Polkadot (DOT)

One of the fundamental problems with blockchain networks such as Bitcoin or Ethereum is the lack of communication.
A smart contract on the Ethereum blockchain cannot verify that a transaction has taken place on the Litecoin blockchain, just as a Tezos service is unable to detect a Stellar transaction.
These blockchains are not interoperable, i.e. they are not compatible and therefore cannot collaborate with each other.

However, it has already been proven that this communication is useful, if not indispensable, for trading.

Decentralized finance protocols are successful not only because they enable crypto-currencies to be exchanged directly between users on a platform (without intermediaries), but also because they are composable and interoperable.

And they are, because they all run on the same blockchain, primarily Ethereum.
The problem is that the growing number of users on Ethereum has made the platform a little slower and more expensive, two disadvantages that the current rollout of Ethereum 2.0 hopes to erase.

What’s more, while Ethereum allows you to create your own virtual currency, it does not enable interoperability between the blockchains of different cryptocurrencies.

The ability to detect a payment on the Bitcoin blockchain could, for example, open up the entire Bitcoin valuation, the largest on the market, to every decentralized finance trader.

There are already intermediaries offering products to bridge this gap, for example wBTC and tBTC, which are representations of bitcoin on the Ethereum blockchain, but it would of course be more interesting to be able to do this directly, and without any intermediaries.

This is the question Polkadot seeks to answer.

Polkadot was founded by Dr. Gavin Wood, co-founder of Ethereum and creator of the Solidity programming language.
Launched in 2020, Polkadot is being developed by the Web3 Foundation, a Swiss non-profit organization, and Parity Technologies, headed by Gavin Wood.

The Polkadot team is made up of world-renowned developers and researchers, working together to create a scalable, interoperable blockchain network, enabling different blockchains to connect and share information in a decentralized way.

Polkadot consists of a central network, called the « relay chain », which functions like a classic blockchain, with nodes, miners and all the infrastructure required for its operation.

Polkadot’s main network and blockchain are surrounded by secondary networks to external blockchains such as Bitcoin.
These secondary networks are called « parachains « .
The role of the relay chain is to ensure the security of the parachains and relay messages between them.
Messages can consist of any type of data, and serve primarily to detect a transaction and relay this information to the other parachains.
Each parachain has a unique architecture depending on the blockchain to which it is connected, and of course has its own token.
This makes it possible for projects with totally incompatible architectures to communicate via a common interface.
The process can be summarized as follows: parachain 1 -> relay chain -> parachain 2 The arrows here represent the bridges that enable communication between the relay chain and the various parachains.
To sum up, Polkadot is a protocol that enables independent blockchains to be grouped together to carry out transactions between chains that are not normally compatible, all without the need for an intermediary (broker, exchange platform, etc.), but with security guaranteed by the relay chain across all the different branches.

Polkadot has also foreseen the existence of other parallel blockchains called « parathreads ».
Also grafted onto Polkadot ‘s relay chain , parathreads blockchains differ mainly from parachains in that they can accommodate several projects at the same time.
Less expensive, they offer a good alternative for Polkadot users who don’t need the dedicated and exclusive slot offered by each parathread.
Everything we’ve described here about relay chains, parachains and parathreads concerns users who want to trade.
But there is another type of stakeholder on the Polkadot platform, namely investors.

DOT tokens, native to the Polkadot blockchain, play an essential role in the ecosystem, enabling three main functions: network governance, staking and bonding.
Firstly, DOT holders can participate in network governance, influencing key decisions such as protocol updates.
Secondly, DOT tokens are used for staking, a method that secures the network and enables participants to earn rewards.
Finally, the DOT link is needed to connect new channels, called parachains, to the Polkadot ecosystem, promoting interoperability and network expansion.

1. Total supply: Polkadot has an initial total supply of 10 million DOT tokens.
   However, after a revaluation (redenomination) in August 2020, each token was divided by 100, bringing the total supply to 1 billion DOT.
2. Initial allowance:
   • 58.4% were distributed during the ICO (Initial Coin Offering) and a private sale in 2017.
   • 30% is allocated to the Web3 Foundation to support Polkadot’s ongoing development.
   • 11.6% is reserved for various partnerships, community and other initiatives.
3. Inflation: Polkadot has an inflationary mechanism with an annual rate of around 10%.
   Inflation fuels staking rewards and encourages participants to secure the network.
4. Staking Rewards: A large proportion of DOT tokens are used for staking.
   Users who participate in staking receive rewards in the form of DOTs, proportional to the amount staked, thus contributing to network security.
5. Governance: DOT holders have the right to vote on governance proposals, such as protocol amendments and the allocation of Treasury funds.
6. Bonding: To connect new parachains to the Polkadot network, developers must « bond » a certain amount of DOT, which remains blocked for the duration of the connection.
   This provides an incentive to add new features, while limiting unused strings.

• Launch of new parachains: Polkadot continues to expand its ecosystem by welcoming new parachains.
  These specific chains, which connect to the main network, are optimized for various use cases, such as decentralized finance (DeFi), blockchain gaming, and digital identity management.
• Expansion of Web3 grant program: The Web3 Foundation, which supports Polkadot, has allocated additional funds to finance dApp development projects, new developer tools, and decentralized governance initiatives, strengthening Polkadot’s overall infrastructure.
• Enhanced interoperability with other blockchains: Polkadot is actively working on projects to improve interoperability between blockchains.
  Solutions such as XCMP (Cross-Chain Message Passing) are being developed to enable seamless communication between parachains and other blockchain networks, including Ethereum.
• Network upgrades: Polkadot is planning several protocol upgrades to improve network efficiency, particularly with regard to on-chain governance, consensus optimization and transaction cost reduction.
• Community governance initiative: Polkadot strengthens its governance model by introducing new methods of participation for DOT holders, including more robust voting systems and the ability for the community to submit and approve proposals for network improvements.
• NFT development on Polkadot: With the emergence of new non-fungible token (NFT) projects on parachains such as Unique Network and Efinity, Polkadot is becoming an increasingly important player in the NFT ecosystem, attracting creators and collectors alike.
• Enhanced network security: Initiatives to improve security, such as the implementation of advanced solutions to protect against 51% attacks and other vulnerabilities, are underway to ensure a secure environment for users and developers.

• Registration: Create a Coinhouse account by providing your e-mail address and creating a secure password.
• Verification: Verify your identity by uploading a piece of identification and following the instructions to validate your account.
• Deposit funds: Add funds to your Coinhouse account by bank transfer or credit card.
• Buying DOT: Access the Polkadot (DOT) page on Coinhouse, enter the amount you wish to buy, then confirm your transaction.
  You can buy DOT with USDC.
• Secure storage: Your DOTs are securely stored in your Coinhouse account.
  You can also transfer your DOTs to an external wallet if you wish.

Polkadot is therefore a project to watch, meeting a fundamental need for interoperability between blockchains.

It offers an original, innovative and high-performance architecture: parachains are theoretically capable of delivering up to 1,500 transactions per second, far more than Bitcoin and Ethereum.
Similar networks are also positioning themselves in this niche, such as Cosmos and Avalanche.