What is Polkadot (DOT)?
Polkadot is a next generation blockchain that establishes an ecosystem of computers that can each operate their own blockchains. It incentivises a global chain of computers to use a blockchain and is thought by many to be one of the most innovative projects in the world of cryptocurrency.
Polkadot was founded in 2016 by Gavin Wood, the co-founder of Ethereum. Before Polkadot, Wood was also the founder of Parity Technologies and the Web3 Foundation. He also developed Solidity, the programming language for writing applications on Ethereum. The Polkadot Foundation conducted a series of capital raises from 2017-2019. In October 2019, the Polkadot Ecosystem Fund was created, providing money for projects built on the Polkadot network. Finally, the Polkadot mainnet launch occurred in May 2020.
As traditional blockchains were not built to communicate with each other, this provided an opportunity for the creation of a network that connects all other blockchains. Polkadot can act as a multichain connector across multiple networks, which generally would not be able to communicate otherwise.
Polkadot achieves this by hosting its blockchain network known as the ‘relay chain’, which is the primary chain for Polkadot and is responsible for its consensus mechanism, cross-chain interoperability, and shared network security.
The ‘relay chain’ then hosts data structures, known as parachains, which run parallel to the ‘relay chain’. These data structures come in various forms and can be customised based on their needs. Parachains can act across multiple blockchains and work simultaneously. This allows Polkadot to achieve vast levels of interoperability and network scalability.
To further understand the relationship between the various chains and how consensus is maintained, view a detailed description on Polkadot’s site here.
Polkadot's vision is to create an ‘Internet of Blockchains’ with many use cases, including payment networks, marketplaces, prediction markets and more!
It's evolving ecosystem that currently holds approximately 100 parachains for use. To access these, Polkadot designed an auction system whereby teams can bid for available slots to build their projects with. The network allows projects to raise funds internally or source support from the Polkadot community via a crowd loan system. The chosen project is provided lease rights between 12-96 weeks and needs to lock up DOT as collateral during the nominated usage time. Once the timeframe expires, all DOT is returned, and teams can choose to reapply for a parachain.
The first parachain auction was held on November 11th, 2021. The network believes the combination of auctions, defined lease timeframes and crowd loans incentivises the best possible projects to gain the limited spaces available. Furthermore, the competition encourages consistent innovation among bidders who will compete to gain parachain leases.