Polkadot
What is Polkadot?
Polkadot is the first fully-sharded blockchain.
Polkadot enables scalability by allowing specialized blockchains to communicate with each other in a secure, trust-free environment.
Polkadot is built to connect and secure unique blockchains, whether they be public, permissionless networks, private consortium chains, or other Web3 technologies. It enables an internet where independent blockchains can exchange information under common security guarantees.
Polkadot is a living network with the core pillars of governance and upgradability. The network has an advanced suite of governance tools and, using the WebAssembly standard as a "meta-protocol", can autonomously deploy network upgrades. Polkadot adapts to your growing needs without the risks of network forks.
What is DOT?
DOT is the native token of the Polkadot network in a similar way that BTC is the native token of Bitcoin or Ether is the native token of the Ethereum blockchain.
The smallest unit of account in a Substrate network (Polkadot, Kusama, etc.) is the Planck (a reference to Planck Length, the smallest possible distance in the physical Universe). You can compare the Planck to Satoshis or Wei, while the DOT is like a bitcoin or an ether. Kusama tokens (KSM) are equal to 1e12 Planck, and Polkadot mainnet DOT is equal to 1e10 Planck.
Polkadot does not have a maximum supply. DOT is inflationary. You can read more about that here.
How does staking work on Polkadot?
Polkadot uses a proof-of-stake consensus mechanism (as opposed to the proof-of-work system Bitcoin uses) to secure the network, verify transactions, and create and distribute new DOT. There are several ways DOT holders can interact with staking system — depending on how much time, technical knowledge, and money they want to devote.
Validators do the most work — it’s a major commitment, and requires technical knowhow. To become a validator, you need to run a node (one of the computers that makes up the network) with little to no downtime and stake a substantial amount of your own DOT. In exchange, you get the right to verify legitimate transactions, add new “blocks” of transactions to the relay chain, and potentially earn newly created DOT, a cut of transaction fees, and tips. (On the flip side, you can also forfeit some or all of your staked DOT for acting maliciously, making a mistake, or even having technical difficulties).
Nominators allow regular investors to participate in staking indirectly. You can delegate some of your DOT to a validator you trust to behave according to the rules. In exchange, you get a cut of DOT earned by your chosen validators. Be careful with who you choose: you also can forfeit some of your stake if your validator breaks the rules.
There are also two specialized roles that typically require less of a commitment than becoming a full validator but more technical skill than is required to be a nominator: Collators keep track of valid parachain transactions and submit them to the relay chain validators. Fishermen help find and report bad behavior across the network.
Rewards on Polkadot
Every validator in the active set receives the same amount of DOTs for equal work. They then take a validator fee (a percentage commission) before distributing the remaining rewards to their nominators (delegators to the validator) and to the validator’s self-bonded stake on a pro-rata basis. All rewards are distributed automatically on-chain.
Tokenomics
Dot Price: $10.31
For active set 2,461,704.1259 DOT
estimated price in 3 years from now $56
Bonding period 28 days
Yield (per annum) (stakingrewards.com) 14.73
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