**Polkadot** is a network protocol that enables the transfer of arbitrary data, including tokens, across [blockchains](https://iq.wiki/wiki/blockchain). This allows for the possibility of cross-chain registries and cross-chain computation. It is capable of transferring data between public, open, permissionless, and private, permissioned blockchains. This makes it possible to develop applications that can use permissioned data from a private blockchain on a public blockchain. [\[3\]](#cite-id-or586dupyln)[\[1\]](#cite-id-kozu0hdfyz)  
  
Polkadot is designed to enable individuals to regain control of their digital information from third parties, allowing for a secure web where data is kept from central authorities and internet monopolies. It provides a foundation for layer-1 blockchains to develop, potentially leading to new business models, services, organizations, societies, and economies. Polkadot intends to further the potential of [blockchain](https://iq.wiki/wiki/blockchain) technology by providing a way for different [blockchains](https://iq.wiki/wiki/blockchain) to connect within a scalable ecosystem and facilitating secure cross-chain communication. [\[2\]](#cite-id-qn773qqrnc)[\[3\]](#cite-id-or586dupyln)  
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# History  
  
The Polkadot whitepaper was published in 2016 by [Dr. Gavin Wood](https://iq.wiki/wiki/gavin-wood), co-founder and former CTO of Ethereum and creator of Solidity. He founded Polkadot alongside [Robert Habermeier](https://iq.wiki/wiki/robert-habermeier), a Thiel fellow and member of the Rust community with a background in [blockchain](https://iq.wiki/wiki/blockchain), distributed systems, and cryptography, and Peter Czaban[\[24\]](#cite-id-tmlz0oymbis), Technology director for Web3 Foundation with a Masters degree in Engineering from the University of Oxford and background in defense, finance, data analytics, machine learning, and business development.  
  
![image2-1.jpg](https://ipfs.everipedia.org/ipfs/QmYxQVQHNp9MK9cyLoDd2npELxUvFBWnBw2rsAtzAeqM7N)*Polkadot co-founders (L-R) Robert Habermeier, Dr Gavin Wood and Peter Czaban*  
  
In 2017, Dr. Wood co-founded the Web3 Foundation for research and development of decentralized web technologies, including Polkadot. Parity Technologies, which has done the majority of development work on Polkadot's core technology as stated in the whitepaper, [\[10\]](#cite-id-7jf6sfj5k9) was co-founded by Dr. Wood and former [Ethereum](https://iq.wiki/wiki/ethereum) head of security Jutta Steiner.  
  
In 2019, the first version of the Polkadot codebase, known as [Kusama](https://iq.wiki/wiki/kusama), was released as an unaudited canary network. [Kusama](https://iq.wiki/wiki/kusama) serves as a testing platform for Polkadot's technology and has its own independent economic incentives. The Kusama network is independent and is directed by its own decentralized community.  
  
In May 2020, the Polkadot genesis block was launched as a proof-of-authority (PoA) network with a single Sudo (super-user) account controlling governance. Subsequently, validators joined the network and signaled their intent to participate in consensus. In June 2020, the network evolved to become a [proof-of-stake ](https://iq.wiki/wiki/proof-of-stake)(PoS) network. The Sudo module was removed in July 2020, transitioning the chain's governance to the token (DOT) holders and securing the chain with a decentralized community of validators.  
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# Overview  
  
Polkadot adopted a multi-phase rollout strategy for its [mainnet](https://iq.wiki/wiki/mainnet) launch. During the first phase, Polkadot operated as a proof-of-authority (PoA) platform, with six validators from the Web3 Foundation managing the network. [\[6\]](#cite-id-gwk9x6fq)  
  
In June 2020, the second phase of the proof-of-stake implementation was initiated, which enabled DOT owners to claim validator slots and receive staking rewards. The first validator election was held during this phase.  
  
In late July 2020, Polkadot's governance system was enabled through Phases 3 and 4, which saw the election of the Council and Technical committees and the acceptance of public proposals. In August 2020, the final phase approved balance transfers of the DOT token. [\[6\]](#cite-id-gwk9x6fq)  
  
Polkadot uses a technology that allows specialized chains/networks to exchange messages and communicate with other specialized chains/ networks. Polkadot technology comprises four core features: [\[2\]](#cite-id-qn773qqrnc)  
  
## Relay Chains  
  
The Relay Chain is the central chain of Polkadot, built using Substrate,[\[9\]](#cite-id-2a3n7bb7fbn) Parity’s framework for developing custom blockchains. It forms an integral part of Polkadot, responsible for the network’s shared security, consensus, and cross-chain interoperability. The Relay Chain offers a limited number of transaction types, which include ways to interact with the governance mechanism and participate in consensus. It is designed to be minimal in functionality, with its main purpose being to secure and coordinate the system as a whole. All Polkadot validators are staked on the Relay Chain in the native token ([DOT](https://iq.wiki/wiki/polkadot-dot)) and verify transactions coming from the connected parachains. [\[2\]](#cite-id-qn773qqrnc)  
  
## Parachains  
  
Polkadot parachains are independent layer-1 blockchains that connect to the Relay Chain. Each parachain has its own design, token economy, functionality, and governance. Polkadot's network security is shared by the parachains, which do not need separate validator communities and are able to exchange data as well as tokens between chains. Polkadot was developed to enable blockchains to specialize in different features and use cases, thereby increasing efficiency, security, and service quality. [\[2\]](#cite-id-qn773qqrnc)[\[4\]](#cite-id-a9pqvwsdyqa)  
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## Parathreads  
  
Parathreads are parachains that connect to Polkadot using a pay-as-you-go model, allowing blockchains with varying levels of connectivity to the network to access the network at a low cost. Blockchains on Polkadot are able to switch between being parachains and parathreads based on their needs and the availability of parachain slots on the Relay Chain. [\[2\]](#cite-id-qn773qqrnc)[\[4\]](#cite-id-a9pqvwsdyqa)  
  
## Bridges  
  
Bridges are a special type of parachain that allow chains and apps on Polkadot to connect and communicate with external networks like [Ethereum](https://iq.wiki/wiki/ethereum) and [Bitcoin](https://iq.wiki/wiki/bitcoin). There are two types of bridges in the Polkadot ecosystem:  
  
### Bridge modules  
  
Bridge modules allow non-parachains to act as a “virtual parachain” while extending the external or the other chain’s functionality, with the interoperability benefits of Polkadot.  
  
### Bridge contracts  
  
They exist on specific parachains that support smart contracts, linking Polkadot and any other smart contract capable or intelligent contract-enabled blockchain. [\[2\]](#cite-id-qn773qqrnc)[\[4\]](#cite-id-a9pqvwsdyqa)  
  
# The DOT Token  
  
[DOT](https://iq.wiki/wiki/polkadot-dot) is the native token of the Polkadot network. It was created after the Web3 Foundation concluded a relatively successful [ICO](https://iq.wiki/wiki/initial-coin-offering) in October 2017 and raised over $140 million by selling 50% of the 10,000,000 DOT token supply. The sale was split between a private sale, which raised over $80 million, and a public sale, which raised the remaining. [\[22\]](#cite-id-932tpb33t3)  
  
On Nov. 6, 2017, a vulnerability was exploited in the Parity multi-sig wallet containing over 500,000 ETH, including $98 million of the $140 million+ in ETH raised through the Polkadot ICO. These funds are frozen, and a debate among the [Ethereum](https://iq.wiki/wiki/ethereum) community will determine whether these funds can or will ever be recovered. Even if the funds are lost, the Parity team does not believe this will impact their development roadmap. [\[22\]](#cite-id-932tpb33t3)  
  
Despite this event, Polkadot further conducted two private sales. One in 2019, when the foundation announced it sold 500,000 DOT (old) tokens to an undisclosed group of private investors and successfully raised $60 million. The second private sale was held in the summer of 2020 and raised 3,982.07 bitcoin (BTC) worth an estimated $42.76 million upon completion. [\[22\]](#cite-id-932tpb33t3)[\[4\]](#cite-id-a9pqvwsdyqa)[\[23\]](#cite-id-kcfnuq8ebw)  
  
DOT tokens, by design, have a 10% inflation rate in the first year, after which validator and nominator staking dynamically determine the inflation. [\[20\]](#cite-id-dtznogtedtj)  
DOT holders will have:  
  
* The ability to act as a validator, collator, nominator, or fisherman.  
* The ability to participate in the governance of Polkadot.  
* The ability to be a collator for a parathread by making bids for block inclusion that are denominated in DOT.  
* The ability to participate in the decision-making process in relation to global upgrades and/or changes to Polkadot. [\[21\]](#cite-id-6x7uml45g46)  
  
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The [DOT](https://iq.wiki/wiki/polkadot-dot) token serves 3 distinct purposes: **Governance** over the network, **[Staking](https://iq.wiki/wiki/staking)**, and **Bonding**. [\[21\]](#cite-id-6x7uml45g46)[\[5\]](#cite-id-keq6vx5vx6j)  
  
## Governance  
  
Polkadot token holders have complete control over the protocol. All privileges, which on other platforms are exclusive to miners, will be given to the Relay Chain participants (DOT holders), including managing exceptional events such as protocol upgrades and fixes.  
  
## Staking  
  
Polkadot uses Nominated Proof of Stake (NPoS) technology. A decentralized network of validators is selected by nominators to secure Polkadot's multichain ecosystem, and the block rewards are distributed between validators and nominators. [\[11\]](#cite-id-a8k16rninxd) DOT can be staked natively on Polkadot, on Non-Custodial Wallets, Liquid Staking/Third-Party Pools, or on Custodial Exchanges. [\[11\]](#cite-id-a8k16rninxd)  
  
### How to stake natively on Polkadot  
  
#### By joining a nomination pool  
  
Nomination pools are a feature of the Polkadot staking system that allows users to pool their DOT tokens together on-chain to nominate validators and receive rewards. DOT holders can join a nomination pool with a minimum of 1 DOT and pool members split rewards and penalties proportionally. [\[11\]](#cite-id-a8k16rninxd)[\[12\]](#cite-id-nzqlkg64ti)  
  
#### Nominating directly  
  
Nominators select trustworthy validators and earn rewards in return. Nominators can lose a portion of their staked DOT if a chosen validator misbehaves. [\[11\]](#cite-id-a8k16rninxd)  
  
#### Opening a nomination pool  
  
Confident users can open their own nomination pool and allow others to join and pool their stake. [\[11\]](#cite-id-a8k16rninxd)  
  
#### Running a validator  
  
Validating is for more technical users who secure the network and produce blocks on the Relay Chain. Validators are rewarded for good behavior and can lose DOT for bad behavior. [\[5\]](#cite-id-keq6vx5vx6j)[\[11\]](#cite-id-a8k16rninxd)  
  
## Bonding  
  
New parachains are added by bonding tokens. Outdated or non-useful parachains are removed by removing bonded tokens. This is a form of [proof of stake](https://iq.wiki/wiki/proof-of-stake) (PoS).  
  
DOT is inflationary, which means that, unlike [Bitcoin](https://iq.wiki/wiki/bitcoin), there is no maximum number of [DOT](https://iq.wiki/wiki/polkadot-dot). The rate of inflation is not fixed: it is designed to be 10% in the first year. The DOT generated is used for validator rewards, with the remainder going to the Treasury. The smallest unit of account in the ecosystem is a Planck, equivalent to 0.0000000001 DOT. [\[6\]](#cite-id-gwk9x6fq)[\[5\]](#cite-id-keq6vx5vx6j)[\[2\]](#cite-id-qn773qqrnc)[\[4\]](#cite-id-a9pqvwsdyqa)  
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# The Polkadot Treasury  
  
The treasury raises funds from validator rewards, transaction fees, and slashes (the fine paid by a validator who acts maliciously or incompetently). These funds are allocated for the operation of the network and the ecosystem, with some funds available for community-supported projects through on-chain treasury funding proposals, which are voted on by the Polkadot Council. [\[2\]](#cite-id-qn773qqrnc)  
  
# Features  
  
## Twin blockchain (Kusama)  
  
[Kusama](https://iq.wiki/wiki/kusama) (KSM) is a platform, similar to Polkadot (DOT), that allows users to launch and operate their own blockchains. It is referred to as a "canary network" for Polkadot, meaning that new code and features are tested on Kusama before being implemented on Polkadot. The Kusama network is not a testnet because unlike a testnet, it holds significant economic value. [\[19\]](#cite-id-uuxe3rrt5nl)  
  
Kusama is a sandbox environment for Polkadot providing developers with greater flexibility to experiment with their projects on a platform that replicates Polkadot’s major designs. The primary purpose of Kusama is to aid in the testing process, offering more relaxed regulations than Polkadot, including less rigorous governance parameters. [\[19\]](#cite-id-uuxe3rrt5nl)  
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## Parallel Processing  
  
Polkadot has the ability to process transactions in parallel. Other blockchains, for example, [Ethereum](https://iq.wiki/wiki/ethereum) network, execute transactions individually, which can lead to longer transaction times. To increase transaction speeds, Polkadot uses its parachains to spread transactions across the broader network. [\[7\]](#cite-id-3lb4p16c118)  
  
## Multichain  
  
Often described as a layer-0 blockchain, Polkadot creates the infrastructure for other blockchains to build on through two key developments: the relay chain and parachains.  
  
## GRANDPA  
  
Polkadot uses a modified version of the [proof-of-stake](https://iq.wiki/wiki/proof-of-stake) (PoS) consensus protocol known as nominated proof-of-stake (NPoS). Polkadot’s NPoS model lets participants use their tokens to vote on validators, and only those validators who have received enough backing can start validating transactions.  
  
Polkadot uses the consensus mechanism GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement) to be able to handle millions of blocks at once instead of validating blocks at a fixed rate. In doing so, GRANDPA allows Polkadot to rapidly settle transactions while the blockchain is functioning optimally, and to make up for network lags when the blockchain is not performing as well. [\[7\]](#cite-id-3lb4p16c118)[\[6\]](#cite-id-gwk9x6fq)  
  
# Polkadot Fellowship  
  
The Polkadot Fellowship is a rules-based ranked-membership organization administered and empowered through blockchain logic hosted on the Polkadot Network and it was launched by [Gavin Wood](https://iq.wiki/wiki/gavin-wood). [\[13\]](#cite-id-spcwjo4t45h)  
  
The Fellowship is a mostly self-governing expert body with a primary goal of representing the humans who embody and contain the technical knowledge base of the Polkadot network and protocol. Unlike the current Technical Collective, it is designed to be far broader in membership (i.e. to work well with even tens of thousands of members) and with far lower in barriers to entry (in terms of administrative process flow and expectations of expertise). Becoming a candidate member in the Fellowship is as easy as placing a small deposit. [\[14\]](#cite-id-6vep83uc5jb)[\[15\]](#cite-id-fh73bqyai9)  
  
In order to ensure a high quality of collective decisions in light of such a broad membership, members are associated with a rank to designate the degree to which the system expects their opinion to be well-informed, of a sound technical basis, and in line with the interests of Polkadot. The members of the Fellowship can vote on any given Fellowship proposal and the aggregate opinion of the members (weighted by their rank) constitutes the Fellowship’s considered opinion. The technical means by which the Fellowship votes is exactly the same code (Substrate *pallet*) as the means by which the Polkadot stakeholders vote in a referendum and it has exactly the same facilities (multiple tracks, agile delegation, etc.).[\[15\]](#cite-id-fh73bqyai9)  
  
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# First Successful Parachain Migration from Kusama to Polkadot  
  
Kusama is considered a natural starting point for teams building in the Polkadot ecosystem. It allows teams to complete their early-stage development, stress-test their technology, engage their community, and launch partnerships before upgrading to the Polkadot Relay Chain. [\[16\]](#cite-id-4ytnuv1sx1)  
  
On October 3rd, 2022 KILT Protocol [\[17\]](#cite-id-4wed06v407k) made history by becoming the first parachain to accomplish a full migration from the Kusama Relay Chain to the Polkadot Relay Chain. The migration marks an important technical milestone and it also represents the first instance of a parachain taking the upgrade path from Kusama to Polkadot. This demonstrates an important use case for the ‘canary network’ model pioneered by Polkadot, giving Web3 projects a place to stress-test their technology in a real-world environment and mitigate risk before upgrading to a more stable production network. [\[16\]](#cite-id-4ytnuv1sx1)  
  
The historic migration was made possible by Polkadot’s tech stack, in particular, the cross-chain interoperability standard XCM [\[18\]](#cite-id-2lgmbll07j5) and the Solo-to-parachain pallet developed by Parity Technologies. XCM allowed KILT to generate the final block on the Kusama parachain, followed by the first block on the Polkadot parachain. The Solo-to-parachain pallet allowed the KILT parachain to switch networks. All data and services built on KILT remained unchanged. [\[16\]](#cite-id-4ytnuv1sx1)

The Polkadot genesis block was launched in May 2020

Date Founded

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Polkadot is a network protocol that enables the transfer of arbitrary data, including tokens, across blockchains. 

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Polkadot

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