Polkadot is a protocol that allows blockchains that have different structures and purposes to interoperate within and outside the Polkadot network.
Projects within the Polkadot ecosystem can take advantage of shared security, faster transaction processing times, and bridges that connect with external networks such as Bitcoin and Ethereum.
How does Polkadot work?
Individual blockchains within the ecosystem are called parachains (or parallel chains) that process transactions parallel to other parachains instead of sequentially like in a single blockchain.
Transactions from each parachain are collected by their own collators, which offer a list of transactions to a set of validators.
Once transactions are verified, validators finalize a parachain block which they then submit to the Relay Chain that connects ALL parachains within the Polkadot network.
Parachain blocks from validators are pooled to create a Relay Chain block candidate.
A transaction is finalized when validators – using a NPoS (nominated proof-of-stake) mechanism – reach a consensus over the next Relay Chain block.
Polkadot’s Relay Chain can currently provide security for up to 100 parachains and 10,000 parathreads.
Developers are working on executing “nested relay chains,” though, which would link thousands of relay chains using bridges.
What is the DOT token?
DOT, Polkadot’s native token, has three main purposes:
- It’s used by nominators and validators participating in and earning from the NPoS consensus mechanism
- Projects pay and stake their DOTs so they can attach their parachains to Polkadot’s Relay Chain
- DOT hodlers can participate in Polkadot’s governance.
DOTs are available on major cryptocurrency exchanges and can be stored in popular wallets like Ledger, Trezor, MetaMask, and Binance Chain Wallet.
*The smallest unit of account in the ecosystem is a Planck, equivalent to 0.0000000001 DOT.
Polkadot was conceptualized by Dr. Gavin Wood, co-founder of Ethereum and creator of the programming language Solidity.
He started working on a “sharded version of Ethereum” and published the first draft of Polkadot’s whitepaper in October 2016.
Wood and Peter Czaban founded the Web3 Foundation in 2017 to raise funds and develop Polkadot. Czaban was Parity Technologies’ Software Engineer and Web3 Foundation’s current Chief Technology Officer.
The third co-founder, Robert Habermeier, was Parity’s Core Developer and is the Technology Director for Web3 Foundation.
These days, Polkadot is being developed by researchers from Inria Paris and ETH Zurich, developers from Parity Technologies, and capital partners from crypto-funds such as Polychain Capital.
- Holder Addresses: 185K on Binance Smart Chain
- Circulating supply: 1.162B
- Liquid Supply: 1.249B
- Inflation Rate: 9.99%
- No Max Supply
Notable Projects on Polkadot Network:
- Acala: Decentralized Finance hub
- Moonbeam: smart contract platform
- Efinity: cross-chain NFT protocol
- Kusama: testing ground for Polkadot
Notable Historical Events:
- Nov. 6, 2017: $90M worth of ETH (around 66% of Polkadot’s proceeds from the first token sale of $145M in Oct. 2017) in Parity multisig wallet was frozen.
- May 27, 2020: Polkadot’s first mainnet launched with Proof-of-Authority (PoA) consensus on six validators owned by Web3 Foundation.
- June 18, 2020: Transition to Phase 2 Nominated Proof-of-Stake (PoS) system, allowing DOT holders to claim validator slots and staking rewards.
- July 2020: Enabled functionality to open up governance to the community.