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Polkadot (DOT) : What It Is, How It Works, and What This Crypto Is Used For in [current_year]
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Polkadot (DOT) : What It Is, How It Works, and What This Crypto Is Used For in [current_year]

Explore the groundbreaking Polkadot (DOT) blockchain, aiming to connect the entire crypto ecosystem by creating an internet of blockchains. Learn how this innovative technology is revolutionizing interoperability and attracting investors' attention in 2025.

Written by Maholy

Translated on June 17, 2025 at 13:51 by Maholy

Colorful polkadot pattern logo design symbol.
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What is Polkadot (DOT) ?

The Polkadot network, also known by the symbol DOT, represents one of the most ambitious innovations in the modern blockchain ecosystem. Officially launched in May 2020, Polkadot positions itself as a layer 0 blockchain protocol with a clear vision: to create a true internet of blockchains where different networks can communicate and exchange data in a transparent and secure manner.

Polkadot logo

Unlike traditional blockchains, Polkadot doesn’t operate in a silo. Instead, it adopts an innovative multi-chain architecture. This structure allows specialized blockchains, called parachains, to function in parallel. At the same time, they benefit from the shared security offered by the main chain, the Relay Chain.

At the center of this system is the DOT token, the network’s native cryptocurrency. It plays a key role in the overall functioning of Polkadot, with several major utilities.

Thanks to this design, Polkadot allows blockchains to specialize while remaining interconnected. In this way, it overcomes the limitations of scalability and interoperability that still hinder the mass adoption of blockchain technologies.

The History of Polkadot

The history of Polkadot began in 2016 with the publication of a revolutionary white paper by Dr. Gavin Wood, co-founder of Ethereum and creator of the Solidity programming language. This technical document laid the conceptual foundations for a new blockchain paradigm focused on interoperability and scalability.

Polkadot cover

The genesis of the project finds its roots in the limitations observed on Ethereum, particularly network congestion issues and high transaction fees. Gavin Wood, with his experience as Ethereum’s CTO, envisioned a system where multiple specialized blockchains could coexist and collaborate.

The concrete development of Polkadot was entrusted to Parity Technologies, the company founded by Gavin Wood in 2016. The project benefited from substantial initial funding through an ICO organized in October 2017, which raised 485,000 ETH (approximately $145 million at the time).

After three years of intensive development, the Polkadot mainnet was officially launched on May 26, 2020. This launch marked the culmination of colossal engineering work, including the creation of a new programming language, Substrate, specially designed to facilitate the development of custom blockchains.

Who Created Polkadot ?

Dr. Gavin Wood is undeniably the emblematic figure behind the creation of Polkadot. Born in April 1980 in Lancaster, England, this brilliant computer scientist followed an exemplary academic path, obtaining a Master of Engineering in Computer Systems and Software Engineering from the University of York in 2002, followed by a PhD in Computer Science.

Dr. Gavin Wood

Before revolutionizing the blockchain ecosystem, Gavin Wood gained solid professional experience at Microsoft Research. Gavin Wood’s meeting with Vitalik Buterin in 2013 marked a decisive turning point in his career. Together, they co-founded Ethereum, where Wood played a crucial role as CTO. He is notably the author of the Ethereum Yellow Paper and created Solidity, the programming language for smart contracts.

Divergent visions regarding Ethereum’s evolution led Gavin Wood to leave the project in 2016 to found Parity Technologies. Alongside his co-founders Robert Habermeier and Peter Czaban, Wood assembled the technical team necessary to transform Polkadot from a theoretical concept into an operational reality.

What is the DOT Cryptocurrency Used For ?

The DOT token plays a central role in the Polkadot ecosystem. It constitutes the economic and functional basis of the network. DOT fulfills four key functions. These ensure the security and proper functioning of the blockchain.

First, DOT is used for decentralized governance. Each holder can vote on protocol updates, network parameters, or even the allocation of the community treasury. Thus, Polkadot’s evolution truly reflects the choices of its community.

Polkadot utilité

Staking represents the second major utility of the DOT token, allowing holders to secure the network while generating passive income. In Polkadot’s NPoS (Nominated Proof of Stake) consensus system, DOT holders can choose to become validators or nominators. This active participation in consensus is rewarded with annual yields that generally oscillate around 10%.

The third crucial function of DOT concerns bonding, a mechanism unique to Polkadot that allows blockchain projects to reserve parachain slots on the network. Development teams must “lock” a significant amount of DOT tokens during their parachain lease, typically 96 weeks.

Finally, the DOT token also serves for payment of transaction fees on Polkadot’s Relay Chain. This transactional utility, combined with the three other functions, creates a robust economic ecosystem where demand for the DOT token is sustained by real and diversified needs.

How Does the Polkadot Network Work ?

Polkadot’s architecture is based on a revolutionary design. It fundamentally rethinks how blockchains interact and collaborate.
At the heart of this innovation is a sophisticated multi-chain system. It allows specialized blockchains to operate in parallel, while remaining connected.

Between Relay Chain and Parachains

The Relay Chain constitutes the central component of Polkadot’s architecture, functioning as a main blockchain that coordinates the entire network. This relay chain does not process complex smart contracts but focuses exclusively on critical functions: transaction validation, consensus coordination, and facilitating communication between different parachains.

Relay Chain et Parachains

Parachains represent Polkadot’s most distinctive innovation. These parallel blockchains can be entirely customized according to the specific needs of their developers, whether for decentralized finance (DeFi), blockchain games, Internet of Things (IoT), or any other imaginable use case. Each parachain benefits from the Relay Chain’s robust security while maintaining complete autonomy over its business logic.

Polkadot’s Consensus Algorithm

Polkadot’s NPoS (Nominated Proof of Stake) consensus mechanism represents a sophisticated evolution of traditional proof-of-stake systems. In this system, validators are responsible for producing blocks and validating transactions on the Relay Chain, while nominators select and financially support validators they deem trustworthy.

Collators play a crucial role in the ecosystem by collecting transactions from parachains and producing validity proofs that are then verified by the Relay Chain validators. Polkadot’s native interoperability is made possible by Cross-Chain Message Passing (XCMP), a protocol that allows parachains to communicate directly with each other.

Cross-Chain Message Passing

Advantages and Disadvantages of Polkadot (DOT)

Let’s now look at the strengths and areas for improvement of Polkadot.

The 5 Major Advantages of Polkadot

  1. Native interoperability : Polkadot integrates interoperability directly into its fundamental architecture, allowing specialized blockchains to communicate naturally without complex or vulnerable third-party solutions.
  2. Exceptional scalability : Thanks to its parallel architecture, the network can theoretically process thousands of transactions per second by distributing the load across multiple parachains simultaneously.
  3. Shared security : Parachains automatically benefit from the Relay Chain’s robust security without having to build and maintain their own validator network, significantly reducing costs.
  4. Decentralized governance : The adaptive voting system allows DOT holders to modulate their engagement according to the importance of proposals, ensuring a democratic evolution of the protocol.
  5. Technical flexibility : The Substrate framework allows developers to create entirely customized blockchains in just a few weeks, adapted to their specific needs.

The 5 Main Challenges and Disadvantages

  1. Technical complexity : The multi-chain architecture requires considerable technical expertise to be fully understood and exploited, creating a barrier to entry for many developers.
  2. Intense and established competition : Projects like Cosmos, Avalanche, and Ethereum’s layer 2 solutions offer proven alternative approaches to solving the same interoperability problems.
  3. Prohibitive access cost : Parachain auctions often require millions of dollars in locked DOT tokens, effectively excluding less well-funded teams and projects.
  4. Limited adoption compared to leaders : Despite its technical advantages, Polkadot still needs to prove its ability to attract a significant number of users and popular decentralized applications.
  5. Dependence on the Substrate ecosystem : Polkadot’s success remains closely tied to the adoption of the Substrate framework and the ability to attract new projects to its ecosystem.

Polkadot (DOT) Price and Predictions

The DOT token made its market debut in August 2020, with a price of around $4.68.
Shortly after, its price experienced a rapid ascent, driven by enthusiasm around blockchain interoperability projects.
In November 2021, DOT reached its all-time high of $55. This represents an increase of more than 1,000%.

Graphique historique de prix DOT

This exceptional performance can be explained by several converging factors: the successful launch of the first parachains, the growing adoption of DOT staking with attractive yields, and increasing institutional interest. Polkadot’s market capitalization briefly exceeded $50 billion.

However, like the entire crypto market, DOT suffered the effects of the 2022-2023 bear market. The price experienced a severe correction, falling to a low of $3.25 in April 2025, representing a drop of more than 94% from its peak.

Predictions and Perspectives for 2025 and 2030

Analysts offer varied forecasts for DOT’s price evolution in 2024, with conservative estimates placing the price between $8 and $15, while optimistic scenarios envision a return towards $20-25 in case of a generalized crypto market recovery.

Prédiction de prix Polkadot

Longer-term projections for 2030 are naturally more speculative, with ranges from $30 to $100 depending on adoption and technological development assumptions. These predictions are based on the hypothesis that Polkadot will succeed in establishing itself as the reference infrastructure for blockchain interoperability.

Again, these predictions should be taken with a grain of salt and do not replace a complete analysis of the token and the Polkadot project.

Important Moments in Polkadot (DOT) History

2016 : Publication of the Polkadot white paper by Gavin Wood in October, laying the conceptual foundations for the blockchain interoperability project.

2017 : Organization of Polkadot’s ICO in October, raising 485,000 ETH (approximately $145 million) to fund development.

2018 : Development and launch of the Substrate framework, enabling rapid creation of custom blockchains.

2019 : Finalization of technical development and preparation for mainnet launch with the first network tests.

2020 : Official launch of the Polkadot mainnet on May 26, followed by the redenomination of the DOT token in August (multiplication by 100).

Histoire de Polkadot

2021 : Launch of the first parachains in December with Acala and Moonbeam, validating the multi-chain architecture.

2022 : Introduction of the parachain auction system and crowdloans, establishing the economic model for parachains.

2023 : Significant expansion of the ecosystem with more than 30 active parachains and development of new features.

2024 : Development of Polkadot 2.0 and the Agile Coretime concept for more flexible resource allocation.

2025 : Consolidation of the ecosystem with more than 50 active parachains covering various sectors (DeFi, gaming, IoT, NFT).

How and Where to Buy Polkadot (DOT) ?

Acquiring DOT tokens is an essential step for those who wish to invest in the project, participate in its governance, or use applications in its ecosystem. Due to its growing market capitalization and popularity, the DOT token is available on the majority of centralized exchange platforms (CEX).

These platforms allow you to buy Polkadot directly with euros or dollars via different payment methods (bank card, wire transfer). Here is our ranking of the best platforms in 2025 :

1
logo bitget
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600+ cryptocurrencies
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Low trading fees : 0.02% to 0.06%
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Futures trading with leverage, copy trading…
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KYC required
2
bitmart classement
bitmart classement
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Up to $8,000 in welcome bonuses
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600+ cryptocurrencies available
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Futures trading with leverage
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Low trading fees : 0.02% to 0.06%
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Optional KYC : required for more options
3
bybit classement
bybit classement
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600+ cryptocurrencies available
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Competitive fees and advanced trading tools
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Futures trading
4
weex logo
weex logo
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Wide selection of cryptocurrencies
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Futures trading with leverage
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Ultra-low trading fees
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KYC optional, but required for extended features
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Less known than some competitors
5
binance
binance
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Global Market Leader
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Extensive Selection of Cryptocurrencies and Features
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Strict Regulatory Restrictions in Some Countries
6
mexc classement
mexc classement
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Buy Crypto without KYC
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Among the lowest fees on the market
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Lower volume compared to market leaders
7
bitunix logo
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Wide range of cryptocurrencies
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24/7 responsive customer support
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Limited withdrawal options

It’s important to distinguish between specialized exchange platforms (like those mentioned above) where you actually buy and hold cryptocurrencies, and brokers that sometimes offer derivative products like CFDs (Contracts For Difference) on cryptocurrencies. For direct ownership and total control of your assets, it’s preferable to use a specialized exchange platform.

How to Buy Polkadot on Bitget ? Mini Tutorial

Here’s how to buy DOT in 5 steps on the best platform in our ranking.

  1. Create an account on Bitget :
  • Go to the official website
  • Click on “Sign Up”
  • Fill out the form with your email and password
inscription bitget
  1. Complete KYC verification :
  • Prepare a valid ID document
  • Follow the instructions for verification
KYC Bitget
  1. Deposit funds :
  • Add funds to your account on the platform. Via bank transfer, credit card, or other cryptocurrencies for example.
Dépôt Bitget
  1. Buy DOT :
  • Navigate to “Spot Trading
  • Search for the DOT/USDT or DOT/EUR pair
  • Place a buy order by specifying the amount of DOT you want to acquire or the amount you want to spend.
  • You can generally choose between a market order (purchase at the current price) or a limit order (purchase at a specific price that you define).
  1. Secure your DOT :
  • After purchase, it is strongly recommended to transfer your DOT tokens from the exchange platform to a secure personal wallet (see next section) to have total control over them.

Choose a platform that matches your needs in terms of fees, security, ease of use, and regulatory compliance in your jurisdiction.

How to Store Your DOT ?

Once you have acquired DOT tokens, the question of their secure storage becomes paramount. Leaving your cryptocurrencies on an exchange platform (CEX) involves significant risks: you don’t directly control your private keys, and your funds could be lost in case of platform hacking, regulatory issues, or company bankruptcy.

This is why it is strongly recommended to transfer your DOT to a personal wallet where you alone hold the private keys. “Not your keys, not your coins” is a fundamental adage in the ecosystem.

Ledger

There are mainly two types of wallets for storing your DOT :

  1. Cold Wallets : These are hardware devices that store your private keys offline, thus offering the highest level of security against online hacking. They often resemble secure USB keys. Recognized brands like Ledger (for example, Ledger Nano S Plus or Ledger Nano X) are the safest solutions for storing significant amounts or for long-term storage.
  2. Hot Wallets : These are software applications (mobile or desktop apps, browser extensions) that store your private keys on a device connected to the Internet. They are more convenient for frequent use and for interacting with decentralized applications (dApps), but are inherently more vulnerable to malware and phishing than cold wallets. Popular wallets like MetaMask or Trust Wallet can be configured to manage DOT tokens.

The choice between a cold wallet and a hot wallet depends on your needs.
For maximum security, prioritize a cold wallet, like Ledger. It’s ideal for protecting your long-term investments.
On the other hand, a hot wallet like MetaMask or Trust Wallet is better suited for small amounts. It’s perfect for regular interactions with Polkadot’s or Ethereum’s DeFi ecosystem.

In any case, always secure your recovery phrase (seed phrase). Never share it and don’t store it online.

How to Get DOT for Free ?

There are a few ways that could allow you to get Polkadot (DOT) for free.

Staking and Validation Rewards

DOT staking is the simplest method to generate additional tokens. Indeed, holders participate in the NPoS consensus and can obtain an annual yield of about 10%.

For those who hold a large quantity of tokens (at least 350 DOT), becoming a validator allows obtaining the highest rewards. However, nomination constitutes a more accessible alternative. It only requires 120 DOT.

staking de DOT

Reward Programs and Airdrops

The Polkadot ecosystem regularly generates airdrop opportunities.
This often occurs during the launch of new parachains.
DOT holders who participate in crowdloans often receive tokens from the projects they support.
Additionally, bug bounty programs offer substantial rewards to technical experts.

Polkadot airdrops

Participation in Governance

The decentralized governance system rewards active community participation. Members who propose improvements or participate in votes can receive allocations from the community treasury. Development programs and hackathons offer substantial prizes in DOT.

Within the European Union, Polkadot and the DOT token are considered legal and benefit from the MiCA regulatory framework that came into effect in 2024. Regarding France, the AMF classifies DOT as a legal digital asset, subject to capital gains taxation at the flat rate of 30%. As for Germany, it adopts a particularly favorable approach, considering DOT as a “private asset” exempt from capital gains tax if held for more than one year.

DOT legalité

Internationally, and in the United States, the regulatory situation remains complex and evolving, but major exchanges offer the token. In Canada, DOT is legally recognized as a digital asset. Japan and South Korea also explicitly authorize DOT trading.

Nevertheless, China has banned all cryptocurrency transactions since 2021, and India adopts an ambiguous approach with punitive taxation of 30%. We always invite investors to verify local regulations before any commitment.

Who Holds the Most DOT ?

The Web3 Foundation holds approximately 30% of the total supply. This share is primarily used to fund ecosystem development.
Furthermore, Parity Technologies owns a significant allocation to support its development operations.
In addition, early institutional investors hold significant positions. These shares were acquired during private funding rounds.

Finally, and as often happens, centralized exchanges concentrate significant quantities of DOT. Binance likely holds the largest reserve among public platforms.

Distribution Token DOT

Impact on Governance

Despite these concentrations, the governance system incorporates mechanisms to preserve decentralization. Active participation of the community in voting remains high, with typically more than 50% of tokens participating in important decisions.

Our Opinion on Polkadot (DOT) in 2025

After an in-depth analysis of the Polkadot ecosystem, our assessment is clear.
Polkadot is a blockchain project with exceptional technical maturity.

In 2025, its value proposition remains more relevant than ever.
Native interoperability, shared security, and horizontal scalability address critical needs of a maturing crypto ecosystem.

The parachain ecosystem shows encouraging signs of diversification and innovation, creating synergies between different applications. However, adoption challenges remain real and require continued attention to democratize access to this advanced technology.

Our investment recommendation for DOT in 2024 remains moderately optimistic. Indeed, we favor a long-term holding perspective.
The token benefits from several structural sources of demand, such as staking and governance.
Thanks to these factors, DOT has a solid foundation for sustainable valuation.

Maholy

Maholy

Caméléon de la rédaction et experte SEO, Maholy Ny Voary a découvert le monde des cryptomonnaies et du Web3 en 2021. Constamment à l’affût des nouveautés, elle continue de se former pour créer des contenus engageants qui aident véritablement les internautes.

FAQ – Frequently Asked Questions about Polkadot (DOT)

What sets Polkadot apart from other blockchains ?

Polkadot stands out with its unique multi-chain architecture that enables native interoperability between specialized blockchains (parachains) while sharing the security of a main relay chain. This design solves scalability and isolation issues faced by traditional blockchains.

What is the expected staking yield for DOT in 2025 ?

Staking DOT currently offers annual yields of around 10 to 15%, depending on the overall network participation rate. These rewards are automatically distributed to nominators and validators involved in Polkadot’s Nominated Proof-of-Stake (NPoS) consensus.

How many DOT are needed to start staking ?

The minimum amount to participate as a nominator is roughly 120 DOT. To become a validator, you generally need at least 350 DOT, along with the technical skills required to maintain a validating node.

Can Polkadot compete with Ethereum ?

Polkadot does not aim to replace Ethereum but rather to build a complementary ecosystem focused on interoperability. Both networks can coexist, with Polkadot specializing in connecting blockchains, while Ethereum remains dominant for decentralized applications.

What is the difference between Polkadot and Kusama ?

Kusama is Polkadot’s “canary network,” serving as a testing ground for new features before they are deployed on the mainnet. Kusama uses more aggressive parameters, enabling faster innovation, whereas Polkadot prioritizes stability and security.

DISCLAIMER

This article is for informational purposes only and should not be considered as investment advice. Trading cryptocurrencies involves risks, and it is important not to invest more than you can afford to lose.

InvestX is not responsible for the quality of the products or services presented on this page and cannot be held liable, directly or indirectly, for any damage or loss caused by the use of any product or service featured in this article. Investments in crypto assets are inherently risky; readers should conduct their own research before taking any action and invest only within their financial means. This article does not constitute investment advice.

Risk Warning : Trading financial instruments and/or cryptocurrencies carries a high level of risk, including the possibility of losing all or part of your investment. It may not be suitable for all investors. Cryptocurrency prices are highly volatile and can be influenced by external factors such as financial, regulatory, or political events. Margin trading increases financial risks.

CFDs (Contracts for Difference) are complex instruments with a high risk of rapid capital loss due to leverage. Between 74% and 89% of retail investor accounts lose money when trading CFDs. You should assess whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Before engaging in financial or cryptocurrency trading, you must be fully informed about the associated risks and fees, carefully evaluate your investment objectives, level of experience, and risk tolerance, and seek professional advice if needed. InvestX.fr and the InvestX application may provide general market commentary, which does not constitute investment advice and should not be interpreted as such. Please consult an independent financial advisor for any investment-related questions. InvestX.fr disclaims any liability for errors, misinvestments, inaccuracies, or omissions and does not guarantee the accuracy or completeness of the information, texts, graphics, links, or other materials provided.

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