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What Is Polkadot (DOT)?

Sat 10 Apr 2021 ▪ 10 min of reading ▪ by Nicolas

Polkadot is a protocol that allows different blockchains to communicate with each other. Based on the observation that many blockchains have scalability problems or are better in some areas than in others, Polkadot tries to place itself above them in order to improve the efficiency of the entire ecosystem.

The operation of Polkadot goes hand in hand with that of other blockchains, it is not an isolated system. Polkadot thus makes the link between different chains by trying to make the most of the strengths of each one. Three main advantages to this system include:

  • Interoperability: Different blockchains and applications can exchange information and functionality through interoperability and channel compatibility.
  • Greater scalability: Polkadot operates several blockchains in parallel thanks to Ethereum’s notion of ‘sharding’, but called ‘parachains’ in the case of this project.
  • Specialisation: Each of the parachains can be assigned to a particular task depending on its strengths and level of congestion. This way, one parachain can handle smart contracts, another can make quick transactions and another can process information at a lower cost.

Other projects have already tried to make this possible, but Polkadot is the one that has made the most progress and that seems the most promising to really make it happen. In this article, we’ll see how the project works so you can better understand this exciting project.

How does Polkadot work?

As we saw in the introduction, Polkadot wants to have several blockchains communicate with each other in order to use the advantages of each. To achieve this, the project had to develop a fairly complex system that is divided into three parts.

First, we find the Relay Chain. This is Polkadot’s main blockchain on which all transactions are finalised. Based on a 2020 test, it would appear that this chain can validate more than 1,000 transactions per second.

Then we find the Parachains. These are independent blockchains that work in addition to the Relay Chain. Each of these parachains specialises in a specific task and will be called upon when action is required in relation to this specialisation. The current number of parachains is limited, but this will increase over time as needed.

Finally, we also find what we call the Bridges. These bridges allow the Polkadot network to interact with other blockchains such as Ethereum, EOS or Bitcoin. Eventually, it will be possible to interact with all the most popular blockchains.

How the Relay Chain works

What makes Polkadot work is the Relay Chain. This network blockchain uses a modified proof of stake system called nominated proof of stake. Each person who decides to stake DOT tokens by locking them up in a special contract can perform a particular role with specific functions on Polkadot’s blockchain.

In total, there are four roles that stakers can take on to run the Relay Chain:

  • The validators: These are the people who validate a block on a parachain. They can also participate in the consensus and vote for changes on the network.
  • The nominators: They are the ones who secure the Relay Chain by selecting trusted validators. The nominators allocate the DOT tokens they have staked to the validators, at the same time also transferring their right to vote.
  • The collectors: These are the people who maintain a complete history for each parachain and aggregate this transaction data into blocks that will be added to the Relay Chain.
  • The fishermen: The individuals who secure the Polkadot network and report bad behavior to the validators.

Each person who completes one of these four roles earns rewards in the form of DOT tokens. The number of DOT earned depends on the role played and the DOT staked.

Decision-making for future project developments


Cryptocurrencies all have a different mode of governance, which both adds to their charm and also complicates their understanding. To drive the evolution of Polkadot, several actors have their say.

First of all, we find the DOT token holders. Each individual who has a DOT token has a vote and can propose changes on the network. They also have the option of voting to approve or reject a proposal for improvement or modification on the network that was suggested by someone else.

Second, we find the board. These are people elected by DOT holders. Board members can propose changes much like those in possession of DOT tokens. However, proposals made by board members require fewer votes to be approved than if they had been made by DOT token holders.

Finally, there is the technical committee. These are individuals who are elected by the board members. These are usually important members of the community, such as the people who are in charge of Polkadot’s development. In the event of an emergency, they can make a special proposal to quickly resolve a problem encountered by the project.

Anyone has the opportunity to join the board. All you need to do is be selected by the community and to succeed in winning votes. However, joining the technical committee is a little more complex because you have to get much more involved in Polkadot, and it requires special prerequisite skills such as programming.

The DOT token

Polkadot’s ICO took place on 14th October 2017 and raised about $140 million, which was a huge success at the time. However, the team made two other private sales in 2019 and 2020 in order to secure additional funds worth about $100 million, for a total of around $250 million.

DOT tokens were not immediately available for trading. It was not until August 2020 that the new token, whose total supply was multiplied by 100 while its value was reduced by the same amount, was exchangeable on trading platforms. The total number of DOT in circulation is around 1 billion and there are hundreds of different trading pairs if you look at Coinmarketcap.

DOT tokens provide three rights to the people who hold them:

  • Governance: DOT holders have total control over the project. They are the ones who decide the future developments of the project as we saw in the previous chapter.
  • Staking: To participate in the Relay Chain and get one of the four roles available, you have to stake your DOT. Thanks to a bonus and penalty system based on the behaviour of token holders, they can earn DOT or lose them according to their honesty on the Relay Chain.
  • Bonding: This is a system that requires you to stake DOT to create a parachain that will improve system efficiency. If the parachain is not used or technologically outdated, it will be removed – resulting in the removal of the staked tokens with no reward given. This allows the system to always be at the cutting edge of technology by allowing token owners to reallocate them to the most economically profitable parachains.

Conclusion on Polkadot

We hope that our explanations have been clear enough for everyone. While the basic idea behind the project is generally easy enough to understand, the technical side can be a little complicated to master for the uninitiated.

The general idea behind Polkadot is to allow different blockchains to communicate with each other to allow the entire blockchain ecosystem to interact. Many projects have already tried this experiment, but Polkadot is probably the one who has the best chance of succeeding on this path.

Token holders have a say in the entire project thanks to the governance system that has been put in place. In addition to this, DOT tokens allow their holders to earn rewards when they participate in the Relay Chain.

Polkadot is a fairly popular project at the moment and it has been a long time since a cryptocurrency has grown so rapidly in the market cap ranking. It is an undeniable sign that a large community is gravitating around the project and that the programmers in charge of its development know what they are doing.

We have also written other articles about Polkadot in case you want to know more about the project. We invite you to check out our list of guides on all the different aspects Polkadot

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Nicolas avatar

J'ai découvert le monde des cryptomonnaies en janvier 2018. Arrivé au pire moment pour investir, je n'ai depuis lors jamais cessé de me former et partage désormais mes connaissances afin de faciliter l'adoption des cryptos.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.