Quick Facts

Approximate Market Cap$20,811,735,532
Year Established2016
FounderGavin Wood
UtilityDeFi Token

By now, a large number of blockchain projects with diverse abilities have found their use. Unfortunately, often their features are not meant to operate together. This makes it difficult for consumers to use a wide range of apps on various blockchain projects.

Polkadot combines the finest features from different blockchains. Its goal is to provide a ground for the development of new decentralized markets.

What is Polkadot – Definition

Polkadot is a next-generation blockchain protocol that connects a network of custom-built blockchains. It enables them to work together smoothly at scale. Its native coin is DOT.

Polkadot’s design allows it to operate two types of blockchains. The first, main network, where transactions are permanent is a Relay chain. The other type, Parachains, is a user-created network.

Polkadot has its own cryptocurrency called DOT. By owning and staking DOT, users gain the ability to vote on network upgrades.

Polkadot’s architecture has a number of significant benefits over existing and outdated networks. Its most important feature is on-chain governance. Other features include:

  • Heterogeneity
  • Scalability
  • Interoperability
  • Extra-key security via multi-signature accounts
  • Novel economics and game theory

Polkadot enables the exchange of any sort of data between any type of blockchain. This opens the door to a plethora of real-world applications.

Pros and Cons


  • Secure
  • Robust platform
  • Enables connection of various blockchains


  • Relatively new
  • Bad reputation
  • High competiton

The History

Gavin Wood, co-founder and former CTO of Ethereum created Polkadot. In mid-2016, Dr. Wood began working on his proposal to “design a sharded version of Ethereum.” In October 2016, he published the first version of the Polkadot white paper.

Dr. Wood and Peter Czaban established the Web3 Foundation in 2017. It was a non-profit organization formed to assist Polkadot’s research and innovation.

Polkadot’s initial token sale was in October 2017.  In just two weeks, the auction garnered $145 million, selling half of the initial 10 million DOT supply. Parity Technologies took over the further development of Polkadot.

They released the initial Polkadot block in May 2020.

How Polkadot Works

The Polkadot platform uses a relay chain that employs a variant of the proof of stake consensus method.

Polkadot’s architecture consists of:

  • Relay Chain 

It secures load-balanced blockchains that are running in parallel parachains.

  • Parachains 

Modified blockchains that may operate by their own set of laws and regulations.

  • Parathreads

Type of parachains that connect to the relay chain in rare cases.

  • Bridges

Elements used for communication with other networks such as Bitcoin and Ethereum.

Polkadot features a complex on-chain governance mechanism. Everyone who owns a DOT has a say over how the network is run. While functionality is being addressed, blockchains linked to Polkadot can utilize their own PoS method. They determine when and how to update their code, as well as when and how to run the dApps or tokens they want.

The DOT serves various purposes, which makes it valuable. DOTs can be used for governance, network operation, and connecting parachains to the Polkadot relay chain.

Advantages & Disadvantages



Polkadot’s architecture allows smart contracts on one blockchain to link with assets and data on other blockchains with ease.


Polkadot’s architecture allows many parachains to run at the same time across a single relay chain. It enables the processing of numerous instant transactions.


Polkadot secures the network as a whole, enabling chains to use pre-existing collective security. This enables blockchains with varying degrees of security goals to improve their own weak areas.


High competition

Polkadot may see increased competition in blockchain interoperability.

Large networks of teams

Multiple teams with various objectives will fight to be leaders inside the network. This might cause friction, and it may take longer to get Polkadot up and going.

Polkadot in the Global Crypto Market

The Polkadot network doesn’t have a cap on the quantity of DOT coins and does not have a fixed inflation rate. Yet, the inflation rate ranges between 6% and 10%. 10% is the highest inflation rate for Polkadot.

There were 1.1 billion DOTs created, yet there are about 950 million DOTs in circulation. The remaining DOT crypto was destroyed or permanently removed from the network.


What is Polkadot’s limit for connected chains?

The number of chains that may link to the Polkadot network is not limited.

How to best store Polkadot (DOT)?

There are a few storage choices for Polkadot (DOT): Parity, a Polkadot-developed wallet; Mist, a popular Ethereum wallet; Ledger Nano S, a hardware wallet.

Who is operating on Polkadot’s behalf?

Anybody could contribute to Polkadot’s development since it uses open-source software.