Summary of Polkadot Token Economy

Today , we will briefly review the DOT token economy of Polkadot, which is about to release the mainnet .

The original text of this posting can be found on the Bison Trail homepage link below, and some of the contents below are not included in the reference content.

• Original text link: Polkadot Token Economics

#One. Polka Dot brief introduction

As briefly described in the previous posting , PolkaDot Network is a multi-chain platform that can service corporate B2B apps with high stability and security .

To solve the problems of scalability and interoperability faced by many blockchains, Polkadot builds a shard ecosystem that includes a main relay chain and individual parachains (shards) .

The relay chain is responsible for passing consensus and transactions (messages) between paradigms. Initial test results show that a PolkaDot network with multi-threading and parachain can reach 1,000,000 transactions per second.

#2. DOT token

Initial issuance: 10 million

Polka Dot's native token, the DOT token, is first issued 10 million . In the case of Bitcoin, the final issue volume is fixed, while the maximum supply of DOT tokens is not fixed .

• Maximum supply: 10 million + issuance according to the inflation rate .

• Inflation rate: It varies depending on the staking rate , and when the staking rate reaches 50%, it can reach up to 10%.

• Unbonding / unstaking period: 28 days

# 3. Polka Dot's consensus mechanism

Polka Dot uses an NPoS consensus mechanism called Nominated Proof of Stake . The characteristic of this consensus mechanism is that the number of valley data to be included in the active set is determined by governance, and this active set includes only a limited number of valley data .

The minimum stake quantity to be included in the active set is constantly changing depending on how many valley data each day has and how many staking quantities are applied to the active set.

#4. Valley Data Reward

All valley data included in the active set will have the same voting power and receive the same reward .

For example, if two active data sets are included in the active set, Valley Data 1 staking 15,000 DOT and Validator 2 staking 100,000 DOT, they will receive the same reward each year.

Because rewards are the same for each valley data, DOT token holders have an incentive to vote by dividing their voting stakes among various valley data.

Polka dot network with NPoS consensus mechanism requires more aggressive management than other PoS networks to optimize their reward or network participation .

# 5. Reward distribution

After receiving recommendations through token holders' voting, the valley data included in the active set receives the same amount of DOT tokens as rewards as described above .

Validators are for token holders who contributed to the reward funds entrusted to them, except for a certain fee allocated according to the percentage will be.

All rewards are automatically distributed on-chain.