blockchain) that runs on the Polkadot network in parallel with other parachains. Parachains are connected to Polkadot in a way that allows developers to create new, independent networks that are powered by the same framework as the main chain.</p>\n<p><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-substrate/">Substrate, a new-generation framework for developing blockchains with Web3 capability, which is also used to build and develop Polkadot and Kusama, <strong>supports the technology behind parachains</strong>.</p>\n<p>Each parachain is connected to the main chain via the central <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-relay-chain/">Relay Chain</strong></a>, allowing them to operate independently without jeopardizing the network's integrity. <a href=https://www.bitdegree.org/"https://research.web3.foundation/en/latest/polkadot/XCMP/index.html/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Cross-Chain Message Passing (XCMP)</strong></a> allows the parachains to exchange messages with other parachains on the same Relay Chain. 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The goal of passive income is to create a consistent income stream without the demands of a full-time job. Traditionally, passive income is used in spheres like rental properties, royalties, <strong>peer-to-peer lending</strong>, dividend stocks, and so on. However, it can also be used in many other types of investments.</p>\n<p>The expansion of <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cryptocurrency/">crypto and <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-defi/">decentralized finance (DeFi)</strong></a> businesses is creating possibilities for investors looking for <strong>innovative ways</strong> to earn a passive income. DeFi is offering crypto investors the chance to earn <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-annual-percentage-yield-apy/">annual percentage yields (APYs)</strong></a> that put most bank deposits to shame.&nbsp;</p>\n<p>There have been a number of options for investors to gain passive income since DeFi began in the summer of 2020, assisted <strong>by the sale of</strong> Compound's COMP token. Lending, staking, and yield farming are the <strong>main techniques</strong> for earning passive income in DeFi, and they all require crypto to do it.</p>\n<p>The notion of <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-peer-to-peer-p2p-lending/">lending is simple. Users lend their unused crypto assets to a platform, which is secured by a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-smart-contract/">smart contract</strong></a>. In exchange, <strong>lending services give</strong>&nbsp;crypto holders an APY. Borrowers can access locked assets as loans, with interest paid back to the platform. There is no danger to the crypto lender if the <strong>borrower dodges to pay their loan</strong> because the process is governed by smart contracts. This means that anyone can withdraw their cryptocurrency assets at any time.</p>\n<p><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-staking/">Staking is the process of a crypto holder locking or staking their assets in a smart contract. It originates from networks that use <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-proof-of-stake-pos/">Proof-of-Stake (PoS)</strong></strong></a> algorithms. A user can earn more of the same token by keeping their assets locked up for the long term. Staking is a means for users to make extra money by contributing to the network's security and decentralization in exchange for <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-mining-reward/">rewards.

/n

Yield farming</strong></a> (or liquidity mining) also allows cryptocurrency holders to earn additional rewards while simultaneously supplying liquidity to <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-liquidity-pool/">pools. By doing that, <strong>liquidity providers (LPs)</strong> earn an <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-are-liquidity-provider-tokens-lp-tokens/">LP token</strong></a> that represents their pool share. Trading expenses are frequently included in the benefits of being an LP when trades take place in the pool.</p>\n<p>To receive additional rewards, LP tokens can be staked on a protocol or project. These rewards usually come in the form of the native token of the project or protocol. These tokens can then be staked for even more rewards, which makes yield farming a <strong>lucrative and passive income source</strong>. 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Such projects are driven by the following principles:</p>\n<ul>\n<li>Transparency</li>\n<li>Free participation</li>\n<li>Open exchange</li>\n<li>Community-oriented development</li>\n<li>Rapid prototyping</li>\n</ul>\n<p>The <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-source-code/">source code</strong></a> in OOS is accessible to be analyzed, edited, and redistributed by anyone. However, some OOS licenses require the original source code to be displayed next to the modified source code.</p>\n<p><strong>Closed-source software</strong> is the opposite of OOS. It doesn&rsquo;t make its source code available to anyone. Therefore, only a specific person, team, or organization that produced it has the authority to alter and allocate it.</p>\n<p>Open-source software has a number of benefits compared to proprietary software. Some of the benefits include:</p>\n<ul>\n<li>OOS principle of open collaboration that leads to<strong> a</strong> <strong>higher-quality product</strong> as a result of the open call for participation. This brings in a diverse group of specialists from many sectors.</li>\n<li><strong>Fixing faults can be faster and cheaper</strong> with OOS than with closed-source software. This is the case because a large number of people can address them and have the skill to resolve them.</li>\n</ul>\n<p>However, it can take a long time for various participants to agree on strategic decisions. This is because open-source software is produced in a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-decentralization/">decentralized way, without a single organization guiding the process. Though to deal with this problem, open-source projects use <strong>unique <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-governance/">governance methods.</strong></p>\n<p>Besides, there&rsquo;s even a movement aimed at making the majority of software available under an open-source license. The movement is called <strong>the open-source software movement.</strong></p>\n<p>It also aims to <strong>advance open-source technology</strong> through the collaborative creation of high-quality code. Supporters of the open-source software movement produce and share code voluntarily. They do that because voluntary work is as part of the ideology of open cooperation.</p>","level":"easy","meta_title":"What is Open-Source Software (OSS)? 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Crypto Terms: Letter P

What is Parachain?

Parachain MEANING:
Parachain - an application-based data structure that runs in parallel with other parachains on the Polkadot network.
Easy
1 minute

Let's find out Parachain meaning, definition in crypto, what is Parachain, and all other detailed facts.

Parachain is an application-based data structure (which could take a form of a blockchain) that runs on the Polkadot network in parallel with other parachains. Parachains are connected to Polkadot in a way that allows developers to create new, independent networks that are powered by the same framework as the main chain.

Substrate, a new-generation framework for developing blockchains with Web3 capability, which is also used to build and develop Polkadot and Kusama, supports the technology behind parachains.

Each parachain is connected to the main chain via the central Relay Chain, allowing them to operate independently without jeopardizing the network's integrity. Cross-Chain Message Passing (XCMP) allows the parachains to exchange messages with other parachains on the same Relay Chain. As it can have its own functionality, tokens, governance system, and other blockchain properties, parachain can be treated as a standard blockchain.

Since each parachain is linked via Relay Chain, it can still benefit from the Polkadot network's security and be backed by its validator architecture. To put it in another way, maintaining a parachain doesn’t require the creation of one's own validator community.

Validators are also assisted by collator nodes in securing parachains. Though collator nodes, unlike validators, do not secure the network. They keep track of all parachain data, choose new block candidates, and confirm the inputs and state of a parachain along with validators.

Note that the economics of parachains might differ from those of the broader Polkadot ecosystem. This means that they can charge various transaction fees based on the preferences of their own community.