Polkadot is ‘defying’ what is possible, as one of the original founders of Ethereum and the inventor of the Solidity programming language drives the project. Talk about a blockchain powerhouse! But that’s just the tip of the iceberg.
By connecting all the dots, Polkadot is not just another blockchain; it’s a platform that wants to connect multiple specialized chains and create an interconnected ecosystem that’s as intricate and beautiful as a polka dot pattern. Let’s take a look…
Polkadot is a self-proclaimed next-generation blockchain protocol that connects multiple specialized blockchains into a unified network. It is also described as the ‘internet of blockchains’ and has a unique structure with a main chain, known as the Relay Chain, and several (50) parallel chains or parachains.
Polkadot was founded by Dr. Gavin Wood, Robert Habermeier, and Peter Czaban. Fun fact: Dr. Wood was one of the co-founders of Ethereum and the inventor of the Solidity programming language.
Besides this, the name ‘Polkadot’ is not just a quirky label but serves a conceptual purpose. It helps in visualizing the platform’s fundamental goal: to connect multiple blockchains (dots) in a single network, similar to connecting dots in a polka dot pattern.
The foundation successfully raised over $200 million to develop the protocol through the sale of DOT tokens. The foundational whitepaper for Polkadot was released in 2016, leading to the launch of its mainnet in May 2020 after successful token sales that provided necessary funding.
This review of Polkadot (DOT) was created for informational purposes. This article is not intended for promotion.
As we know Polkadot, we know it as the first version where it was positioned as a Layer-0 platform that supports various Layer-1 (L1) blockchains, commonly known as parachains. But as we go deeper into 2025, we see that it has been transformed to a second version, that is Polkadot 2.0. (Live from 29 April 2025).
The new version of Polkadot, also known as Agile Polkadot, that aims to transform the existing network infrastructure and security model for chains and applications.
The primary differences between Polkadot 1.0 and 2.0 include:
This new system upgrade will introduce a new, flexible way to manage core block space rights within Polkadot. Developers can now either reserve core time in bulk, which helps prevent fee spikes, or opt for small, on-demand purchases that lower barriers to entry.
Asynchronous backing is the first major upgrade in the Polkadot 2.0 rollout. What does it do? It slashes the block time in half, reducing it from 12 seconds to about 6 seconds. This significant decrease in block time enhances the chain’s capacity to execute more transactions and handle data more efficiently.
The result is an increase in total throughput by an impressive 8 to 10 times the current capacity, meaning Polkadot can handle nearly 1000% more transactions per second.
Elastic scaling is another crucial component of Polkadot 2.0. It essentially boosts Polkadot’s transaction handling capabilities by activating additional cores and integrating them with the benefits of Agile Core Time.
This expansion allows parachains to use multiple cores, which helps distribute computational tasks more evenly and avoid bottlenecks.
Polkadot is ‘entirely’ governed by its community through what is known as OpenGov mechanisms, which are democratic. With the introduction of OpenGov, Polkadot’s governance has become even more decentralized, open, efficient, and future-facing.
NPoS, or Nominated Proof of Stake, is the consensus mechanism used by Polkadot. It involves staking the DOT cryptocurrency to perform various roles within the network:
In Polkadot’s nominated proof-of-stake consensus model, there are three key roles:
The selection process allows nominators to support up to 16 validators, with an election algorithm optimizing stake distribution and minimizing power centralization among validators.
PoKe, short for Polkadot’s Key Account Unit, is a specialized unit focused on integrating large enterprises and governmental bodies into the Polkadot ecosystem. It operates mainly in Europe and the Middle East and wants to cater to companies or governments instead of public initiatives.
Kusama is perhaps another name you’ve heard of, as it is Polkadot’s “canary network,” embodying a “live fast, die young” philosophy. As the name tells, it serves as a real-world testnet where developers can experiment under actual economic conditions, albeit with lower stakes compared to the main Polkadot network.
The network offers an experimental environment with quicker governance processes and lower barriers to entry for deploying parachains, making it ideal for startups.
Economically, Kusama is fueled by its native cryptocurrency, KSM, used for transaction fees, staking, and governance.
Inter Miami CF has announced a significant partnership with Polkadot, the leading blockchain software platform, becoming the club’s Global Training Partner. Under this new partnership, Polkadot’s logo will be prominently featured on the front of all training tops worn by Inter Miami’s First Team.
In the Polkadot network, DOT plays a pivotal role, similar to how Ether functions on the Ethereum platform. Participants in the network are required to stake at least ten thousand DOT coins.
As said earlier DOT holders have significant control over the Polkadot platform through governance, allowing them to vote on setting network fees, funding projects, approving upgrades.
Also to add a new parachain to the network, DOT must be bonded to reserve a parachain slot. The bonded DOT are locked up for the duration of the parachain’s lease and are released once the parachain is removed from the network.
Some key stats on DOT’s tokenomics:
The inflation provides incentives for participating in the network and securing it via staking.
Polkadot employs a finely tuned inflation model set at 10% annually, meaning the supply of DOT increases by this percentage each year. These newly minted tokens are distributed among DOT stakers and the Polkadot treasury. However, a recent referendum (PKA 1139) has proposed reducing the inflation rate to 8% and adjusting the treasury allocation to a fixed standard flow.
Under the current model, DOT experiences a fixed annual expansion in its token supply of 120 million DOT. This distribution sees 15% of the new tokens allocated to the treasury, while the remaining 85% are distributed to stakers.
Assuming the fixed inflation rate continues, we can forecast DOT’s gross annual inflation and total issuance over the next 25 years. The gross annual inflation, represented by a red line in predictive models. The total issuance, which is depicted by a blue line, accounts for this gross inflation but does not consider tokens that are burned.
Polkadot utilizes a proof-of-stake consensus mechanism to secure its network, verify transactions, and mint new DOT tokens. Staking on Polkadot involves several roles:
As of the latest update, there are 297 active validators and almost 37,000 nominators in the network. The historical reward rate for stakers has been approximately 16.8%.
Starting with as little as 1 DOT, you can participate in staking. Rewards are doled out approximately every 24 hours, influenced by factors such as total tokens staked and validator performance.
Polkadot’s 10% annual inflation rate further drives the staking process by using new tokens as rewards for participants, aiming to maintain a healthy staking rate around 60%.
Because Polkadot belongs to a previous generation of crypto projects, it still has sufficient backing and is still going strong. With their new update, they can process transactions up to 10x faster thanks to optimizations coming from Polkadot 2.0.
On the horizon are more updates, and these include a unified Hub, faster smart contracts, and the high-powered JAM protocol to eventually replace the Relay Chain. More developments are coming in the gaming area as well, because Polkadot has also been the building ground for many Web 3 games.
But we must consider, they are not the only ones trying to establish a firm base. For example, for smaller projects, the overhead of maintaining a separate blockchain might not make sense. This brings into question the necessity of creating new parachains for minor applications.
While Polkadot allows for inter-chain communication, the process is not instantaneous and has some inherent delays, which could be a drawback for applications requiring real-time interactions. More developments will definitely come from them…
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