Shard (SHARD) news

DevvE (DEVVE): Solving the Complex Challenges Inherent in Environmental, Social, and Governance with Blockchain

What is DevvE (DEVVE)? DevvE (DEVVE) is the cryptocurrency that powers the DevvX blockchain, a Layer 1 protocol engineered to support environmental, social, and governance (ESG) efforts with unparalleled speed, scalability, and affordability. While DevvE fuels transactions and governance within the ecosystem, DevvX provides the underlying infrastructure with patented architecture and cutting-edge features. How DevvE (DEVVE) Works Before talking about DevvE, it is important to discuss the structure of the blockchain that underlies its operation first. DevvX is designed to address the most pressing challenges in the blockchain space. It uses sharding as a solution that allows for horizontal scaling. Each shard is responsible for processing transactions and maintaining data integrity, and they all operate independently. Additional shards are added to the blockchain as transaction volume increases. The cross-shard mechanism facilitates seamless interaction between shards, ensuring that transactions can flow effortlessly across the network. This innovative approach not only enhances scalability but also provides a robust solution for architectural flexibility and interoperability. At its core of DevvX is a byzantine fault-tolerant consensus algorithm known as Proof-of-Validation (PoV). In PoV, Validators propose new blocks containing valid transactions, which are then evaluated by other Validators. Once a block receives validation from a predetermined threshold of Validators, it is added to the blockchain and associated with a shard. This process ensures the security and integrity of the DevvX network while enabling cost-effective transactions. Thanks to DevvX’s structure, DevvE's utility is multifaceted with three primary use cases as follows: Providing Trust Through Verification Nodes Central to DevvE's mission is the establishment of trust and transparency through Verification Nodes. These nodes, operated by DevvE holders, validate transactions and ensure the integrity of the DevvX blockchain. Powered by the Proof-of-Validation consensus algorithm, these nodes play a crucial role in maintaining the ecosystem's security and reliability. Funding Worthy ESG Projects to Generate ESG Assets DevvE acts as a catalyst for funding ESG projects that drive positive social and environmental impact. Through token sales and contributions, DevvE fuels the Forevver Association's investment fund, which supports green initiatives and generates ESG assets such as carbon credits and plastics tokens. This funding mechanism empowers individuals, corporations, and governments to actively participate in building a sustainable future. Payment DevvE serves as the primary payment mechanism within the DevvX ecosystem, enabling seamless transactions for ESG assets and services. DEVVE Goes Live on Bitget DEVVE offers a unique utility, serving as the backbone of the DevvX blockchain ecosystem, which revolutionizes ESG investing with unparalleled speed, scalability, and affordability. As a leading crypto exchange, Bitget provides a secure and reliable platform to trade DEVVE tokens with confidence. Whether you're a seasoned trader or new to the crypto market, Bitget's intuitive interface, advanced security measures, and dedicated customer support ensure a smooth journey into the world of digital assets. Join Bitget today and explore the possibilities of trading DEVVE tokens with ease and peace of mind, while contributing to a sustainable future through ESG investing. How to Trade DEVVE on Bitget Step 1: Go to DEVVEUSDT spot trading page Step 2: Enter the amount and the type of order, then click Buy/Sell. DevvE and DevvX represent a paradigm shift in ESG investing, offering a sustainable and transparent alternative to traditional financial models. With its focus on trust, funding, and payment solutions, DevvE empowers individuals and organizations to make meaningful contributions to environmental and social causes. Trade DEVVE on Bitget now! Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.

Shardeum: The EVM-Based Layer 1 Solution for Blockchain Trilemma

The blockchain trilemma - scalability, security, and decentralization - has been a persistent challenge for blockchain networks. While existing blockchain solutions have made progress in addressing these issues, there is still a need for a comprehensive solution that can tackle all three aspects simultaneously. In this article, we will learn about Shardeum, the innovative EVM-based Layer 1, and how it solves the blockchain trilemma. What is blockchain trilemma? Imagine you're a superhero tasked with saving the world from an impending crisis. You have to choose between three superpowers: flight, super strength, and invisibility. However, you can only have two of the three powers at any given time. Similarly, the blockchain trilemma presents a similar challenge to decentralized networks. The three superpowers, in this case, are decentralization, security, and scalability. Just like a superhero, decentralized networks can only have two of these superpowers at any given time. The blockchain trilemma is a widely held belief in the world of cryptocurrencies and blockchain technology. The term blockchain trilemma was coined by Vitalik Buterin, co-founder of Ethereum. The most common example of blockchain trilemma is Bitcoin, the first and most well-known blockchain-based cryptocurrency. Bitcoin is highly decentralized, with thousands of nodes spread across the world. This means that no single entity or group controls the network, making it more secure against attacks. However, Bitcoin's scalability is limited, as it can only process a few transactions per second. As a result, transaction fees can be high and the network can become congested during times of high demand. In comparison to credit card processors such as Visa and Mastercard, Bitcoin is lagging behind since these competitors can process transactions in milliseconds. What is Shardeum and how does it solve blockchain trilemma? The blockchain trilemma claims that having all three of these features simultaneously in a blockchain system is difficult. For example, increasing scalability might require sacrificing decentralization, or increasing security might come at the cost of scalability. The only way to solve this problem is to have a completely decentralized network that is secure and scalable. Shardeum was founded by Nischal Shetty, Founder and CEO of WazirX, India's largest crypto exchange by trading volume. The project has raised $18.2 million in a seed funding round from more than 50 investors, including Jane Street, Struck Crypto, and the Spartan Group. Shardeum is a new smart contract platform that promises to provide fast, secure, and scalable solutions for decentralized applications. Built on the Ethereum Virtual Machine (EVM), Shardeum uses dynamic state sharding to achieve linear scalability and offer high throughput capacity without sacrificing decentralization. So, what is sharding? In simple terms, sharding refers to the process of splitting a large database or network into smaller, more manageable parts. In the context of blockchain, sharding involves dividing the blockchain network into smaller, individual parts called shards, each with its own set of validators. This allows the network to process more transactions per second (TPS) without overloading the system. Shardeum takes this concept one step further by using dynamic state sharding. In traditional sharding, each shard is limited to a fixed amount of computational power, which means that increasing the number of shards would result in a decrease in computational power per shard. With dynamic state sharding, Shardeum can increase its TPS capacity with each validator added to the network while retaining low fees forever. But that's not all. One of the major challenges with state-sharded blockchains is that developers often face difficulties maintaining atomic composability across shards. Atomic composability refers to the ability to execute multiple operations in a single transaction, which is critical for decentralized applications. Shardeum, however, uses a novel architecture that retains atomic composability, ensuring that developers can build complex, decentralized applications on the network without worrying about interoperability issues. For developers, the experience of building on Shardeum is much the same as building on any other EVM-based blockchain. You can deploy contracts in Solidity or Vyper, and there aren't any special considerations relative to sharding. You don't need to worry about which shard you deploy your contract on, as the network retains atomic composability with all applications. What is Shard Coin? Shard Coin (SHM) is the native coin of the Shardeum network. The maximum supply of SHM is set at 508 million. It is obtainable through mining by the validator, archive, and standby nodes, which receive SHM as a reward for contributing resources to the network. Shard Coin is used to cover the gas costs incurred by the Shardeum network when executing transfer operations and smart contracts. Source: Shardeum Twitter Shardeum use cases The Shardeum network offers a range of potential use cases. One such use case is facilitating Peer to Peer (P2P) transfers and the exchange of digital assets with low transaction fees. Shardeum's architecture is designed to ensure immediate finality and high throughput, which increases linearly with the network size. This would encourage more peer-to-peer transactions and exchanges of digital assets. Developers can build decentralized applications (DApps) on the Shardeum network using any programming language, thanks to the Ethereum Virtual Machine (EVM) which provides a distinct and accommodating experience. This feature opens up a wide range of opportunities for the development of innovative DApps. Shardeum is also well-suited for the development of Decentralized Finance (DeFi) protocols, which are P2P financial services such as lending, borrowing, and trading. Shardeum's transparent, accessible, fair, and free network could foster the growth of DeFi protocols. In the future, the blockchain network intends to implement its own version of non-fungible tokens (NFTs). NFTs represent ownership of digitally unique items and can be issued, bought, sold, and traded. Through a built-in bridge, Shardeum's NFTs could facilitate the transfer of such assets between other blockchains. Finally, Shardeum is well-positioned to support the development of Web 3.0, which is the next iteration of the internet that operates through open, trustless, and permissionless networks. The Shardeum network has the potential to be an ideal platform for building applications and services for the Web 3.0 era, making the web integrated, interoperable, and automated through smart contracts. Looking to trade securely and responsibly? Register your accountat Bitget and start your crypto trading journey with us! Disclaimer: All investment strategies and investments are subject to the risk of loss. Nothing contained in this article should be construed as investment advice. Users are strongly advised to do their due diligence and invest at their own risk.

The Crypto Burrito (Volume I): Ethereum Merge

We are at the end of 2022 - a year full of surprises. From the highly anticipated Ethereum Merge to the nasty fall of industry giants, The Crypto Burrito By Bitget Academy will make a recap of the top news stories of the year, one by one. The Crypto Burrito (Volume I): Ethereum Merge The Crypto Burrito (Volume II): Terra’s Fall From Grace The Crypto Burrito (Volume III): The Never-Ending Saga of FTX The Crypto Burrito (Volume IV): Understanding 2022’s Crypto Bankruptcy Filings We Have Waited Since 2015 For The Ethereum Merge The Ethereum white paper was published in 2014 by Vitalik Buterin, the mastermind behind the idea of Ethereum, the ‘visionary and spiritual leader of the Ethereum ecosystem’. Around one year later, Ethereum’s first mainnet Frontier went live on July 30, 2015, operating with the Proof-Of-Work (PoW) consensus mechanism. As reported by Fortune, the plan for a shift to Proof-Of-Stake (PoS) had been in discussion since the inception of the blockchain, with Mikhail Kalinin being the lead contributor to The Merge. In November 2020, he published the ‘Executable Beacon Chain Proposal’, which establishes the base for the PoS Ethereum and specifies the following changes: • ‘Network bandwidth’: This means the maximum capacity of data processing. An improved network bandwidth will result in an increase in block size; Kalinin’s proposal is designed to ‘enlarge the size of executable data’ by up to 60% ‘depending on the block utilization’. • ‘Block processing time’: Kalinin explains that processing time could take as long as the PoW Ethereum if there is a ‘relatively large validator set and crosslink processing’, but the average throughput is 12ms (millisecond) per each Beacon block compared to 200ms per each PoW Ethereum block. • ‘Solidifying the design’: The proposal makes it harder to ‘introduce more executable shards’, where each shard contains a unique portion of the network’s database and is independent of each other, so that ‘problems like cross-shard communication, sharing account space and some others’ are closely monitored. Source: Twitter In short, the Beacon Chain - the first step to fully functional PoS Ethereum - is designed to allow for better data processing in terms of both capacity and speed, thereby optimizing the transaction execution. The Beacon Chain went live in the next month on December 1, 2020, marking the beginning of Ethereum’s grand transition to PoS. Six upgrades and two delays later, the Ethereum Foundation finally agreed on the schedule for Ethereum Difficulty Bomb - a concept introduced by former CCO Stephan Tual in 2015. The Difficulty Bomb is a function that increases the difficulty levels of Ethereum mining algorithm ‘exponentially’ to completely paralyze the network of the PoW mechanism and usher in the age of PoW. So apparently, Ethereum is set to shift to PoS right from the start. Everyone was thrilled to celebrate the milestone when the Difficulty Bomb went off at the terminal total difficulty of 58,750,000,000,000,000,000,000. However, there wasn’t really much to talk about this very moment. It was so quiet you might have thought something must’ve gone wrong, but it was indeed a smooth ride - that’s some splendid work by Kalinin and the developer team. Of course, the community had its own, unique way to capture this piece of history. The final NFT (minted for ca. 31.5 ETH) on the last block of the PoW Ethereum blockchain looks like this... Source: OpenSea … And the first NFTs on the PoS chain were minted for a whopping 36 ETH. Named ‘The Transition’, this collection consists of 100 panda-featuring tokens that ‘recognize two privileged addresses’ of Vitalik Buterin and the Ethereum Foundation, meaning these two addresses can claim the not yet auctioned editions at any time. That is how 0xTransition paid tribute to Ethereum creators. Below is the Edition 1, a.k.a the very first post-Merge NFT: Source: OpenSea The open interest (OI), i.e. the number of unsettled positions on exchanges, of Ethereum reached the peak in the earlier months: US$7.937 billion on January 02, US$7.934 billion on January 04, and US$7.983 billion on April 03, 2022. After April 03, speculative activities around the biggest altcoin took a dive relentlessly until the end of July, when markets started to show signs of recovery after the Terra (LUNA) and 3AC fiasco, which will be discussed in the next issue of The Crypto Burrito. Over the same period, Ethereum lost as much as two-thirds of its value, OI was down by 57.9% at its lowest, and exchange reserve was on the rise as fear took over, causing a sell-off. The official announcement by the Ethereum Foundation regarding The Merge schedule livened up derivatives markets a bit after some quiet days in August, but there was kind of a blackout phase in September - people wanted to see how everything goes with the new consensus before making any (new) bet. We could’ve ended the year decently had it not been for FTX, another debacle also covered in this series. Source: CryptoQuant The Changes Let’s talk about the fundamental changes that come with Ethereum’s PoW-to-PoS shift. Three main aspects here include energy consumption, blockchain design, and tokenomics. Energy consumption Crypto mining activities are criticized for their high energy consumption (0.4% global electricity use) and deemed not sustainable. With all the tensions between Russia and Western countries, EU member states are preparing for a harsh winter this year; hence the industry may have to stop their activities in Europe when required. Converting to PoS is intrinsically more eco-friendly (see the plunging below, 99.99% saved!), and less subject to disruptions (due to external factors), suggesting that it will comply with regulations better. Source: Digiconomist In addition, becoming a validator has become easier because no understanding of mining equipment is needed; there are several staking options available that allow any user to earn the rewards, thus boosting the adoption of Ethereum. Blockchain design Energy is not the only reason for Ethereum Merge. Equally important for this major blockchain is to improve its scalability (as in the ability to handle an increasing number of transactions). The PoW Ethereum’s capacity was limited to ca. 30 transactions per second (TPS), causing a huge inherent issue of network congestion and high gas fees. With Ethereum being home for the majority of DApps, the market desperately needed a scaling solution. Source: CryptoQuant Ethereum TPS has not been considerably improved, nor have fees been reduced after The Merge. Still, the Beacon Chain lays the foundation for the Ethereum Foundation to improve the situation, first of all for Sharding. This upgrade breaks down the database into smaller chunks for faster and cheaper transactions. Sharding should be launched in 2023 - so (theoretically) we are getting there, but a significant development is not observable immediately after the merge and in the next few months. Tokenomics Previously, new Ethereum tokens were created in the form of rewards on the former Mainnet in parallel with the Beacon Chain. After The Merge, only Beacon Chain continues to work and issues rewards for validators, putting a brake on the ETH issuance. ETH issuance rate is estimated to be approximately 4.61% p.a. pre-Merge (4.09% for miners, 0.52% for stakers). The staking issuance rate will change congruently to the total amount of ETH staked on the Beacon Chain, which hasn’t seen any radical changes and remains at 14 million ETH. ETH inflation, therefore, stays at 0.52%, showing an 88.7% reduction compared to the pre-Merge period. Meanwhile, the burning function exerts a negative influence on the ETH supply. Burning is a mechanism adopted by inflationary-by-nature tokens in order to control their inflation rate. ETH burning will wipe out all newly issued ETH when: When simplified, it becomes: At the current inflation level of 1,700 ETH issued per day, the net daily ETH issuance rate (newly issued minus burned) will turn negative when the average daily gas fee is 16 gwei or more. The annualized supply growth of ETH since September 15 has been hovering above 0%, which is not a good proof for the ‘deflationary ETH’ theory. When we take a closer look at the base fee chart (this base fee is what gets burned to reduce ETH supply) versus ETH price, notably after The Merge was completed, it’s safe to say that burning did help ETH land in the green after a local low every now and then, for example, Price USD 1,107.40/Base Fee 12.09 (November 21, 2022) to Price USD 1,139.61/Base Fee 14.02 (November 22, 2022). Albeit one single case isn’t convincing enough; most of the time, base fees shot up whenever there was a panic sell. Source: CryptoQuant Ether holders obviously find the idea of deflationary ETH exciting, as it should make ETH scarcer and more valuable with time. However, informed market participants for sure will act on what they know to influence the net issuance rate of Ethereum’s native token in their own interest. Ethereum Comes Out Stronger ETH deflation is not coming soon, but was ETH able to pull off a nice performance this year? ETH and its forks As the countdown for Ethereum Merge got closer to zero, many began talking about a fork since, as ETC miner Sebastian Nill put it, ‘The possibility of a hard fork has always been there. People are always going to prefer to be able to mine Ether rather than having to buy it.’ And actually, there have been two Ethereum forks: EthereumPOW (ETHW) and EthereumFair (ETHF). Throwing in the six-year-old Ethereum Classic (ETC), and we have three forks, although Ethereum Classic (ETC) has its own thriving ecosystem of DApps and is still in the Top 30 cryptocurrencies by market cap. Here is a comparison between the profits of the four tokens (ETH, ETC, ETHW, and ETHF) on a 3-month basis. In general, ETC still did well when the market was good/not too bad (Q1 and Q3), while ETH was definitely a staple in difficult times. Extremely hyped in the first days post-Ethereum upgrade, but ETHW and ETHF couldn’t even stay strong till the end of September. ETHW lost 77% after 38 days of trading; ETHF is even worse - 89% after 16 days of trading. How did that happen? EthereumPOW users reported accessing issues on the same day the project went live, which turned out to be the result of an attack on this fork. Unclear future plans, a white paper meme with absolutely no useful content, and an inactive Github repo do not make a great recipe for a brilliant investment. EthereumFair doesn’t even have a white paper, and its ecosystem is even less prosperous than that of EthereumPOW. Furthermore, data from 2miners.com shows that ETHW and ETHF hash power combined makes up less than 20% of ETC’s hash rate. Hash rate measures the computational power used on a PoW network and therefore is an indicator of one blockchain’s health, security, and difficulty. At its peak, the OG Ethereum saw a hash power of 1,126.67 TH/s, which is nearly 10 times ETC’s, 70 times ETHW’s, and 300 times ETHF’s. They still have a long way to go to become a match for ETC, let alone for Ethereum. ETH and BTC What about the race between the two largest cryptocurrencies? Below are the rolling correlations between ETH and BTC price for the year 2022 (up until December 20). Rolling correlation allows us to see changes in the correlation over time, here with 7 days, 30 days and 90 days lookback. For the short run (one-week basis), the correlation between ETH and BTC price was much less reliable; the 7D correlation dropped to as low as less than 0.25 in January and several times below 0.75, reasonably because of upgrades, Difficulty Bomb delays and other news pieces related to the ecosystem. More consistent trend is observed over the one-month window; that ETH and BTC prices were more likely to move in tandem (around 80-90% of the time) on a monthly basis. Granted that longer time frames show better reflection between the two assets’ prices (noises cancelled out), both two coins ended the year losing two-thirds of their value after May and November crashes. Bitcoin held on a little bit better, with a return of minus 65% compared to Ethereum’s minus 68%. ETH adoption 2022 is definitely not a good year for Ethereum when it comes to wallet activities:• Active addresses: On average, the number of Ethereum active addresses daily is 490,648 in 2022 versus 538,163 in 2021 (-8.83%).• Unique addresses: The difference between this year's and last year’s average of daily increase is wider (-32.31), plunging to 96,472 in 2022 from 142,517 in 2021. • Bonus 1: The average daily transaction value for 2022 on Ethereum is US$585,534 against 2021’s US$1,080,340 (-45.80%). Calculations used data as of December 20, 2022 from Blockchair. • Bonus 2: The total searches for Ethereum and ETH in 2022 stand at 3,677, down 23% from 4,806 in 2021. Calculations used data as of December 20, 2022 from Google Trends. The thing is, Ethereum Merge gave Ethereum-based protocols a boost in revenues, together with a cutback in costs. Below are the cumulative earnings of blockchains from the last 180 days and 90 days (as of December 20, 2022). The biggest change is Ethereum went from second worst pre-Merge to best performer post-Merge with US$15.5 million in 90-day cumulative earnings. Source: Token Terminal Similar to the case of ETH and ETC, Ethereum might not be the best gainer in green markets, but it’d hand down see less blood being shed than the so-called ‘Ethereum killers’ in bears. The six selected coins are the native token of L1s with the highest Total Valued Locked (TVL) on December 20, per DefiLlama. TVL on Ethereum alone (US$13,531,736,320) was 43% higher than the aggregate TVL of the remaining five (US$9,468,263,680). Besides, we dare say that Ethereum’s popularity will rise exponentially given that non-crypto natives will soon be able to buy, sell and store Ethereum directly on their Paypal account thanks to the new partnership agreement between MetaMask and the digital payment giant. MetaMask users already have painless on-ramp as they can pay for their crypto purchases with debit cards, Visa credit cards, MasterCard credit cards, and Apple Pay. Ethereum Liquid Staking Derivatives One of the big words for 2023 would be liquid staking derivatives (LSDs). A form of derivatives, which means its value is derived from another asset, LSDs allow DeFi users to stake their assets on a platform to earn yields and still be able to obtain extra utility from the staked tokens. To make it easier to comprehend, let’s say we have ETH that we want to stake on the Beacon Chain. Suppose that we go to Lido, delegate our ETH to the corresponding pool, and receive stETH as a claim on our original ETH. Similar claims used to be illiquid and had almost no utility except for redeeming ETH. stETH and other LSDs, on the other hand, can be used as collateral on Aave for borrowing, for yield farming (ETH/stETH pool) on Curve, and so many more. That way, we can deploy two income-generating schemes at the same time: via staking and via DeFi activities. Ethereum Merge brings in the prosperity of liquid staking markets for not everyone wants to be a solo validator with 32 ETH locked on the Beacon Chain. Lido offers one of the first pooled staking options with stETH and has indeed become the biggest validator on the Beacon Chain, dominating the market at nearly 67%. In the case of ETH liquid staking derivatives, each token is pegged to ETH at the 1:1 ratio. Source: Dune Analytics Also in the Top 3 are Coinbase and Rocket Pool, so two decentralized entities and one exchange. cbETH (Coinbase’s tokenized ETH liquid staking positions) emerged only after the Ethereum Foundation confirmed The Merge schedule on August 25. Sometimes we see headlines such as ‘stETH loses peg’ and wonder, does the peg really matter? LSDs show some resemblance to wrapped assets in that users and holders are putting their faith in the integrity of issuers. As a validator, LSD issuers can be slashed, i.e., penalized, if they fail to maintain their validating responsibilities with good behavior. Validators may lose their entire stake on Ethereum as a consequence of slashing and, for that reason, can no longer redeem LSDs. Aside from that, LSDs losing peg will put DeFi borrowers at an awful liquidation risk as the loan isn’t considered guaranteed anymore. In that case, LSDs will be sold automatically, and you may now kiss your staked ETH goodbye. On the flip side, if LSDs consistently trade at a premium to ETH, the pool won’t have enough ETH to pay back to stakers, especially if a large amount of LSDs are to be redeemed at the same time. stETH experienced a prolonged period of discount from May to September following the collapse of Terra (LUNA), then crypto lender Celsius. Since The Merge's completion, it has reclaimed its peg. cbETH is almost constantly trading at a discount, at times as low as 8.38%, though that should be less of a problem for their holders, who are more of a centralized nature and do not care much about on-chain activities. In early 2022, rETH (issued by Rocket Pool) value dropped by 10% but saw an undisturbed appreciation towards the second half of the year. When we zoom in on the last quarter, we can see that stETH appears to be the most stable, whereas its two peers seem to be moving further away from each other as time goes by. This stability looks mesmerizing, staking with Lido feels like the best choice, right? Think about it again. With Lido’s dominance on the Beacon Chain hitting 67%, can we expect Ethereum to be decentralized? Abuse and censorship are among the concerns discussed by researchers of the Ethereum Foundation. Yield-bearing LSDs are a nice addition to the ecosystem of complex products and derivatives; they are expected to grow even more rapidly into the year 2023. Closing Thoughts Enough about the PoS hype. One downside of this shift is the definition of ETH: Is it a commodity? Is it a security? The Securities and Exchange Commission (SEC) Chair Gensler hinted, around the time when The Merge took place, at the possibility of PoS ETH becoming a security. The Commodity Futures Trading Commission (CFTC) still holds the view of ETH having the quality and characteristics of a commodity, for now, but with the SEC and even Senator Cynthia Lummis, an outspoken advocate of crypto, referring to ETH as a security, it sounds like more regulatory scrutiny is on the way. Register your Bitget account to enjoy new user rewards! Disclaimer While we do our utmost best to make sure that the information contained herein is acquired from reliable sources, we provide information on an "as-is" basis with no representations as to the validity, accuracy, usefulness, timeliness, or completeness of any information. We are not responsible for any errors or omissions, losses, and/or damages arising from its display or use. The views, information, or opinions expressed in the report are intended for informational and educational purposes only. It is not intended or offered to be used as legal, tax, investment, financial, or other advice. Under no circumstances are Bitget, our employees, agents, partners, and/or co-operations responsible for any decision made, action taken, or result obtained from or in reliance on the use of the information herein. Any investment or trading ideas, strategies, or actions should never be taken without first taking into consideration each individual's personal and financial situation, and/or without consulting financial professionals.

Introduction to Polkadot (DOT)

Every day we interact with technologies controlled by a handful of large companies whose interests and incentives often conflict with our own. If we want the benefits of using their proprietary apps, we’re forced to agree to terms that most of us will never read, granting these companies complete control over the data we generate through each interaction with their tools. What Is Polkadot (DOT)? Polkadot is a next-generation blockchain protocol that unites an entire network of purpose-built blockchains, allowing them to operate seamlessly together at scale. Because Polkadot allows any type of data to be sent between any type of blockchain, it unlocks a wide range of real-world use cases. By bringing together the best features from multiple specialized blockchains, Polkadot paves the way for new decentralized marketplaces to emerge, offering fairer ways to access services through a variety of apps and providers. While blockchains have demonstrated great promise in several fields—Internet of Things (IoT), finance, governance, identity management, web decentralization, and asset-tracking to name a few—design limitations in previous systems have largely hindered large-scale adoption. Polkadot’s design offers several distinct advantages over existing and legacy networks, including heterogeneous sharding, scalability, upgradeability, transparent governance, and cross-chain composability. History of Polkadot Before diving further into details about the Polkadot ecosystem, let us take a look at the history of Polkadot. Polkadot has been developed by Parity Technologies under the leadership of Gavin Wood and Jutta Steiner. Both of them have already served as Ethereum executives. Most important of all, the Polkadot project also has the support of the Web3 Foundation. The Web3 Foundation emphasizes profoundly offering funding, advocacy, and research benefits along with collaborations. Parity started off in 2015 and started working on node software for Ethereum, termed as Parity Ethereum Client. However, Parity shifted focus from that project towards Polkadot and another related project, Substrate. So, the journey of Polkadot started off in November 2017 with developers publishing the first code on GitHub. Subsequently, the company introduced two proofs-of-concept in 2018, followed by deploying the first para chain of Polkadot in July 2018. Polkadot was officially launched in an ‘initial’ state in May 2020, and only a few months later, it enabled token transfers in August 2020. The relay chain of Polkadot had not been activated in September 2020, and the chain auctions are also not alive yet. How Does Polkadot Work? All blockchains make different tradeoffs to support specific features and use cases, and as chain specialization increases, the need to transact between them will only increase over time. Polkadot is a sharded blockchain, meaning it connects several chains together in a single network, allowing them to process transactions in parallel and exchange data between chains with security guarantees. Thanks to Polkadot’s unique heterogeneous sharding model, each chain in the network can be optimized for a specific use case rather than being forced to adapt to a one-size-fits-all model. More chains and more specialization mean more possibilities for innovation. One blockchain isn’t enough to support a bustling future of decentralized applications. The limited throughput and lack of runtime specialization in early blockchains made them impractical for scaling in many real-world use cases. By bridging multiple specialized chains together into one shared network, Polkadot allows for multiple transactions to be processed in parallel. This system removes the bottlenecks that occurred on earlier networks that processed transactions one-by-one. Polkadot will be able to scale even further in the future with a planned feature known as nested relay chains, which will increase the number of shards that can be added to the network. Early computer games were shipped on printed circuit boards known as cartridges. These cartridges were expensive and time-consuming to make as the code was etched onto the chips, leaving no room for error. These days we’re used to our apps, games, and browsers updating frequently, even automatically. Developers fix bugs before they can cause problems, and new features are added as better solutions become available. Like all software, blockchains need upgrades in order to stay relevant. However, it’s far more difficult to upgrade a blockchain than an app, game, or browser. Upgrading conventional blockchains requires forking the network, often taking months of work, and particularly contentious hard forks can break apart a community. Polkadot revolutionizes this process, enabling blockchains to upgrade themselves without the need to fork the chain. These forkless upgrades are enacted through Polkadot’s transparent on-chain governance system. With this feature, Polkadot enables projects to stay agile, adapt, and evolve with the pace of technology. It also significantly reduces the risk associated with contentious hard forks—a severe barrier to entry for many organizations. What Helps Polkadot Deliver So Many Functionalities? The easiest answer to this question directly rests in the architecture of Polkadot. A proper connection of all dots on a Polkadot chart depicting its architecture can shed light further on its functionality. Polkadot combines a network of heterogeneous blockchain shards referred to as parachains. The parachains connect to the Polkadot Relay Chain, which also takes care of their security. In addition, the parachains could also establish connections with external networks through bridges. Here are the important elements in Polkadot architecture which define its functionality. Polkadot unites a network of heterogeneous blockchain shards called parachains. These chains connect to and are secured by the Polkadot Relay Chain. They can also connect with external networks via bridges. 1. Relay Chain The heart of Polkadot, is responsible for the network’s security, consensus, and cross-chain interoperability. 2. Parachains Sovereign blockchains can have their own tokens and optimize their functionality for specific use cases. To connect to the Relay Chain, parachains can pay as they go or lease a slot for continuous connectivity. 3. Bridges Special blockchains allow Polkadot shards to connect to and communicate with external networks like Ethereum and Bitcoin. 4. Validators Secure the Relay Chain by staking DOTs, validating proofs from collators and participating in consensus with other validators. 5. Collators Maintain shards by collecting shard transactions from users and producing proofs for validators. 6. Nominators Secure the Relay Chain by selecting trustworthy validators and staking DOTs. 7. Fishermen Monitor the network and report bad behavior to validators. Collators and any parachain full node can perform the fisherman role. Polkadot Governance Roles Council Members Elected to represent passive stakeholders in two primary governance roles: proposing referenda and vetoing dangerous or malicious referenda. Technical Committee Composed of teams actively building Polkadot. Can propose emergency referenda, together with the council, for fast-tracked voting and implementation. DOT - Polkadot’s Native Token The DOT token is Polkadot’s native token. It serves four functions: payment for fees, governance over the network, interoperability, and bonding. When messages are sent between two blockchains on the network, DOT's are used to pay for fees. DOT holders are also responsible for managing significant events by voting on protocol upgrades and fixes. The token also ensures that network participants act in a manner that does not damage the network by giving them skin in the game. In order to create new parachains, tokens must be bonded ensuring incentive alignment. How to stake DOTs: While validators on Polkadot need to maintain the (often expensive) hardware necessary to secure the network, anyone can assume the role of a nominator by bonding their DOTs to a dedicated validator. Bonding tokens help increase the network’s cost of attack and allow DOT holders to earn newly minted tokens as staking rewards. Polkadot is targeting a 75% stake rate, which at a 10% inflation rate in the network’s inaugural year, would provide an annual staking return of~20%. Bonded tokens will remain locked for twelve weeks and are subject to slashing (loss of funds) should the chosen validator go offline or misbehave. Polkadot Wallet: There are multiple teams working on Polkadot wallet implementations prior to the network launch. Most notably, blockchain.com announced that it will integrate DOT tokens into its wallet allowing users to store, send and receive tokens as well as participate in governance by voting on proposals. The DOT token serves three distinct purposes: governance over the network, staking, and bonding. 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 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. 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. Launch Initial Token Distribution In Oct 2017, the Web 3.0 Foundation raised the equivalent of $145 million in ether (ETH) through a token sale. The sale was split between a private sale, which raised over $80 million, and a public sale, which raised the remainder. Participants were required to use a KYC system called PICOPS, which verifies the identity of each participant. Participants who were unable to verify themselves were deemed ineligible. The sale was also not available to any Chinese or American citizens due to regulatory concerns. At the start of the network, a total of 10 million DOT (old) will be created as a native token. The initial supply was later redenominated by a community vote, a cosmetic change that increased token account balances by 100x. The following allocations are the same for both DOT (old) and new DOT: 50% allocated to token sale investors 5% allocated to the 2019 private sale investors 3.4% allocated to 2020 token sale investors 11.6% retained by the Foundation for future fundraising efforts 30% allocated to the Web 3 Foundation for immediate use to develop the Polkadot network and other undisclosed Foundation activities. The total supply is not fixed at 1 billion but instead will use a to-be-determined inflationary model to supply the rewards for the proof-of-stake (PoS) system. 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 currently frozen, and a debate among the 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. In Jun 2019, The Web3 Foundation announced it sold another 500,000 DOT (old) tokens (now 50 million new DOT) to an undisclosed group of private investors. Based on previous reports from Polkadot, the project was seeking to raise $60 million at a $1.2 billion valuation through this token sale. The Jun. 2019 announcement declared the raise successful, implying the Polkadot reached its target. Disclaimer: All products and projects listed in this article are not endorsements and are provided for informational purposes only.