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31
Mar
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Polkadot 2.0 is the most important update in Polkadot’s history

Polkadot is the market-leading Layer 0 protocol. Layer 0 refers to a blockchain that provides infrastructure for Layer 1 blockchains, i.e., traditional smart contract platforms. The blockchains in the Polkadot ecosystem can easily communicate with each other, and the Polkadot’s decentralized governance ensures their security.

You can find more information about the project from our Polkadot beginner’s guide.

Polkadot’s infrastructure is based on parachains. Parachains are Layer 1 blockchains that link to each other with the Polkadot protocol. One parachain is typically created for one decentralized application (Dapp).

The current issue is distributing the computation resources evenly among the parachains. This is inefficient because the processing needs of parachains are variable.

The Polkadot 2.0 update solves the problem with a new concept called Agile Coretime. This refers to a marketplace where parachains can acquire computational resources (“Coretime”) and space in the blockchain (“Blockspace”) as needed. Below is a picture from Polkadot’s website.

agile coretime

The new system makes it easier for small projects to join Polkadot’s ecosystem and enables the acquisition of sufficient resources for large applications. With the update, Polkadot’s transaction capacity is expected to increase to tens of thousands of transactions per second.

Agile Coretime also benefits DOT token owners. The marketplace’s currency is Polkadot’s native token, DOT, and most purchases are burned. This kind of token burn mechanism is familiar to the Ethereum platform, where the EIP-1559 update made the ETH token deflationary. The same can be expected to happen with DOT as well.

Polkadot 2.0 also includes a third major update called Asynchronous Backing. The term refers to the block processing of parachains. Until now, parachain blocks have been processed synchronously in a particular order. The new update frees Polkadot protocol validators to process parachain transactions asynchronously. It enables faster processing of time-critical transactions (e.g., decentralized exchange trades).

With the Asynchronous Backing concept, the block time of parachain blocks can be halved from 12 seconds to 6 seconds. The upgrade can theoretically increase Polkadot’s transaction capacity up to eight times.

Polkadot 2.0 is arguably the most critical update in Polkadot’s history. It will be introduced in stages at the end of 2024. The timing of Polkadot 2.0 is excellent, as it will likely be introduced near the peak of the 2024-2025 bull market.

The update can have a positive effect on Polkadot’s price. In the world of cryptocurrencies, it is typical for investors to front-run such updates, which can lead to a significant increase in Polkadot’s price months in advance.

If you want to invest in Polkadots, check out this guide: How to buy Polkadot (DOT). It provides step-by-step instructions on how to buy Polkadot on the Binance exchange.

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