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What is Polkadot (DOT)?

Polkadot basic info

Name:Polkadot
Ticker:
Introduction:

Every day we interact with technologies controlled by a handful of large companies whose interests and incentives often conflict with our own. If we want the benefits of using their proprietary apps, we’re forced to agree to terms that most of us will never read, granting these companies complete control over the data we generate through each interaction with their tools.

What Is Polkadot (DOT)?

Polkadot is a next-generation blockchain protocol that unites an entire network of purpose-built blockchains, allowing them to operate seamlessly together at scale. Because Polkadot allows any type of data to be sent between any type of blockchain, it unlocks a wide range of real-world use cases. By bringing together the best features from multiple specialized blockchains, Polkadot paves the way for new decentralized marketplaces to emerge, offering fairer ways to access services through a variety of apps and providers. While blockchains have demonstrated great promise in several fields—Internet of Things (IoT), finance, governance, identity management, web decentralization, and asset-tracking to name a few—design limitations in previous systems have largely hindered large-scale adoption. Polkadot’s design offers several distinct advantages over existing and legacy networks, including heterogeneous sharding, scalability, upgradeability, transparent governance, and cross-chain composability.

History of Polkadot

Before diving further into details about the Polkadot ecosystem, let us take a look at the history of Polkadot. Polkadot has been developed by Parity Technologies under the leadership of Gavin Wood and Jutta Steiner. Both of them have already served as Ethereum executives. Most important of all, the Polkadot project also has the support of the Web3 Foundation. The Web3 Foundation emphasizes profoundly offering funding, advocacy, and research benefits along with collaborations.

Parity started off in 2015 and started working on node software for Ethereum, termed as Parity Ethereum Client. However, Parity shifted focus from that project towards Polkadot and another related project, Substrate. So, the journey of Polkadot started off in November 2017 with developers publishing the first code on GitHub. Subsequently, the company introduced two proofs-of-concept in 2018, followed by deploying the first para chain of Polkadot in July 2018.

Polkadot was officially launched in an ‘initial’ state in May 2020, and only a few months later, it enabled token transfers in August 2020. The relay chain of Polkadot had not been activated in September 2020, and the chain auctions are also not alive yet.

How Does Polkadot Work?

All blockchains make different tradeoffs to support specific features and use cases, and as chain specialization increases, the need to transact between them will only increase over time.

Polkadot is a sharded blockchain, meaning it connects several chains together in a single network, allowing them to process transactions in parallel and exchange data between chains with security guarantees. Thanks to Polkadot’s unique heterogeneous sharding model, each chain in the network can be optimized for a specific use case rather than being forced to adapt to a one-size-fits-all model. More chains and more specialization mean more possibilities for innovation. One blockchain isn’t enough to support a bustling future of decentralized applications. The limited throughput and lack of runtime specialization in early blockchains made them impractical for scaling in many real-world use cases.

By bridging multiple specialized chains together into one shared network, Polkadot allows for multiple transactions to be processed in parallel. This system removes the bottlenecks that occurred on earlier networks that processed transactions one-by-one. Polkadot will be able to scale even further in the future with a planned feature known as nested relay chains, which will increase the number of shards that can be added to the network. Early computer games were shipped on printed circuit boards known as cartridges. These cartridges were expensive and time-consuming to make as the code was etched onto the chips, leaving no room for error. These days we’re used to our apps, games, and browsers updating frequently, even automatically. Developers fix bugs before they can cause problems, and new features are added as better solutions become available. Like all software, blockchains need upgrades in order to stay relevant. However, it’s far more difficult to upgrade a blockchain than an app, game, or browser. Upgrading conventional blockchains requires forking the network, often taking months of work, and particularly contentious hard forks can break apart a community.

Polkadot revolutionizes this process, enabling blockchains to upgrade themselves without the need to fork the chain. These forkless upgrades are enacted through Polkadot’s transparent on-chain governance system. With this feature, Polkadot enables projects to stay agile, adapt, and evolve with the pace of technology. It also significantly reduces the risk associated with contentious hard forks—a severe barrier to entry for many organizations.

What Helps Polkadot Deliver So Many Functionalities?

The easiest answer to this question directly rests in the architecture of Polkadot. A proper connection of all dots on a Polkadot chart depicting its architecture can shed light further on its functionality. Polkadot combines a network of heterogeneous blockchain shards referred to as parachains.

The parachains connect to the Polkadot Relay Chain, which also takes care of their security. In addition, the parachains could also establish connections with external networks through bridges. Here are the important elements in Polkadot architecture which define its functionality.

Polkadot unites a network of heterogeneous blockchain shards called parachains. These chains connect to and are secured by the Polkadot Relay Chain. They can also connect with external networks via bridges.

1. Relay Chain

The heart of Polkadot, is responsible for the network’s security, consensus, and cross-chain interoperability.

2. Parachains

Sovereign blockchains can have their own tokens and optimize their functionality for specific use cases. To connect to the Relay Chain, parachains can pay as they go or lease a slot for continuous connectivity.

3. Bridges

Special blockchains allow Polkadot shards to connect to and communicate with external networks like Ethereum and Bitcoin.

4. Validators

Secure the Relay Chain by staking DOTs, validating proofs from collators and participating in consensus with other validators.

5. Collators

Maintain shards by collecting shard transactions from users and producing proofs for validators.

6. Nominators

Secure the Relay Chain by selecting trustworthy validators and staking DOTs.

7. Fishermen

Monitor the network and report bad behavior to validators. Collators and any parachain full node can perform the fisherman role.

Polkadot 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.

DOT - Polkadot’s Native Token

The DOT token is Polkadot’s native token. It serves four functions: payment for fees, governance over the network, interoperability, and bonding. When messages are sent between two blockchains on the network, DOT's are used to pay for fees. DOT holders are also responsible for managing significant events by voting on protocol upgrades and fixes. The token also ensures that network participants act in a manner that does not damage the network by giving them skin in the game. In order to create new parachains, tokens must be bonded ensuring incentive alignment.

How to stake DOTs: While validators on Polkadot need to maintain the (often expensive) hardware necessary to secure the network, anyone can assume the role of a nominator by bonding their DOTs to a dedicated validator. Bonding tokens help increase the network’s cost of attack and allow DOT holders to earn newly minted tokens as staking rewards. Polkadot is targeting a 75% stake rate, which at a 10% inflation rate in the network’s inaugural year, would provide an annual staking return of~20%. Bonded tokens will remain locked for twelve weeks and are subject to slashing (loss of funds) should the chosen validator go offline or misbehave.

Polkadot Wallet: There are multiple teams working on Polkadot wallet implementations prior to the network launch. Most notably, blockchain.com announced that it will integrate DOT tokens into its wallet allowing users to store, send and receive tokens as well as participate in governance by voting on proposals.

The DOT token serves three distinct purposes: governance over the network, staking, and bonding.

Governance

Polkadot token holders have complete control over the protocol. All privileges, which on other platforms are exclusive to miners, will be given to the Relay Chain participants (DOT holders), including managing exceptional events such as protocol upgrades and fixes.

Staking

Game theory incentivizes token holders to behave in honest ways. Good actors are rewarded by this mechanism whilst bad actors will lose their stake in the network. This ensures the network stays secure.

Bonding

New parachains are added by bonding tokens. Outdated or non-useful parachains are removed by removing bonded tokens. This is a form of proof of stake.

Launch Initial Token Distribution

In Oct 2017, the Web 3.0 Foundation raised the equivalent of $145 million in ether (ETH) through a token sale. The sale was split between a private sale, which raised over $80 million, and a public sale, which raised the remainder. Participants were required to use a KYC system called PICOPS, which verifies the identity of each participant. Participants who were unable to verify themselves were deemed ineligible. The sale was also not available to any Chinese or American citizens due to regulatory concerns.

At the start of the network, a total of 10 million DOT (old) will be created as a native token. The initial supply was later redenominated by a community vote, a cosmetic change that increased token account balances by 100x. The following allocations are the same for both DOT (old) and new DOT:

  • 50% allocated to token sale investors

  • 5% allocated to the 2019 private sale investors

  • 3.4% allocated to 2020 token sale investors

  • 11.6% retained by the Foundation for future fundraising efforts

  • 30% allocated to the Web 3 Foundation for immediate use to develop the Polkadot network and other undisclosed Foundation activities.

The total supply is not fixed at 1 billion but instead will use a to-be-determined inflationary model to supply the rewards for the proof-of-stake (PoS) system.

On Nov 6, 2017, a vulnerability was exploited in the Parity multi-sig wallet containing over 500,000 ETH, including $98 million of the $140 million+ in ETH raised through the Polkadot ICO. These funds are currently frozen, and a debate among the Ethereum community will determine whether these funds can or will ever be recovered. Even if the funds are lost, the Parity team does not believe this will impact their development roadmap.

In Jun 2019, The Web3 Foundation announced it sold another 500,000 DOT (old) tokens (now 50 million new DOT) to an undisclosed group of private investors. Based on previous reports from Polkadot, the project was seeking to raise $60 million at a $1.2 billion valuation through this token sale. The Jun. 2019 announcement declared the raise successful, implying the Polkadot reached its target.

Disclaimer: All products and projects listed in this article are not endorsements and are provided for informational purposes only.




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Current price:
All-time high:$55
All-time low:$2.69

DOT supply and tokenomics

Circulating supply:1,531,332,400 DOT
Total supply:1,531,332,308.11 DOT
Max supply:0 DOT
Market cap:$10.70B
Fully diluted market cap:$10.70B
Token allocation:
Token Sale Investors
50.00%
Foundation
30.00%
Pre-launch distribution
20.00%
Tokenomics:

Uniqueness

Polkadot is a sharded multichain network, meaning it can process many transactions on several chains in parallel (“parachains”). This parallel processing power improves scalability.

Custom blockchains are quick and easy to develop using the Substrate framework and Substrate blockchains are designed to be easy to connect to Polkadot's network. The network is also highly flexible and adaptive, allowing the sharing of information and functionality between participants. Polkadot can be automatically upgraded without the need for a fork in order to implement new features or remove bugs.

The network has a highly sophisticated user-driven governance system where all token holders have a vote in how the network is run. Teams can customize their own blockchain’s governance on Polkadot based on their needs and evolving conditions. Nominators, validators, and collators all fulfil various duties to help secure and maintain the network and eradicate bad behavior.

Token utility

$DOT will be used to facilitate the consensus mechanism that underpins Polkadot. For the platform to function and allow for valid transactions to be carried out across parachains, Polkadot will rely on holders of $DOT to play active roles. Participants will put their $DOT at risk (via staking) to perform these functions. The staking of $DOT acts as a disincentive for malicious participants who will be punished by the network by getting their $DOT slashed. The $DOT required to participate in the network will vary depending on the activity that is being performed, the duration the $DOT will be staked for, and the total number of $DOT staked.

Token governance

$DOTis allow to entitle holders to control the governance of the platform. Some functions that are included under the governance mechanism include determining the fees of the network, the addition or removal of parachains, and exceptional events such as upgrades and fixes to the Polkadot platform.

Polkadot will enable any holder of $DOT to participate in governance.

Links

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What is the development prospect and future value of DOT?

The market value of DOT currently stands at $10.70B, and its market ranking is #17. The value of DOT is widely recognized by the market. When the bull market comes, the market value of DOT will likely continue to increase.

Moreover, if DOT can play a greater role in practical applications, such as Polkadot builders fully leveraging the potential of DOT, partnering with more businesses, and increasing its user base, the long-term value of DOT will be significantly enhanced.

What will the price of DOT be in 2025?
Based on DOT's historical price performance prediction model, the price of DOT is projected to reach $11.2 in 2025.
What will the price of DOT be in 2030?
In 2030, the DOT price is expected to change by -17.00%. By the end of 2030, the DOT price is projected to reach $22.31, with a cumulative ROI of +219.71%.
Reminder: Just like all cryptocurrency investments, investors must closely monitor the market performance of DOT and be aware of the associated risks. The world of cryptocurrencies is full of uncertainties, so thorough research and preparation are essential.

Is DOT worth investing or holding? How to buy DOT from a crypto exchange?

If you want to buy DOT, the following information may be helpful for your investment decisions:
In the last 7 days, the price of DOT has fallen by -21.71%, leading to negative returns for most DOT investors. The market is currently pessimistic about the price trend of DOT.
It is important to note that the current price of DOT has retreated by -87.29% from its all-time high. This coin is currently considered high-risk, and while its price may rebound in the future, there is significant uncertainty.
Additionally, it's important to understand that each coin has its own optimal times for buying and selling. The optimal time to invest is dynamic: when a coin is undervalued, it's wise to adopt a buying strategy; when it becomes overvalued, you should decisively sell the coin.
To decide whether DOT is worth investing in, you need to consider various market factors such as the overall trend of the cryptocurrency market, the project's fundamentals, its current market valuation, and whether the current price is suitable for buying. If the project's fundamentals suddenly change or the price becomes excessively high, you should adjust your investment strategy and trading operations accordingly.
Your investment decisions should be based on your own risk tolerance, financial status, market analysis and research, especially the timing of your investments. Correct timing can ensure more reliable returns. Keep in mind that investing in DOT or any cryptocurrency comes with certain risks and uncertainties.
Regardless of your outlook on the development prospects and future trends of DOT, if you want to buy or sell DOT, you can consider Bitget for your trading needs. The best place to buy DOT is an exchange that offers hassle-free and secure transactions, combined with a user-friendly interface and high liquidity. Every day, millions of users choose Bitget as their trusted platform for crypto purchases.
Investing in Polkadot has never been easier. Simply sign up on Bitget, complete the identity verification process, and make payments using bank transfers, debit cards, or credit cards, all while ensuring security through crypto wallets. This is a widely adopted method to buy Polkadot. Here's a step-by-step guide on how to buy Polkadot on Bitget.

How to get Polkadot through other methods?

Using cash to buy Polkadot is not the only way to obtain Polkadot. If you have the time to spare, you can get Polkadot for free.
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Receive free Polkadot airdrops by joining ongoing challenges and promotions.
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What is Polkadot used for and how to use Polkadot?

The use case of Polkadot may expand as the crypto market and the project itself develop. Currently, you can use DOT to achieve the following goals:
Arbitrage by trading DOT: Since DOT is a frequently traded cryptocurrency, the price of DOT is always fluctuating. Earn more DOT by buying low and selling high on the exchange. Bitget spot market provides a variety of DOT trading pairs to fully meet your needs.
Earn by staking DOT: You can also generate income through financial management methods such as staking DOT or lending DOT. Bitget Earn offers a variety of financial products designed to help you earn more income from your DOT.
Send or pay DOT: If you want to give DOT to your friends, a charity, or a fundraiser, or you want to pay someone with DOT, you can quickly and easily send DOT to the recipient through their payment address.
You can also go to the official website of the Polkadot project to learn more about the use cases of DOT. For example, find out if the project supports the use of within its community or ecology, or if the project allows you to purchase physical or virtual products in .

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