What is Polkadot? DOT
Explainer
Polkadot (DOT) is a cryptocurrency and a blockchain platform that aims to enable different blockchains to transfer messages and value in a trust-free fashion; allowing them to interoperate, share security, and innovate without being hindered by centralized infrastructure. It was created by Dr. Gavin Wood, one of the co-founders of Ethereum.
Polkadot uses a unique consensus mechanism called Nominated Proof-of-Stake (NPoS), which combines aspects of both Proof-of-Stake (PoS) and Proof-of-Authority (PoA) consensus algorithms. In NPoS, token holders can nominate validators to secure the network, and those nominated validators are then responsible for validating transactions and producing new blocks.
The Polkadot network consists of multiple interconnected blockchains called parachains, which can communicate with each other and with external blockchains through a central relay chain. Parachains can be customized to suit different use cases, such as smart contracts, decentralized finance (DeFi), identity management, and more.
The native cryptocurrency of the Polkadot network is DOT, which is used for governance, staking, and bonding. DOT holders can participate in the governance of the network by voting on proposals and protocol upgrades. They can also stake their DOT tokens to secure the network and earn rewards in return.
Polkadot aims to address some of the scalability, interoperability, and governance issues faced by existing blockchain platforms, making it easier for developers to build and deploy decentralized applications (dApps) and for users to interact with them seamlessly across different blockchains.