What currency is DOT? Analysis of the development and value prospects of Polkadot (DOT)

This article will introduce the characteristics and uses of the emerging blockchain DOT known as Ethereum Polkadot. The price of DOT has increased 1,000 times. Not many investors really understand the DOT currency. So, what exactly is DOT? What is the investment value of Dot coins?

1. What currency is DOT?

DOT coin is the native token of the Polkadot platform, and is called Polkadot coin in Chinese. In 2017, Gavin Wood (Chinese name: Lin Jiawen), co-founder of Ethereum and author of the Ethereum Yellow Paper, founded the polkadot project, aiming to establish a sharded cross-chain service network and allow connections between chains Interaction.

The goal of DOT is to become a "blockchain of blockchains" and help bridge the value chain between different blockchains. This is similar to forming a federation on the blockchain to solve various problems. The "island effect" of assets and data between blockchains.

The 4 uses of DOT token

DOT is Polkadot’s native token, and its purpose is to perform key functions of the platform. DOT token has 4 uses Purposes: Governance, Operations, Interoperability, Binding.

Governance

The first function of DOT is to give holders the right to complete governance control of the platform. DOT holders control the future of Polkadot. This governance function includes determining the network’s fees, auction dynamics and schedules for adding parachains, and special events such as upgrades and fixes to the Polkadot platform.

Operation

Operation, game theory encourages token holders to act in an honest manner. Good participants will be rewarded through this mechanism, while bad participants will lose their stake in the network. This ensures that the network remains secure.

Interoperability

The third function of DOT is to pay fees to validator nodes to transmit cross-chain messages. According to the market mechanism, users will pay to send their messages to other state machines on the DOT network.

For messages to be delivered from one blockchain to the next, the sender can pay a fee in DOT. However, the fee is not required.

Binding

Add a new parachain by binding the token. Outdated or useless parachains can be removed by deleting the bonded token. This is a form of proof of stake.

2. What can DOT do?

What is the function of DOT in Polkadot? DOT will play four key functions in Polkadot, namely:

1. Provide management for the network

The first function of DOT is to empower holders to complete the governance of the platform control. This governance function includes determining the network’s fees, auction dynamics and schedules for adding parachains, and special events such as upgrades and fixes to the Polkadot platform. These features are not officially granted to DOT holders, but Polkadot’s underlying code will enable DOT holders to participate in governance.

2. Run the network

The second function of DOT is to promote the consensus mechanism that supports Polkadot. In order for the platform to function and allow efficient transactions across parachains, Polkadot will rely on holders of DOT to play an active role. Participants will put their DOTs at risk (called "staking" or "bonding") to perform these functions, which is not conducive to malicious participation in the network.

The DOT required to participate in the network will vary depending on the activity being conducted, the duration of DOT staked, and the total number of DOT staked.

3. Create Parachains by Binding DOT

The third function of DOT is the ability to add new parachains by bundling DOT (called "binding"). Outdated or useless parachains can be removed by deleting the bonded token.

4. The cost of transmitting messages across parallel chains

The fourth function of DOT is to pay fees to validator nodes to transmit cross-chain messages. According to the market mechanism, users will pay to send their messages to other state machines on the Polkadot network.

3. What rights will DOT give its holders?

Holders of DOT will have certain functions within the Polkadot platform, including:

1. The ability to serve as a validator node, collator, nominator or fisherman;

2. The ability to participate in Polkadot governance;

3. The ability to participate in the decision-making process regarding the addition or removal of parachains;

4. The ability to participate in decisions regarding global upgrades and/or changes to Polkadot process capabilities.

IV. The value prospect of DOT

DOT is one of the most dazzling star coins in the currency circle in recent years, with an increase of more than 100 times!

For many people in the currency circle, many people do not fully understand the value of DOT. This is also because the value expression of DOT is too abstract compared to other mainstream currencies.

Today, we won’t talk too much about technology, we just want to help evaluate the price of DOT from a value analysis perspective.

DOT’s goal is to become a “blockchain of blockchains” and help build a bridge of value between different blockchains.

Whether such a function is valuable is difficult to say. Why?

Many people may think that once the DOT parallel chain is launched, it will be like the Qin Dynasty unifying the six countries, bringing the development of blockchain to a new level. But the reality is not so optimistic. The performance of DOT's relay chain is relatively poor for heterogeneous chains.

However, things develop, and the rules of the blockchain will continue to change. Currently, Ethereum sits at the top of the blockchain, but this chair may have to be given to DOT in two years. Not only This is because the person who wrote Ethereum and the person who wrote Polkadot are the same person (Gavin Wood), and also because Polkadot has many features that Ethereum cannot do (on-chain upgrades, off-chain working machines, modularity and ease of use). development).

In addition, I personally believe that in the next few years, various blockchains developed based on substrate will spring up like mushrooms after a rain and begin to be implemented in a broader dimension (alliance chain, DAO, decentralized finance).

Finally, let’s return to the question itself, what is the rational price range of Polkadot (DOT)?

What’s the future? Let’s first look at its fundraising and market capitalization.

DOT Fundraising

From 2017 to 2020, DOT has raised approximately US$240 million in total, with the lowest private placement price being US$28 (equivalent to US$0.28 after DOT is diluted 100 times), and the highest The public offering price is $145 ($1.45 after dilution).

Based on the current price of US$37, the minimum private placement price return is: 132 times, and the highest common placement price return is: 25 times. According to the median calculation, there is also an increase of about 70 times. Of course, these data are direct and extreme algorithms. The current actual holding cost of the entire network may be higher, and the rate of return will naturally be lower.

DOT market value

It is now September 13, 2021, and the supply of DOT is about 1 billion (the total supply of DOT tokens has changed from 10 million to 1 billion). According to the current 37 In U.S. dollars, the market value of the project is as high as 37 billion U.S. dollars, and the cryptocurrency market value ranks: 8th. The DOT community says that its goal is to kill Ethereum. Regardless of whether it can be killed or not, let’s compare it first.

The current market value of Ethereum: $2,126, ranking 2nd, 6 times that of DOT. According to the logic of the DOT community, to surpass Ethereum, it will have to rise another 6 times, that is, the unit price of DOT will rise to $222.

Can DOT rise to $222? I won’t jump to conclusions here. If we assume that DOT will rise to 222 US dollars, then it is only a 6 times chance. For the currency circle, 6 times is really nothing!

But it should be noted that there have been too many projects clamoring to kill ETH in recent years, and they all ended in failure. EOS is a good example.

I don’t want to discuss here whether DOT will become the next EOS. Even though EOS has been abandoned by BM today and has become garbage and a laughing stock, it does not prevent a large number of people from making a fortune from EOS at all.

DOT Price Prediction

Similarly, no matter what DOT will eventually become, at least for now, the price of DOT currency is strong. If the project goes well, there is likely to be room for a 5-10 times increase in the future! However, after this surge, the short-term upside space has become limited, and it is recommended to make long-term planning.

Illustration of Polkadot DOT coin purchase and transaction tutorial

Today, the editor will take the purchase of DOT coins on the Ouyi OKX exchange as an example to introduce the purchase and transaction of Polkadot DOT coins to the majority of investors. Tutorial diagram, detailed tutorial below:

1. Open Ouyi OKX official website, click [Register] on the homepage to enter the registration page

##2. Due to use Email registration requires binding a mobile phone number, so it is recommended to use a mobile phone number to register. Enter the mobile phone number and password and click Register

3. After registering as a new user, first verify the identity (KYC verification) before you can conduct transactions, click User Center - Identity Authentication, and conduct identity authentication

4. Log in to your OKX account, click Transaction - Basic Transaction, Enter the trading page

5. Search for the English abbreviation of Polkadot DOT, select the DOT/USDT trading pair, and you can see the real-time market price of DOT

6. Fill in the DOT purchase quantity and click Buy. If selling, fill in the DOT selling quantity and click Sell. Note: The minimum transaction amount of DOT is 0.1DOT

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