You might have heard about Polkadot before. Polkadot connects different blockchains into a single network. But what exactly is Polkadot, how does it work and why is it so important?

Let’s learn more about the Polkadot network protocol and its DOT tokens.

What Is Polkadot?

Polkadot is a blockchain protocol that enables transfers across different blockchains.

Polkadot was built to realize its vision of an interoperable web that decentralizes identity and data, empowering users with ultimate ownership

Gavin Wood founded Polkadot on May 26, 2020. The primary research organization responsible for keeping Polkadot's open-source code updated and secure is the Web3 Foundation.

How Does Polkadot Work?

The Polkadot network operates on a consensus mechanism called proof-of-stake, which verifies transactions and is responsible for creating and distributing new DOT. DOT holders can interact with the staking mechanism in several ways, the most appropriate of which will depend on the amount of money, effort, and technical expertise they are willing to invest.

Validators are responsible for the most work, which involves a significant time investment and specialized knowledge. They manage a node with little to no downtime and stake a considerable quantity of DOT tokens to become a validator. Nodes are the computers that make up the network.

In return, validators will receive permission to validate transactions, add new blocks of transactions to the relay chain, and the possibility of earning newly minted DOT, a portion of transaction fees. On the other hand, if they engage in illegal behavior, make a mistake, or simply experience technical issues, they risk losing part or all of the DOT attempted.

Investors can stake their assets through the use of nominators and hand up DOT to a validator. Investors will receive a portion of the DOT generated by the validators they select. Investors should be careful with who they pick as their validator as if the selected validators go against the platform rules, they could lose money.

What Are DOT Tokens?

DOT, Polkadot's native token, is the component that is essential to put all of these aspects together, including proof-of-stake validation, cross-chain interactions, and base-layer programming.

Validators on Polkadot's blockchain use DOT as the token they stake or put up as collateral to validate the blockchain's next block. In this sense, the DOT token serves as the proof-of-stake mechanism for the Polkadot platform.

Within the system, a parallel chain, Parachain, is the name given to each distinct blockchain generated using Polkadot.

Current trading price: $5.219

Market capitalization: 5.47 billion

Total Supply: 1.34 billion

Tokenomics

The initial token distribution of DOT is as follows:

3.42% is allocated to Private Sale Investors
5.00% is allocated to SAFT Investors
50.00% is allocated to Auction Investors
11.58% is allocated to Future Sales
30.00% is allocated to the Web3 Foundation

Features of Polkadot

Governance

Holders of Polkadot tokens have entire authority over the network's operating protocol. All capabilities on other platforms are only available to miners and will be available to Relay Chain participants (holders of DOTs). This includes the ability to manage extraordinary events like protocol upgrades and corrections.

Staking

Staking DOT allows token holders to keep the network safe and earn rewards simultaneously. Polkadot’s staking system is designed to achieve maximal decentralization and fair representation by providing incentives for good actors and penalties for bad actors to maintain network security.

Bonding

Bonding tokens are what create new parachains to an existing blockchain. By eliminating bound tokens, obsolete or useless parachains can be eliminated. This is a form of verification that stakes have been placed.

Scalability

Polkadot is a sharded multichain network, which means it can process numerous transactions on several chains in parallel. This eliminates the bottlenecks on older networks that handle transactions simultaneously. The parallel processing capability generates the optimal conditions for expanded adoption and future expansion, dramatically enhancing scalability. The sharded chains connected to Polkadot are called "parachains" because they run in parallel on the network.

What Makes Polkadot Different?

Polkadot is unique as it offers a pre-built infrastructure for developers to create blockchains compatible with other chains. The network continues to expand, including offerings such as streamlined fundraising and auction services, for better cryptocurrency liquidity.

It grants access to the developing world of Web3 and opens the door to the potential of making direct contributions to the construction of that world. It enables more rapid, safe, and transparent transactions across several blockchain ecosystems.

How to Buy DOT Tokens?

CoinEx is a global cryptocurrency exchange, trusted by 5+ millions of users worldwide with 100% reserve. With its 700+ tokens supported, including DOT, users can now trade easily and seamlessly. To purchase DOT tokens on CoinEx, follow the steps below.

Register or Log In: To access CoinEx's services, register for an account by clicking "Register". Existing users can log in.
Deposit Fiat or Crypto: Fund your CoinEx account by depositing through a range of options such as credit cards, etc. You can also deposit other supported cryptocurrencies that can be traded with DOT.
Exchange Paired Tokens for DOT: Deposit funds into your CoinEx account, then go to the trading page and select the appropriate DOT trading pair that matches your deposit. For example, choose "DOT/USDT" if you deposited USDT.
Buy/Trade DOT Tokens: Purchase DOT by specifying the desired amount and exchanging the paired token for DOT after selecting the correct trading pair.