The third generation of blockchain technology is running full steam ahead, with the Polkadot ecosystem leading the charge. The reason Polkadot is such a hot topic right now is that it patches up the issues of scalability and interoperability. This means that developers can use their system to create multi-chain projects that run off blockchains in unison. Further, through chain bridges, projects can integrate with existing blockchains. To do this, they run a series of parachain slots that connect to a Relay Chain, with devs bidding on slots to win time. Alternatively, there are parathreads, which can give businesses access to the Relay Chain on a pay-as-you-go basis. To find out which is the best option, continue reading.
What Are Parachains?
Essentially, parachains are blockchains that exist on the Polkadot network. They are connected to a central Relay Chain and allow for interoperability and scalability. Parachains take up a dedicated slot and can therefore be bid on by developers looking to create. Alongside publicly available parachains, there are common good parachains that are put aside for projects that benefit the central Relay Chain or the entire community. These slots are decided on by a public governance system. If you win a parachain bid, you have access to the Relay Chain for the entirety of the lease and your bond is your allotted a share in DOT.
What are Parathreads?
Parathreads are essentially the same as parachains in terms of functionality. The only difference is that they don’t need to be bid on. Instead, they access the Relay Chain when they need to. Payment for a parachain is made for the time connected to the chain. The question of parachain vs parathread is dependent on the type of project being completed and the amount of revenue you have.
Parachains or Parathreads?
When you bid on a parachain slot, you will need to start a bid at 5 DOT, which is worth around $200 depending on the market. To win the slot, you are going to need a heft fund alongside an invested community. To give you an idea, Acala won the first parachain auction with a lock-in DOT worth $1.3 billion. They can now use that parachain slot for the entirety of the lease. Once they’ve finished, their assets are unfrozen.
If you don’t have the financial backing yourself, or a supportive community, a parathread would be the best option for you. As well the financial side, the practical side of your project will dictate whether you need to invest in a full parachain slot. For instance, if your project runs mostly on your network and would only need limited interoperability, then there’s no feasible point in having a parachain slot. Just because you opt for a parathread now, doesn’t mean you can’t occupy a parachain in the future. The Polkadot ecosystem marks an exciting step forward in the blockchain space by allowing devs to work on interoperable projects. Their system of bidding and freezing assets for the duration of the lease will guarantee that the ecosystem keeps rolling forward.