Crystal Theory:
In the dragons body, there Elemental System made of Special Fibers, 3rd Nervous System, Special Glands, and shacks in the lower guts, dragons can make a material like substances that comes in the form of particle, liquid vape ant tec. like form that is main material needed for Elemental abilities. The Substances nickname by the dragons 'Colorless Sources' can be store in the fibers and Shacks for use in elemental abilities, when using Elemental Blasts for there palm the Sources when going to the palm is given small amount of Nutrients and Genetic Code from the cells to prime the Element to be use and when at the point of release the 3rd Nervous Systems with the aid of the Cell Forming sparks the Sources to become the element abilities as at the palm and Special Glands then blast it out at the same time the Nervous System and Cell Forming to 'control' and use the elements in the ways they want to almost like Blending. As for the Shacks in the Dragon is primary Primed Sources ready to be use at will but more famously used in Dragon's Breathe ability as it is linked to throat and mouth area(With a protective layers in there for any damage). Colorless Sources seems to only able to form or stay around inside the dragon unless you can keep it in a similar environment but there is a way for them to be formed that's by outside in there rare Solid Form or better now as Elemental Crystals, Materials the have sources power and elemental ability to a degree but in the right environment can Growth naturally. This also explains why Elemental Crystals are rare to other species but the dragons and why its used as a power sources by the dragons, its Colorless Sources in there solid stage. As for the sources it's self and what is it, i does seem to have the key parts for the elements dragons use but when trying to 'active' it doesn't seem to work meaning its actived on a more cellular level to be turn into its element, the sources is highly dangerous or energy made when active like how gunpowder works, even a small amount can give off large amounts of energy.
As for the Genetic part of all this is more likely from the DNA of the dragon's cells that can be pasted down to be used in the Genetic Code in the cells to prime the Sources, however it Genetic Code/ Small DNA is forced or modded into a dragon, there body would have a hard time to deal with all there codes and forgien DNA in them messing up there body to the point there body and cell forming takes dangers action to let dragon survive and deal with the new DNA. This is only been seen in one dragon and many stay this is when your a lucky http://www.furaffinity.net/view/27945159/