Polkadot Network and Advantages

Polkadot Network is a next-gen L1 platform that focuses on interoperability, and defines a mechanism for heterogeneous blockchain networks to communicate with each other

This allows separate and previously isolated blockchains to be networked together, forming an "internet of blockchains", where private chains can be firewalled from public chains like Ethereum, but still allow cross-chain transactions via pre-defined State Transition Functions.

For TIDAL Protocol, the advantages of implementation on Polkadot include:

  • Full Interoperability: Polkadot’s unique architecture allows many divergent consensus protocols, open and closed networks to achieve interoperability, allowing TIDAL Protocol to be used to provide coverage to the widest range of different DeFi assets possible on different L1 networks, as well as potentially interfacing with CeFi networks such as banks and other market participants who might need insurance products.

  • Transactional Scalability and High Throughput: Polkadot is built to be highly scalable from the ground up, compared to first generation Smart Contract platforms such as Ethereum 1.0 that has experienced severe network congestion issues, causing security vulnerabilities and irregular market behaviors.

  • Explicit Finality and Security: Polkadot’s Proof-of-stake consensus and GRANDPA finality overlay provide explicit finality, and a secure and robust consensus mechanism that is not vulnerable to 51% attacks. For TIDAL, having explicit finality rather than probabilistic finality is very important, as insurance transactions require explicitly confirmed transactions and settlements for legality reasons.

  • Transparent Governance: TIDAL Protocol embraces a fully transparent and fair governance process via the TIDAL token, and thus Polkadot Network is the natural choice for having similar ethos and a fully decentralized and transparent governance structure as well.

  • Lower Fees: High fees such as seen on Ethereum 1.0 network’s gas fees eat into LPs profit margin, and creates a large amount of friction within the market. TIDAL Protocol relies on a low friction market for efficient price discovery of the insurance products offered, and thus a more scalable, low fees network like Polkadot is preferable.