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Polkadot (DOT) Token

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Polkadot is a blockchain Network being built to enable Web 3.0, a decentralized and fair internet where users control their data and markets prosper from network efficiency and security. Polkadot is the flagship project of the Web3 Foundation.

Polkadot is a typical platform that allows diverse blockchains to transfer messages, including value, in a trust-free fashion; sharing their unique features while pooling their security. In brief, Polkadot is a scalable heterogeneous multi-chain technology.

Polkadot is heterogeneous because it is entirely flexible and makes no assumption about the nature or structure of the chains in the network. Even non-blockchain systems or data structures can become parachains if they fulfill a set of criteria.

Polkadot may be considered equivalent to a set of independent chains (e.g. a set containing Ethereum, Ethereum Classic, Namecoin, and Bitcoin) except with important additions: pooled security and trust-free interchain transactability.

Overview Polkadot (DOT) Token

Polkadot was founded by Robert Habermeier, Dr. Gavin Wood, and Peter Czaban. The Polkadot project was kickstarted in 2016, and its mainnet went live in May 2020.

Polkadot raised $145 million in 2017, selling 50% of the network’s then 10 million dots, according to Messari Crypto.

On February 11, 2020, Web3 Foundation announced that users of the Polkadot network could store their Dots with Coinbase Custody. The new partnership meant that individuals and organizations who bought “Dot allocation indicator tokens” during the pre-launch could claim the actual Dot tokens and have them appear in their Coinbase Custody accounts. They would also be eligible to earn rewards by staking the token in Coinbase Custody but could still contribute to Polkadot on-chain governance to improve the protocol.

On May 26, 2020, according to the network’s managing partner, Web3 Foundation, marks the first phase of Polkadot’s mainnet rolloūt. At this stage, Web3 Fouñdation, retäined control of the netwörk, running nodes, and validatîng blocks. Investors of Polkadot’s native token DOT could also acçess their accounts to express intent to become validàtors or nomïnate other validators, although they could not transfer DOTs at that time.

In July 2020, Polkadot raised $43 million in a 72-hour private sale. The token offering was not available in certain jurisdictions such as the United States, according to the sale’s website. The sale, which lasted for three days from July 24 to July 27, saw participation from several investors. They all contributed nearly 3,982 bitcoins via 1,059 transactions, according to an address associated with Polkadot. Dots were listed for $125 per token, according to Reddit users claiming to be involved in the sale.

Also in July 2020, сryptocurrency exchange OKEx listed the token of Polkadot on its trading platform. According to an announcement shared with CoinTelegraph, DOT spot trading against Tether’s USDT stablecoin on OKEx started at 8:00 AM UTC on July 17, 2020. Per the announcement, DOT deposits and withdrawals are not supported yet, and the tokens can currently only be obtained by claiming them on the mainnet from Ethereum’s blockchain. OKEx also recently published a detailed guide on how to claim the Ethereum-based ERC20 DOT tokens to Polkadot’s mainnet in a way that makes them available on the exchange. OKEx announced no date for the launch of DOT withdrawals and deposits. Still, the exchange promised they will be launched alongside additional DOT trading pairs shortly.

On August 19, 2020, DOT tokens became transferable, making the network truly functional. DOT tokens listed on crypto exchanges after the network passed a resolution for a 100:1 redenomination to decrease token price and increase supply. In six days, Polkadot’s valuation overtook ghost chains like EOS and Cardano. Developers started flocking to build on Polkadot’s application layer, which is more than some of these other blockchains can claim. Stafi, Acala, and Sora Network are a few projects that are building a DeFi ecosystem on Polkadot.

On August 25, 2020, the developer house Snowfork announced Polkadot was weeks away from the release of the first viable bridge to the Ethereum blockchain. The bridge will roll out in phases and should be production-ready by March 2021. Phase one of three slated for release mid-September will include “a working demo of two-way transfer of assets state from Ethereum to our testnet chain and in reverse,” Snowfork developer Aidan Musnitzky told CoinDesk.

In December 2020, Binance announced establishing a $10 million fund to empower innovative projects to be built around the Polkadot ecosystem. In addition to investment opportunities, eligible Polkadot projects will benefit from resources available from the Binance ecosystem: access to a great number of customers, media distribution, knowledge sharing, financing, derivatives, financial management, and other resources and financial support. High-quality projects will also have the opportunity to get fast-track reviews for Launchpool and Launchpad. Additionally, DOT, the native token of Polkadot, will be added as a part of the Launchpad token session and Launchpool pools. As a result, prices for DOT, the native token of Polkadot, rose more than 50%. DOT’s price increased greatly on December 28 after Twitter users noticed the ETH/BUSD pair on Binance’s homepage had been replaced by the DOT/BUSD pair, giving DOT a lot more exposure.

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Polkadot (DOT) Token Technology

Polkadot is a network protocol that allows arbitrary data – not just tokens – to be transferred across blockchains. This means Polkadot is a multi-chain application environment where things like cross-chain registries and cross-chain computation are possible. Polkadot can transfer this data across public, open, permissionless blockchains as well as private, permissioned blockchains. This makes it possible to build applications that get permission data from a private blockchain and use it on a public blockchain. For instance, a school’s private, permissioned academic records chain could send proof to a degree-verification smart contract on a public chain.

Polkadot’s relay chain is built with Substrate, a blockchain-building framework that is the distillation of Parity Technologies’ learnings building Ethereum, Bitcoin, and enterprise blockchains. Polkadot’s state machine is compiled to WebAssembly (Wasm), a performant virtual environment. Wasm is developed by major companies, including Google, Apple Inc., Microsoft, and Mozilla, that have created a large ecosystem of support for the standard.

Polkadot’s networking uses libp2p, a flexible cross-platform network framework for peer-to-peer applications. Positioned to be the standard for future decentralized applications, libp2p handles the peer discovery and communication in the Polkadot ecosystem. The Polkadot runtime environment is being coded in Rust, C++, and Go, making Polkadot accessible to a wide range of developers.
Polkadot uses its original GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) consensus for a more secure and resilient network. Under good network conditions, GRANDPA can finalize blocks nearly instantly. Under bad network conditions, like a network partition, GRANDPA can finalize large quantities of blocks at once when the partitions resolve.

Polkadot (DOT) Token Substrate

The substrate is the name used for Polkadot’s blockchain building framework. It provides developers with a variety of tools to design their custom blockchain for a variety of possible applications. The blockchains can then be launched stand-alone or integrated into Polkadot’s network of shards, or “Parachains.”

In September 2020, the Polkadot team released the update of their Substrate blockchain framework for Substrate 2.0., which now provides a way for blockchain applications to interface with the outside world without relying on external oracle providers. Off-chain workers leverage Substrate nodes to perform operations that would normally be outside of the blockchain’s capabilities. In a blockchain like Ethereum, a particular computation has to be quick and limited enough to fit into a block of instructions. This excludes many types of operations that are either non-deterministic – for example, web requests that may fail – or are just too complex for the resources available. Substrate 2.0 allows developers to unload these operations to the nodes running the network, which can perform web requests, encryption and decryption, signing of data, random number generation, and other CPU-intensive tasks.

The DOT Token

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

  1. 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.
  2. 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.
  3. 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.

Proposal for Redenomination of DOT

The proposal was to modify the denomination of DOT in the Polkadot chain stipulation. The referendum would alter the number of Plancks that create a single DOT. Plancks are the smallest unit in Polkadot. The referendum recommended modifying a single DOT from one trillion Plancks per DOT to ten billion Plancks per DOT. In other words, a 100x decline would be balanced by a 100x rise in the number of DOTs. The official blog further stated that this has been the most voted-on (13%) referendum in the history of Kusama. This referendum caused active discussions on Polkassembly, Riot, Twitter, and elsewhere. Assessing the discussion and the voting exercise the Web3 found that the Kusama community was divided and felt quite firmly about the referendum.

How to Buy Polkadot (DOT)

How do I buy Polkadot (DOT) Token?

While some cryptocurrencies, including bitcoin, are available for purchase with U.S. dollars, others require that you pay with bitcoins or another cryptocurrency.

To buy cryptocurrencies, you’ll need a “wallet,” an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as bitcoin or Ethereum. Here’s more on how to invest in bitcoin.

Coinbase is one popular cryptocurrency trading exchange where you can create both a wallet and buy and sell bitcoin and other cryptocurrencies. Also, a growing number of online brokers offer cryptocurrencies, such as eToro, Webull, and Sofi Active Investing. Robinhood offers free cryptocurrency trades (Crypto.com is available in most, but not all, U.S. states).

The Author

Oladotun Olayemi

Dotun is a financial enthusiast who specializes in first-in-class financial content, including crypto, blockchain, market, and business, to educate and inform readers.