What is Polkadot (DOT)?

Polkadot is a heterogeneous, multi-chain platform that enables various blockchains and non-blockchain systems to transfer messages and value with each other in a trustless way. It consists of a central Relay Chain that coordinates consensus and communication between interconnected blockchains called parachains that can have their own unique features and tokens. By parallel processing transactions across chains, Polkadot aims to achieve scalability.

The key value of Polkadot is its ability to pool security across chains and facilitate interoperability. Chains connected to Polkadot benefit from shared security and trust-free transactions between one another. This is in contrast to previous blockchain implementations consisting of singular chains without native interoperability. Independent external chains like Bitcoin and Ethereum can also connect to Polkadot via bridges to tap into these benefits without needing to be hosted on the platform. In summary, Polkadot’s heterogeneity, shared security model and cross-chain interfacing allows both customization and interoperation not found in earlier blockchains.

History of Polkadot (DOT)

Who created Polkadot

Web3 Foundation hired Parity Technologies to develop the initial versions of Polkadot in Rust and JavaScript. Dr. Gavin Wood and Robert Habermeier are co-founders and core developers of Polkadot, with other contributors listed on Parity Technologies' GitHub repository. Web3 Foundation is working with teams interested in creating more implementations of the platform, as well as building the ecosystem around it.

History

• In 2017, The Web3 Foundation was established to support decentralized protocols, started supporting the development of Polkadot.
• In 2019, The first version of Polkadot's testnet, called Kusama, was launched. Kusama serves as a "canary network" or a more experimental version of Polkadot, allowing developers to test and deploy their projects before going live on the main Polkadot network.
• On May 26, 2020, the Polkadot Genesis block launched as a Proof of Authority (PoA) network with centralized governance by a single Sudo administrator account.
• On June 18, 2020, Polkadot transitioned to a decentralized Proof of Stake (PoS) system secured by an open pool of validators.
• On July 20, 2020, the Sudo module was removed, formally decentralizing the network by transferring control from the Sudo account to DOT token holders and the validator community.
• On August 18, 2020, cross-chain transfer functionality was enabled, marking Polkadot's completion as a fully functional blockchain.
• On August 21, 2020, a DOT token redenomination occurred at a ratio of 1 old DOT to 100 newly minted DOT, aligning for optimal use.
• In 2021, Polkadot initiated the process of deploying parachains through a series of auctions. Parachains are individual blockchains that connect to the main Polkadot relay chain.
• In 2023, Polkadot network has seen significant growth and now a new vision, Polkadot 2.0, has been announced by founder Gavin Wood. The new network will change resource allocation.

What is Polkadot used for?

Polkadot enables interoperability between diverse chains, including private and public networks. Connected chains can utilize their own validators or leverage Polkadot's shared security model. By facilitating cross-chain communication, the unique capabilities of one chain can augment functionality on others to drive advancement across the ecosystem. Whether customizing with independent chains or plugging into Polkadot's out-of-the-box interoperability, flexibility and mutual benefit are core design principles.

What is Polkadot used for?

Polkadot (DOT) is a decentralized platform that enables smart contracts and decentralized applications (DApps) to be built and run without any downtime, fraud, control, or interference from a third party.

Here are some common use cases and purposes of Polkadot:

Cross-chain Design

Polkadot integrates heterogeneous blockchains including parachains, parathreads, and bridges - all secured by the central Relay Chain.

Components

Relay Chain：The backbone of Polkadot, providing shared security, consensus, and cross-chain communication to connected chains.

Parachains：Custom sovereign blockchains that optimize functionality for specific applications while benefiting from the Relay Chain's security guarantees and interoperability.

Parathreads：Similar to parachains but with a flexible pay-as-you-go model suitable for chains that don't require continuous connectivity.

Bridges：Protocols enabling parachains and parathreads to transact with and leverage external networks like Ethereum and Bitcoin while relying on the Relay Chain's trustless functionality.

Communication standard

Polkadot establishes the cross-chain standard with XCM (Cross-Consensus Messaging) - an agnostic data format and programming language allowing heterogeneous chains to exchange information, logic, and value trustlessly.

Consensus

Nominated Proof-of-Stake (NPoS)

Polkadot implements an advanced proof-of-stake model called Nominated Proof-of-Stake (NPoS) which promotes decentralization and fair participation. NPoS evenly distributes stake across all DOT holders, enabling all token holders to help secure the network and earn staking rewards. Native nomination pools further bolster access, allowing users with as little as 1 DOT to contribute.

DOT holders can take on validation roles as nominators, validators, or collators to uphold consensus, produce blocks, and maintain shards. This separation of duties coupled with ubiquitous participation creates a highly decentralized system.

Consensus Roles

Nominators:Secure the network by staking DOT to appoint trustworthy validators.Validators:Stake as validators to validate proofs, participate in consensus, and produce new blocks.Collators: Aggregate transactions into proofs for validation by validators to maintain shard chains.

Governance Roles

Council Members :Elected to represent passive stakeholders in two primary governance roles: proposing referenda and vetoing dangerous or malicious referenda.Technical Committee :Composed of teams actively building Polkadot. Can propose emergency referenda, together with the council, for fast-tracked voting and implementation.

Kusama

What is Kusama?

Kusama is a scalable network of specialized blockchains built using Substrate and nearly the same codebase as Polkadot. The network is an experimental development environment for teams who want to move fast and innovate on Kusama, or prepare for deployment on Polkadot.

Kusama was founded in 2019 by Gavin Wood, founder of Polkadot and co-founder and former CTO of Ethereum.

Polkadot vs. Kusama

Polkadot and Kusama are independent networks with different priorities. Kusama is more affordable and allows for faster upgrades. It serves as a pre-production environment for testing changes before deploying them to Polkadot. Both networks will continue to exist independently but may be bridged for interoperability in the future. Web3 Foundation supports both networks.

Tokenomics

DOT is the native token of the Polkadot network in a similar way that BTC is the native token of Bitcoin or Ether is the native token of the Ethereum blockchain.

Total Issuance

The total issuance is 1381154811.718 DOT. in the era 1270.

Token Inflation

DOT is an inflationary token. On the Polkadot network, inflation is set to be 10% annually, which is distributed as staking rewards based on the amount staked vs. ideal staking rate, and the remainder goes to the treasury.

Functions

DOT serves three key functions in Polkadot: governance of the network, staking for the operation of the network, and bonding to connect a chain to Polkadot as a parachain. It can also be used as a transferrable token. DOT holders have control over platform governance and participate in consensus through staking. Additionally, DOT can be locked to secure a parachain slot in the network. The availability of vesting DOT can be calculated using block information on the Chain State page.

Highlights

• In 2017, Polkadot conducted its initial coin offering (ICO), raising significant funds to support its development.
• In 2021, the first batch of Polkadot auctions took place from November 11th to December 16th, with $1.3B in DOT Committed. Each auction lasted seven days with a two-day starting and five-day ending period. Winners began onboarding simultaneously on December 17th.
• In 2023, Polkadot's staking metrics were positive in Q3, with the total volume of staked DOT rising from 578m to 663m. The percentage of total DOT supply staked reached nearly 49%. Nomination pools, launched in November 2022, had 15,281 members and over 7m DOT staked by the end of Q3.