DOT

Polkadot (DOT) is a blockchain platform launched in 2016 by Gavin Wood, the former CTO and co-founder of Ethereum. It enables developers to create customized interoperable parachains—blockchains that operate alongside the main Polkadot network. Each parachain is connected to Polkadot’s central relay chain, facilitating communication and sharing security protocols with the mainnet.

The advantages of building on Polkadot include the ability for parachains to employ their own proof-of-stake (PoS) consensus mechanisms, develop decentralized apps (DApps), and issue tokens. Parachain slots are limited and are auctioned periodically, with bids made using DOT, Polkadot’s native cryptocurrency.

DOT serves four main purposes:

1. Governance: Holders can vote on network upgrades and changes.
2. Transaction Fees: DOT is used to pay for transactions on the Relay Chain and some parachains.
3. Staking: The token is staked as part of the network’s security mechanism.
4. Bonding: DOT is used to bond new parachains to the network.

Polkadot operates with an unlimited token supply, classifying it as an inflationary cryptocurrency. Validators receive equal rewards regardless of their stake size. The creators emphasize that DOT is intended for utility within these roles rather than speculative trading.