The DOT token
The DOT token serves three distinct purposes:
governance over the network, staking and bonding.
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.
Game theory incentivizes token holders to behave in honest ways. Good actors are rewarded by this mechanism whilst bad actors will lose their stake in the network. This ensures the network stays secure.
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 Outdated or non-useful parachains are removed by removing bonded tokens.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.
What are DOT? keyboard_arrow_rightDOT are the token native to the Polkadot network for the purpose of carrying out the key functions of the platform as detailed below.
Is DOT an ERC20 token? keyboard_arrow_right
No, DOT is native to the Polkadot platform.
What are the functions of DOT within Polkadot? keyboard_arrow_right
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.
What rights will DOT confer on their holders? keyboard_arrow_rightDOT holders will have certain functions within the Polkadot platform, including:
- 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.