Polkadot Crypto: A Comprehensive Guide
Polkadot crypto is a cutting-edge blockchain project aiming to establish a diverse multi-chain framework. It has attracted significant attention from investors, developers, and users, positioning itself as one of the most innovative projects in the cryptocurrency space.
The network architecture offers flexibility and adaptability, allowing developers to leverage scalability, interoperability, and security.
What is Polkadot crypto and how does it work?
Launched in 2020, Polkadot strives to address various limitations of existing blockchains, including scalability and security.
The project aims to enable seamless communication and exchange of data and crypto assets between blockchain networks such as Acala, Centrifuge, and Phala. Polkadot achieves this by connecting distinct and independent blockchains, parachains, to a single blockchain called the relay chain.
The relay chain handles essential aspects of blockchain technology, including security and data validation, using a nominated proof-of-stake (NPoS) consensus mechanism. These are designed with minimal functionality and do not support smart contracts.
On the other hand, parachains can be customised to offer various unique services and features. These parallelised chains can be built from scratch using the Substrate framework to make interoperability with other chains easier. Existing blockchains can also join the Polkadot ecosystem as parachains or parathreads.
Adding new parachains to the Polkadot ecosystem follows a community-driven process called a Parachain Slot Auction. These auctions allocate 96 slots to potential projects using a candle auction format where bids are placed using DOT tokens. Winning bids secure a lease on a slot for a maximum of 96 weeks (approximately two years) before becoming available for others to bid on again.
Substrate Modular Framework
The Substrate is a powerful development tool within the Polkadot ecosystem that simplifies the process of building a new blockchain.
It aims to assist developers in creating their unique blockchain while seamlessly connecting to the relay chain and benefiting from its security, speed, and efficiency. By utilising Substrate, developers can direct their efforts towards adding value to their projects rather than investing resources and funds into constructing infrastructure from scratch.
Any blockchain that uses Substrate is compatible with Polkadot, granting them effortless access to the interoperable ecosystem comprising parachains, applications, and resources.
While Polkadot and Substrate work synergistically, they are not reliant on each other. Polkadot parachains can be constructed and maintained using alternative software options besides Substrate. Similarly, chains built with Substrate are not obligated to connect to Polkadot or Kusama.
Kusama - The testing development platform
Kusama serves as a testing development platform within the Polkadot ecosystem. It allows developers to test new ideas and projects before deploying them on the main Polkadot network. Launching a parachain or becoming a validator is comparatively easier on Kusama, as it demands less staking of DOT tokens.
However, there are some trade-offs when using Kusama. Its governance parameters are less strict, allowing for smoother and quicker upgrades. Kusama is capable of processing transactions up to four times faster than Polkadot. The process involves a seven-day voting period for token holders to participate in a referendum and an eight-day validation period before the referendum is officially approved and implemented.
Nevertheless, this increased speed comes at the cost of stability and security. Kusama stakeholders must remain active to stay informed about all proposals, referenda, and upgrades. Additionally, validators on the Kusama network often must be prepared for sudden updates and changes.
## DOT - The Polkadot crypto native token
The DOT coin is the native Polkadot crypto token, enabling various use cases. It covers network fees, participates in governance voting and validating rights, and facilitates interoperability.
When communicating or transferring data between two blockchains within the network, DOTs are used to pay transaction fees. Additionally, DOTs are utilised as a means of payment for voting on protocol updates or fixes.
Furthermore, nominators can bond their Polkadot crypto to a specific validator they support. This bonding process enhances the network's resistance against potential attacks and enables DOT holders to earn newly minted tokens as staking rewards.
According to Coinmarketcap, DOT tokens are ranked the 13th largest cryptocurrency globally, with a live market capitalisation of $5,228,539,469. As of writing time, the DOT coin is valued at $4.38.
The token can be purchased on exchanges, including Binance, KuCoin, Coinbase, and Huobi Global. These tokens can be stored in different cryptocurrency wallets, including Parity Signer, Fearless Wallet, Polka Wallet, Ledger, and SubWallet.
The future of Polkadot crypto
Polkadot network is one of the leading blockchain projects that seek to solve interoperability and security issues. The utilisation of DOT as the governance token of the protocol, as well as for staking purposes to enhance network security and establish new chains, clearly indicates that the project aims to incentivise user participation.
The DOT coin currently faces hurdles in recovering its original value. However, the project has enormous potential and promises profitable returns to its investors.
Author: Priya Kumari
Priya is a passionate content writer and the co-founder of Finendorse. She is an enthusiastic crypto investor and has a huge interest in the upcoming digitisation age.