Sunday, September 25, 2022

What is Polkadot (DOT)?

Due to the rapid advancement of blockchain technology, Ethereum‘s present network is no longer able to handle all currently active and future decentralized applications. Numerous blockchain protocol alternatives have evolved in order to secure the long-term survival of this growing blockchain development, of which Polkadot is only one of the many.

Polkadot is a next-generation blockchain initiative with the goal of fostering a heterogeneous multi-chain architecture through the use of smart contracts. It is possible to send any kind of data or asset between chains using the Polkadot protocol, utilizing multiple blockchains in a single transaction.

A “multi-chain network” refers to its potential to connect multiple networks together, as opposed to networks like Bitcoin (BTC) and Ethereum that operate on their own. 

One of Polkadot’s primary goals was to fix Ethereum’s limitations, particularly in the area of blockchain interoperability, which is why it’s been so successful thus far. In a way, Polkadot’s co-founder Gavin Wood recognized Ethereum’s flaws and kept them in mind when creating Polkadot, alongside co-founders Peter Czaban and Robert Habermeier in 2016, giving a significant advantage to those who identify with it.

The DOT token currently has a market cap rank of #11, a total trading volume of US$829,486,854, a 0.83% fall in the last 7 days, and a price of $23.25 as of the time of this writing according to data from CoinMarketCap.

Polkadot, a one-of-a-kind blockchain network

Polkadot’s initial goal since its inception was to give a wide range of unique options to the crypto sector with Relaychain and Parachain, the two main blockchain technologies underpinning it.

The core network on which the Polkadot operates is the Relaychain which is responsible for organizing settlements and consensus procedures, while Parachain is a blockchain that has been tailored for specific projects and is connected to the Polkadot (DOT) and Kusama (KSM) blockchain networks. With this design, It is, therefore, possible to provide the same level of security as the Relay Chain using Parachain.

Due to the fact that Polkadot is a clustered multi-chain network, it has the ability to process a high number of transactions simultaneously on numerous chains (“parachains”), and the increases in the scalability of the system via parallel processing power make it distinct.

Essentially, Polkadot creates a “heterogeneous blockchain,” ensuring several chains can be linked together into a single network, allowing them to carry out transactions at the same time and securely exchange data between them.

Major Projects Under the Polkadot Ecosystem 

The incredible number of Polkadot projects that have achieved exceptional success is astounding. Due to their focus on promoting openness and innovation in the blockchain industry, Polkadot projects are gaining popularity among cryptocurrency enthusiasts. The following is a list of notable projects we’ll be discussing;

Polkadex

Efinity

Kusama

PolkaBTC

Moonbeam

  • Polkadex: Underlying Polkadex is the Substrate, a technology that equally enables and powers the Polkadot. Decentralized and centralized features are combined in Polkadex, making it an interesting project to keep an eye on.
  • Efinity: It is expected that Efinity, another Polkadot parachain, will be the platform of choice for Non-fungible tokens (NFTs) in the future generation. Ethereum’s high gas fees, which reflect the network’s low transaction-per-minute capacity, are a recurring problem when working with NFTs. The ERC1155 token standard, a combination of the ERC721 and ERC20 token standards, is Efinity’s solution to this problem. The major purpose of the ERC1155 is to allow for the creation of both non-fungible and fungible tokens within a single token, which reduces gas fees dramatically.
  • Kusama: Kusama, a multi-chain, scalable network, opens the door to a whole new range of inventive possibilities. Using the “Canary network,” Kusama can inform Polkadot developers of any potential hazards or concerns their product may face once it is approved for usage on the relay chain. 
  • PolkaBTC: Given the fact that Bitcoin was the catalyst for the cryptocurrency frenzy, Polkadot could anticipate several potential Bitcoin integrations. This is made feasible by the use of PolkaBTC, a trustless Bitcoin gateway for Polkadot that connects the two protocols utilizing the XCLAIM framework, a highly secure bridge solution, to make this happen. 
  • Moonbeam: As for scaling and cross-chain interaction, Moonbeam makes a bold claim. It claims to combine complete interoperability with the Ethereum network as well as Polkadot, to bring the best of both worlds together.

As seen in other Proof of stake Blockchains, Polkadot requires that transactions are validated by nodes. The more nodes there are, the more decentralized the network is, lessening the chances of successful attacks on the blockchain. DOT token staking involves mechanisms through which you can submit DOT tokens in a bid to serve as a validator and get reimbursed for your efforts.

Role of the DOT Token

The Polkadot network’s native token is the DOT, on which all key functions on the platform are carried out. By using the governance mechanism, DOT holders have the ability to exercise influence over the Polkadot network, affecting network policy, deciding network costs, auctioning rules, and also determining additional parachains. 

Staking DOT through exchanges is the quickest and most straightforward method. Because of the exchange’s resources, it is frequently possible to grow the wallet and node software, ensuring all your data can be accessed through a dashboard that can be readily modified. Kraken, Binance, and Bitfinex are the most popular cryptocurrency exchanges to use for Polkadot staking. The most common trading pairs that are currently accessible are DOT/BTC and DOT/USDT.

The Future of Polkadot

At the end of 2021, Polkadot had been eclipsed by more recent assets like Solana and Terra in terms of market share, however, there’s is reason to believe that Polkadot is on pace to achieve its goal of creating a decentralized internet by creating a trustless blockchain network for validating data and value transfers.

As a result of the platform’s powerful and stable network, as well as its commitment to the project’s strategy, Polkadot’s development and future ambitions appear to be progressing well. 

Ayo Alabi
Ayo Alabi is an experienced writer and Fintech enthusiast, passionate about educating people and helping businesses that want to see their Google search rankings surge. Her articles have appeared in a number of e-zine sites, with focus on balancing informative with SEO needs–but never at the expense of providing an entertaining read.

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