Polkadot(DOT)

Although the DOT cryptocurrency was launched in May 2020, Polkadot, the network, was founded in 2016 when Gavin Wood introduced the concept of an interoperable blockchain in a whitepaper. Polkadot uses parachains, which are standalone blockchains hosted on the network, and parathreads, both of which connect to the main relay chain. These parachains and parathreads can interact with other blockchains like Ethereum via bridges. 

DOT price 

DOT cryptocurrency price in 2020 was range-bound between $3 to just over $6. The first major rally in DOT price started in the last few days of 2020 and continued through 2021. Between Jan. 1 and Jan. 16, 2021 the price of DOT more than doubled from around $9 to over $19 while its market cap grew from around $7.7 billion to over $15.4 billion. According to our live DOT price chart, this uptrend in the price of DOT reached a peak at around $49 on May. 15, 2021.

Thereafter, DOT coin price dropped along with the broader crypto market and fell to around $10 in July 2021. However, Polkadot price surged again in October/November 2021 as Bitcoin rallied, and DOT went on to set a new all-time high of around $55.

DOT coin remains one of the top cryptocurrencies by market cap despite price volatility but future DOT price predictions bank heavily on network adoption and Polkadot's interoperability play and depend on how Ethereum manages to solve its scalability and congestion issues moving forward.

How DOT works

The ability to process transactions simultaneously on parachains makes Polkadot much more scalable than Ethereum. According to Wood, Polkadot’s transactions per second (TPS) limit could go from 100,000 to a million. In comparison, Ethereum can only handle around 15 TPS.

Polkadot was launched with the proof-of-authority (PoA) protocol, where the network’s governance was controlled by a single user. However, validators soon joined the network and Polkadot swiftly migrated to a proof-of-stake consensus mechanism in June. 

However, Polkadot uses a different version of PoS called nominated proof-of-stake (NPoS), where nominators choose validators by staking their own assets. This is similar to the delegated proof-of-stake model but with one difference — in NPoS, nominators can lose their staked assets if they select a bad actor. 

Both validators and nominators can stake their DOT crypto holdings to participate in the consensus mechanism. DOT coin holders can also participate in the network's governance processes. 

Investors can also “bond” their DOT coins to support projects participating in parachain auctions on the Polkadot network. If a project they support wins, their bonded assets are returned at the end of the parachain lease period. Investors are also rewarded by the winning project in terms of their own tokens. However, if the supported project does not win the auction, the bonded assets are returned immediately after the auction.

Polkadot news, updates and highlights

In April 2021, Polkadot announced a significant partnership with Chainlink (LINK). This allowed developers building on Polkadot to access up-to-date and tamper-proof DOT price feed data from the Chainlink oracle.

The ecosystem’s growth was further boosted when VC firm Master Ventures announced a $30 million Polkadot Fund to invest in the most promising projects competing to win the parachain auctions.

Additionally, in March 2022, Polkadot made a jump in expanding interoperability with external blockchains. Its Acala parachain announced integration with the cross-chain bridge Wormhole, which connected the larger Polkadot ecosystem with eight major blockchains including Ethereum (ETH), Solana (SOL), Avalanche (AVAX) , Terra (LUNA) and Binance’s BNB chain (BNB). 

Frequently asked questions about DOT

• Can you mine or stake DOT coins?

Since Polkadot uses the NPoS consensus mechanism, DOT cannot be mined. However, holders can stake their DOT crypto holdings, either as nominators or validators, to earn rewards in exchange for securing the network.  

• What are some of the best DOT wallets?

DOT coins can be stored in hardware wallets like Ledger, web wallets developed by Parity, and mobile wallets like Trust Wallet and TokenPocket.   

• What can you do with DOT cryptocurrency?

Each DOT user gets voting rights, allowing them to participate in the network’s decision-making on aspects such as upgrade deployment and auction mechanisms. DOT holders can also stake their coins to participate in validating transactions and securing the network, either as nominators or validators. Investors can also use their DOT to support projects trying to win parachain auctions. 

• How can you buy DOT?

The easiest way to buy DOT is through centralized exchanges like Coinbase, KuCoin, Binance, OKX, Kraken, eToro, and FTX, among others. You can also Polkaswap, a cross-chain DEX to swap between various cryptocurrencies and tokens on the Polkadot and Kusama networks.