the creator of Polkadot, said that there is no blockchain that can provide for every use-case but by using parachains and having many different blockchains working together you can provide for all needs.
"No single blockchain design works optimally for every use case. Each chain comes with trade-offs making it good for some applications and not others. The parachain model was created with the belief that the future of Web 3 will involve many different types of blockchains working together. Just as the current version of the internet caters to different needs, blockchains need to be able to provide a variety of services. Parachains solve this," said Wood.