DOT is the native cryptocurrency of Polkadot
; a blockchain interoperability protocol founded in 2016. It is a sharded blockchain, meaning it connects several different chains together in a single network, allowing them to process transactions in parallel and exchange data between chains without sacrificing security.
Launched in October 2017, Polkadot released 10 million dot tokens into circulation via an initial coin offering (ICO) raising 485,331 ether worth (approximately $145 million at the time.)
The tokens in the current supply are allocated as follows:
The dot token serves three key functions in Polkadot:
An interesting feature of Polkadot is that it has no hard limit on its total supply. Instead, new dot tokens are constantly released into circulation, at a predetermined, annual inflation rate of 10 percent.
DOT’s price reached a peak of $6.30 shortly after it launched in May 2020, then wavered between $4 and $5 for the remainder of 2020. In May 2021, DOT’s price hit an all-time high of $49.80. During the Q4 bull run of 2021, DOT’s price hit another peak of $44.41 in October.
How Polkadot works
There are thousands of cryptocurrencies across the ecosystem, a vast majority of which can’t communicate with each other. For example, users can’t send their Dogecoin over Chainlink for instance, or vice versa. Polkadot aims to fix that by building a framework that interconnects blockchains, even if each chain performs different functions to one another.
At the center of Polkadot sits the “relay chain,” a central blockchain that connects all other participating blockchains together. The relay chain processes all transactions taking place in the ecosystem at the same time, with the goal of improving scalability.
User-created blockchains that hook into the relay chain are known as “parachains.” By allowing blockchains to communicate with its platform, Polkadot is able to connect many blockchains in a way that wasn’t possible before.
Polkadot relies on Nominated Proof-of-Stake
(NPoS), a method of validating crypto transactions based on how many coins each participant has put up as collateral. NPoS is designed with four roles for users who hold dot:
describes in more detail how far along the developers are in connecting blockchains.
Key events and management
Polkadot was founded in 2016 by Gavin Wood, who also co-founded Ethereum, Peter Czaban and Robert Habermeier.
In 2017, Parity Technologies, the company behind Polkadot, suffered a high-profile attack, leading Polkadot to lose a staggering two-thirds of its ICO funds
(worth $98 million at the time). Curiously, the funds weren’t exactly stolen, but frozen in place. The frozen funds were triggered by an anonymous developer who “accidentally” triggered a bug in the code.
its “relay chain” in 2020, putting the core infrastructure on mainnet for the first time, and released version two
of its Substrate software for easily building new parachains that can hook into the wider Polkadot ecosystem.