Polkadot, referred to as DOT, is an innovative blockchain project initiated by the Web3 Foundation. Its goal is to provide greater convenience for the Internet by connecting private chains, alliance chains, public chains, open networks, oracles, etc., and even future technologies that have not yet been created. The technology of Polkadot is relatively advanced, making it a popular digital currency in a short period of time and promoting the development and growth of the Polkadot ecosystem.
Polkadot circulation and market performance
As of now, the total issuance of Polkadot coins is unlimited supply, the circulation volume on the market is 987,579,314 coins, the circulation market value has reached 18.007 billion US dollars, and the circulation rate has reached 89.51%. As the native functional token of the Polkadot network, DOT’s main functions include:
Governance: DOT token holders can initiate votes on network governance.
Equity consensus mortgage: Relay Chain's network validators need to mortgage DOT tokens to run nodes.
Join the network pledge: Parachains needs to pledge a certain amount of DOT tokens when joining the network.
Handling fee: DOT is used to pay the handling fee generated by cross-chain message transmission.
Polkadot’s technical advantages
Polkadot’s RelayChain uses a consensus algorithm called GRANDPA invented by the team. This algorithm allows RelayChain to quickly finalize blocks from all Parachains and accommodate a large number of validators (over 1,000). Simply put, validators can vote for a block that they believe is valid and has the highest height, and the algorithm will apply the vote to all blocks before that block. In this way, the algorithm finds those blocks with the overwhelming majority of votes and finalizes them.
In the Polkadot network, Parachains can use a series of different consensus algorithms to achieve local consensus. Polkadot provides a software package Substrate, which provides three ready-made consensus algorithms: GRANDPA, Rhododendron and Aurand. In the future, more consensus algorithms may be added to Substrate and used in the Polkadot network.
Investment Prospects and Value Analysis of Polkadot
Polkadot is another king-level cross-chain project after Cosmos. The main network has not yet been launched, but the price of one coin has been more than 1,000 yuan in off-site private placement. This project was established in 2015 and initiated by the Web3 Foundation. It was first crowdfunded in October 2017 and has a two-year lock-in period. The project vision is to integrate various isolated blockchains through the main chain Polkadot chain to achieve communication and data transfer between different chains.
The project development team is very strong, consisting of 30 top developers, including various experts in system programming, cryptography and distributed systems. Project founder Gavin Wood is the co-founder and former CTO of Ethereum. He wrote the technical yellow paper of Ethereum and released the parity Bitcoin technology stack. He is a god-level existence in the currency circle.
The total number of tokens is 10 million, 5 million will be used for project development, 3 million will be used for financing, and 2 million will be used to promote the development of the main network. At present, the tokens on the market are mainly proxy investment, and some are futures. Although the popularity is good, the transactions are relatively light.
The most important feature of the project is the powerful multi-chain asynchronous architecture, which can realize efficient interaction of many parallel chains while ensuring network performance, and the entry threshold is low. You only need to pledge a certain proportion of DOT to participate in the construction of parachains. , the scalability advantage is obvious.
There are currently many foreign users in the community, and there is no formal community established in China. However, Gavin Wood has done several Meetups in China before, with good results. The domestic community has also started construction and is expected to be online soon.
Risks and challenges of the Polkadot project
Although Polkadot has broad prospects and a strong technical team, there are also some risks and challenges:
Uncertainty in cross-chain demand: The demand and application scenarios of cross-chain technology are still evolving, and the market’s acceptance of it remains to be seen.
Risk of staking and forfeiture: Users participating in staking need to bear certain risks. If there is a problem with the network, the pledged tokens may be forfeited.
Summary: Overall, Polkadot, as a cross-chain star project, is currently very popular. Coupled with the strong technical strength of the founder and development team and the upcoming launch of the mainnet, the currency price should have good market performance in the future. Polkadot's prospects are very promising. Blockchain "cross-chain" is a rigid requirement, and Polkadot is not only cross-chain, it also upgrades the original blockchain technology while cross-chain. Gavin Wood, the founder of Polkadot, is the co-founder of Ethereum and the author of the Ethereum white paper. From these aspects, Polkadot does have certain prospects. You can observe it for a period of time before deciding whether to invest.