Polkadot is built to connect private and consortium chains, public and permissionless networks, oracles, and future technologies that are yet to be created. Polkadot facilitates an internet where independent blockchains can exchange information and transactions in a trustless way via the Polkadot relay chain. Polkadot makes it easier than ever to create and connect decentralized applications, services, and institutions.
DOT will serve three key functions in Polkadot, namely (i) providing governance for the network, (ii) operating the network, and (iii) creating parachains by bonding DOT.
The first function of DOT is to entitle holders to complete governance control over the platform. Included in this governance function is determining the fees of the network, the auction dynamics and schedule for the addition of parachains, and exceptional events such as upgrades and fixes to the Polkadot platform. These functions are not formally granted to DOT holders, but rather the underlying code of Polkadot will enable DOT holders to participate in governance.
The second function of DOT will be to facilitate the consensus mechanism that underpins Polkadot. In order for the platform to function and allow for valid transactions to be carried out across parachains, Polkadot will rely on DOT holders to play active roles. Participants will put their DOT at risk (referred to as “staking” or “bonding”) to perform these functions, which acts as a disincentive for malicious participation in the network. DOT required to participate in the network will vary according to the activity undertaken, the duration DOT is staked for, and the total number of DOT staked.
The third function of DOT will be the ability to add new parachains by tying up DOT (referred to as “bonding”). The DOT will be locked during their bonding period and will be released back to the account that bonded them after the duration of the bond has elapsed and the parachain is removed.