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Polkadot vs. Ethereum

Polkadot is the first fully sharded production-grade blockchain protocol. The current protocol of Ethereum does not implement sharding and it is the main focus of the next major upgrade. Similar to Polkadot and its parachains, Ethereum has goals of being a multi-sharded network. When a network is sharded, this implies that it is capable of executing multiple (and often many) state transitions in parallel in a scalable manner. One key difference is that Polkadot parachains are heterogeneous shards while Ethereum will have homogeneous shards. In other words, each parachain can have its own state transition logic whereas on Ethereum, all the shards use the same state transition logic.

Both protocols are blockchains but serve fundamentally different roles in how they are utilized:

  • Ethereum is a general-purpose blockchain that hosts the Ethereum Virtual Machine, an environment for executing smart contracts.
  • Polkadot is a heterogeneous sharded, multi-chain protocol that hosts multiple chains and provides a way for them to partake in a shared security model. Polkadot acts as a meta-protocol that allows for multiple protocols to coexist and work together.
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It's important to note that the "Ethereum" here refers to what was previously known as "Eth2" or "Ethereum 2.0". For more concrete details regarding the subsequent iterations of Ethereum, please refer to the Ethereum Roadmap.

It's relevant to mention that some upgrades may not be active for Ethereum but are described as a part of this comparison to Polkadot. Some of these goals/upgrades may change to reflect the general direction of Ethereum.

High-Level Comparisonโ€‹

At a high level, both protocols have fundamentally different goals, which are reflected by their architecture:

  • Ethereum is a general-purpose blockchain for global coordination. Ethereum is not specialized nor optimized for any particular application, rather its primary focus is the Ethereum Virtual Machine for executing smart contracts.
  • Polkadot is a sharded blockchain that introduces shared security for each one of its shards, or parachains. Each shard is usually specialized towards a specific focus and optimized towards that goal. Polkadot provides shared security and consensus to these shards through the Polkadot relay chain.

Polkadot can't and does not directly run something like a virtual machine for smart contracts. However, several of its parachains can (and do). Parachains on Polkadot can even run an EVM for executing smart contracts written in Solidity, Ethereum's native smart contract language.

In the context of blockchain, "sharding" refers to the parallelization of state transition (transaction) execution. The way Ethereum and Polkadot deal with scalability and sharding is quite different.

Scalability: Sharding vs. Dankshardingโ€‹

As part of Ethereum's roadmap, the previously dubbed "shard chains" have been forgone in favor of rollup-based approach for scaling transaction throughput. Danksharding is how Ethereum plans to create a scalable environment for an acclaimed >100,000 transactions per second. Danksharding was the chosen alternative over "shard chains" and works by storing blobs.

Danksharding will allow for much more space to be utilized per block on Ethereum, where blobs of data will be verifiable for an amount of time before being pruned from the network. These blobs will have to be held for an amount of time, implying a level of data availability that validators must have. This approach will enable data availability at layer one and further enable layer two protocols on Ethereum to flourish.

In contrast, Polkadot is a purely sharded network. It prioritizes data availability as an integral part of the block validation process. Parallelized interactions between parachains, the shards of the Polkadot network, also take advantage of this factor. Whereas Ethereum primarily focuses on making large amounts of data available for validation for a portion of time, Polkadot's parallelization factor allows verification to happen on the protocol level without needing a layer two solution.

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The term "shards" is used here, but know that shards and parachains mean the same thing! Each parachain represents a shard in the Polkadot network.

On Polkadot, each shard hosts core logic. As mentioned earlier, each shard (i.e., parachain) has a unique state transition function (sometimes called a runtime). Applications can exist either within a single shard or across shards by composing logic to create cross-consensus (XCM) interactions.

Polkadot uses WebAssembly (Wasm) as a "meta-protocol". A shard's state transition function can be abstract as long as the validators on Polkadot can execute it within a Wasm environment.

Architectural Differences: Polkadot and Ethereumโ€‹

As previously mentioned, Ethereum is a general-purpose virtual machine that can run sandboxed programs written in Solidity, whereas Polkadot is a meta-protocol for other parachains to connect and interact with each other.

Ethereum operates as a single, homogeneous chain. Each Ethereum node is divided into two layers: the consensus and execution layers. Each layer handles the block validation information, peer discovery, and Proof-of-Stake of the Ethereum client.

Polkadot's primary component is the relay chain, which hosts heterogeneous shards called parachains. The relay chain aggregates information from its shards, the parachains, where Polkadot validators agree upon consensus and finality. In essence, one can look at Polkadot as a series of runtimes, which are state transition functions used to describe parachains (shards), as well as Polkadot itself. Like Ethereum, Polkadot clients abstract away many of their responsibilities into various components built using Substrate.

Forks, Upgrades, and Governanceโ€‹

Ethereum governance is done off-chain, where various stakeholders come to a consensus through some medium other than the protocol itself. Upgrades on Ethereum will follow the standard hard-fork procedure, requiring validators to upgrade their nodes to implement protocol changes.

Polkadot uses on-chain governance with a multicameral system. There are several avenues to issue proposals, and all proposals ultimately pass through a public referendum, where the majority of tokens can always control the outcome. Polkadot uses adaptive quorum biasing to set the passing threshold for low-turnout referenda. Referenda can cover various topics, including fund allocation from an on-chain Treasury or modifying the underlying runtime code of the chain. Decisions get enacted on-chain and are binding and autonomous.

Polkadot can enact chain upgrades and successful proposals using the Wasm meta-protocol without a hard fork. Anything within the state transition function, the transaction queue, or off-chain workers can be upgraded without forking the chain.

Consensus and Finalizationโ€‹

Ethereum and Polkadot use hybrid consensus models where block production and finality have their protocols. The finality protocols - Casper FFG for Ethereum and GRANDPA for Polkadot - are both GHOST-based and can both finalize batches of blocks in one round. For block production, both protocols use slot-based protocols that randomly assign validators to a slot and provide a fork choice rule for unfinalized blocks - RandDAO/LMD for Ethereum and BABE for Polkadot.

There are two main differences between Ethereum and Polkadot consensus:

  1. Ethereum finalizes batches of blocks according to periods called "epochs". The current plan is to have 32 blocks per epoch and finalize them all in one round. With a predicted block time of 12 seconds, the expected time to finality is 6 minutes (12 minutes maximum). See Ethereum 2 Block Time for more information.

Polkadot's finality protocol, GRANDPA, finalizes batches of blocks based on availability and validity checks that happen as the proposed chain grows. The time to finality varies with the number of checks that need to be performed (and invalidity reports cause the protocol to require extra checks). The expected time to finality is 12-60 seconds.

  1. Ethereum requires many validators per shard to provide strong validity guarantees while Polkadot can provide stronger guarantees with fewer validators per shard. Polkadot achieves this by making validators distribute an erasure coding to all validators in the system, such that anyone - not only the shard's validators - can reconstruct a parachain's block and test its validity. The random parachain-validator assignments and secondary checks are performed by randomly selected validators making it less likely for the small set of validators on each parachain to collude.

Staking Mechanicsโ€‹

Ethereum is a proof-of-stake network that requires 32 ETH to stake for each validator instance. Validators run a primary Beacon Chain node and multiple validator clients - one for each 32 ETH. These validators get assigned to "committees," randomly selected groups to validate shards in the network. Ethereum relies on having a large validator set to provide availability and validity guarantees: They need at least 111 validators per shard to run the network and 256 validators per shard to finalize all shards within one epoch. With 64 shards, that's 16_384 validators (given 256 validators per shard). See Ethereum Economics and Eth2 shard chain simplification proposal for more information.

Polkadot can provide strong finality and availability guarantees with much fewer validators. It uses Nominated Proof of Stake (NPoS) to select validators from a smaller set, letting smaller holders nominate validators to run infrastructure while still claiming the rewards of the system without running a node of their own. Polkadot needs about ten validators for each parachain in the network.

Interoperability and Message Passingโ€‹

Polkadot uses Cross-Consensus Message Passing Format (XCM) for parachains to send arbitrary messages to each other. Parachains open connections with each other and can send messages via their established channels. Given that collators will need to be full nodes of the relay chain as well, they will be connected and can relay messages from parachain A to parachain B.

Messages do not pass through the relay chain. Only validity proofs and channel operations do (open, close, etc.). This enhances scalability by keeping data on the edges of the system.

Polkadot will add a protocol called SPREE that provides shared logic for cross-chain messages. Messages sent with SPREE carries additional guarantees about provenance and interpretation by the receiving chain.

DApp Support and Developmentโ€‹

Ethereum mainly supports a form of smart contract development using Solidity. These contracts are immutable, and cannot be changed once published on-chain.

Polkadot supports smart contracts through parachains, usually using the ink! smart contract language. On Ethereum, smart contracts can call each other; however, they are fixed on-chain to the domain of Ethereum. On Polkadot, smart contracts can call each other in the same parachain and across parachains.

On Polkadot, developers have the option of either using smart contracts, calling extrinsics from pallets that modify the chain's state in some particular way or merely use Polkadot's RPC to directly retrieve and act on-chain information. DApps on Polkadot are often composed of these multiple components working together to modify, retrieve, and watch state changes live as they happen.

Conclusionโ€‹

Ethereum and Polkadot both use a sharded model. Danksharding plans to utilize a rollup-centric approach by focusing on data availability. The Polkadot ecosystem is secured by a main chain, called the "relay chain," which in turn manages and connects its shards ("parachains/parathreads") into a single, homogenous solution.

The primary differences between the two protocols are:

  • All shards in Ethereum represent the same state transitions, while Polkadot lets shards have an abstract state transition function implementation.
  • Governance processes in Ethereum are planned to be off-chain and thus require coordination for a hard fork to enact governance decisions. In contrast, in Polkadot the decisions are on-chain and enacted autonomously via forkless upgrades.
  • Validator selection mechanisms differ as Polkadot can provide strong availability and validity guarantees with fewer validators per shard.