As a next-generation blockchain platform, Polkadot (DOT) enables individual blockchains called “parachains” to become interoperable with each other, forming a framework for a decentralized Web3.
Founded by Ethereum co-founder and Solidity inventor, Dr. Gavin Wood, the Polkadot open source ecosystem essentially creates a sharded protocol designed for automating trust and enabling economic scalability.
“Polkadot is the biggest bet in this ecosystem against chain maximalism.”
-Dr. Gavin Wood, Co-Founder of Polkadot and Ethereum
What is Polkadot (DOT)?
Gavin Wood once stated that Polkadot was created to discover “how we could build the next version of Ethereum.” The answer they’ve created involves two types of blockchains: A main chain, the Relay Chain, which permanently stores transactions; and independent, user-created Parachains that benefit from the Relay Chain’s security and scalability features.
As a multi-chain Layer-0 protocol, Polkadot enables transactions on different blockchains to execute in parallel. Using Substrate, the blockchain framework used by developers to build parachains, developers can connect their chains to the Relay Chain for interoperability, security, and bridging functionality with external networks.
- Sharding is employed to split databases horizontally in order to spread out the network load and enable scalability.
- The Polkadot protocol economizes blockchain transactions by utilizing a common set of validators that can secure multiple blockchains through a nominated proof-of-stake (NPoS) model.
- The ecosystem also enables developers to build apps that can bridge permissioned data from private blockchains to a public blockchain. For example, a college’s private records could remain secure while verified degrees could be publicly available.
Polkadot has already launched Kusama, it’s “canary network” that is essentially a testnet parachain where other Polkadot innovations, including onchain governance and runtime upgrades, can be tested.
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Polkadot’s live project consists of three entities, Polkadot, the Web3 Foundation (not profit, R&D and funding), and Parity (blockchain infrastructure development), all of which were co-founded by Gavin Wood.
- 2016 - Gavin Wood begins designing a “sharded version of Ethereum”, releases white paper.
- 2017 - Wood and Parity’s Co-Founder Peter Czaban found the Web3 Foundation to support R&D and fundraising for Polkadot. The Web3 Foundations chooses Parity to develop Parity.
- 2020 - Polkadot v1 launch begins in May with Relay Chain genesis block
- 2021 - Launch completes with the first parachains going live in December via an auction process.
- Gavin Wood is the Co-Founder of Polkadot, Web3 Foundation, and Parity. He is also Co-Founder of Ethereum and Solidity’s inventor. He obtained a Masters in Engineering and a PhD in Music Visualization for Human Computer Interfacing from the University of York.
- Robert Habermeier is a Co-Founder of Polkadot , a Parity Core Developer, and a long-term member of the Rust community.
- Peter Czaban is Polkadot Co-Founder and CTO for the Web3 Foundation. He’s an AI and “radical decentralization” expert with a Masters in Engineering from Oxford.
Square Enix to build Final Fantasy NFTs on Polkadot
New governance model introduced as Polkadot moves toward full decentralization
Polkadot network usage stayed consistent throughout crypto’s Q2.
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Does it have staying power?
Polkadot is a prominent layer-1 blockchain, though it markets itself as Layer-0. Its major competitors are Ethereum, Cosmos, and Solana. Polkadot has one of the most highly regarded development teams in the industry and has been described as the #2 blockchain protocol behind Ethereum. Between 2019 and 2020, a report found that the number of Polkadot developers had doubled.
New ecosystem developer analysis by @ElectricCapital shows @Polkadot literally in a class of its own with clearly the stongest developer growth since launch of any Web3 protocol and by far the biggest dev community outside of Ethereum. https://t.co/Tu6OQ7MMeX pic.twitter.com/3X0qWzleYd— Gavin Wood (@gavofyork) January 6, 2022
Polkadot has over 1.5 million followers across social media platforms (not including Parity and Web3 Foundation numbers).
Ever been hacked?
Yes. Following the end of the 2017 token sale, the Parity multi-sig wallet was exploited, freezing almost $30 million or about 66% of the token sale proceeds. After offering a bounty to no avail, Polkadot and Web3 Foundation later announced there was still enough funds to complete the development roadmap.
DOT is Polkadot’s native token, which was launched in 2017 in a release of 10 million tokens through an ICO. The initial supply was later redenominated through a community vote, which ultimately increased DOT account balances by 100x.
58.4% - Investors
11.6% - Web 3 Foundation for fundraising
30.0% - Founders and the Web3 Foundation for development of the Polkadot platform, etc.
DOT does not have a hard cap on supply; instead tokens are constantly being released into circulation at an annual inflation rate of 10%.
Vesting schedules for team members and investors are not available via Polkadot. According to a Messari profile, the below supply curve only affects tokens in the rewards allocation; even here, the source they link to Polkadot is no longer available.
DOT Token utility
- Network governance
- Staking for network operations
- Bonding to connect a new parachain to Polkadot
October 2017 - Private ICO $80 million
October 2017 - Public ICO $65 million ($30 million was frozen in wallet hack)
June 2019 - SAFT $60 million
July 2020 - Private sale $42.76 million
Additionally, Polkadot has had multiple venture rounds and secondary market sales. Overall, 30 investors/VC firms have been involved with a total fundraise of $293.7 million. VCs include Kosmos Venture, CoinFund, 8 Decimals Capital, and AU21 Capital.
- Most of the 540 forkless Polkadot upgrades have been administered via decentralized governance.
- There are about 3 million user accounts across Polkadot and Kusama, run by 6000 validators.
- They are currently upgrading their decentralized governance system to make it more decentralized.
When the Treasury ends a period without spending all of its funds, a percentage of DOT tokens is burned, which causes deflationary pressure and encourages the spending of the funds in the Treasury by Polkadot's governance system.
Polkadot has completed two audits, the (overall favorable) details can be found on their Audit page.
The team is very transparent and also highly regarded within the blockchain development community.
Yes (bounty and grants)
Next up for Polkadot
According the Polkadot Roadmap, post-launch upgrades are underway, including:
- The release of XCM, a cross-consensus communication standard.
- Upgrades to XCMP, the cross-chain message passing protocol.
- The full launch of parathreads, which are a kind of parachain that participates temporarily, on a block by block basis without have a dedicated parachain slot.
“How the network evolves from its initial vision and design is now up to the network’s on-chain governance community.” - Polkadot Network
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Disclaimer: The content of this article is for general market education and commentary and is not intended to serve as financial, investment, or any other type of advice.