Thread by @asiahodl

1/ In a world of multiple blockchains, we need bridges & the ability to scale. We also need to end hardforks so the community sticks together.

How does @Polkadot work and what does it mean for $DOT?

Let me ELI5.

messari.io/article/polkad…

2/ What is Polkadot trying to do?

Since blockchains don't communicate, Polkadot wants to be a multi-chain platform that also allows for scalability. Like a Layer0 solution connecting all the blockchains and applications.

One blockchain to rule them all.

3/ How's it going to achieve this? Like a sea urchin, Polkadot has a "Relay Chain" as the beating heart. The spikes are "Parachains", which take different characteristics and are specialized by use case. Like a computer dedicated to run 1 task.

(see diagram for examples)

4/ There are also "Common Goods" parachains, that are awarded for free to help the network. Like when you buy an iPhone, you get Apple Maps, Stocks and Health apps. The @polkadot network will have basic services.

There will also be bridges to existing blockchains like $BTC, $ETH

5/ Projects aren't LIVE until they win a parachain -- through an auction using $DOT (rumored to be Summer 2021) Platforms might want to be first, while others can wait.

Projects can get private funding or incentivize the community in a Crowdloan (in exchange for native tokens)

6/ What does $DOT do? It has a handful of key uses including bonding, staking, transaction fees, and governance.

Who buys $DOT? Teams need enough to get a parachain slot. They also need to pay transaction fees (like $ETH) and voting rights require DOT.

7/ What's $DOT's tokenomics?

+ Inflation: There's no cap on supply. Issuance depends on staking rewards (the more staked, the more inflation)
+ Burn: 1% of Treasury funds not spent will be burned
+ Locked: 63% of DOT is staked on the network

8/ What is @kusamanetwork ? If $DOT is Major League Baseball, $KSM is the Minor League. Most testnets have no value, so you can't replicate real-world conditions. #Kusama is a low-value, fast-iteration version of Polkadot.

It's rumored to start auctions Mar-2021, a $KSM catalyst

9/ So what are the risks?

(a) The SEC: Don't want to be another @Ripple with $XRP. $DOT notably hasn't targeted US investors.

(b) Competition: Polkadot isn't a smart contract platform (like $ETH, $SOL) but competes for developers and users.

10/ Risks continued.. (c). Polkadot-specific:

+ Further delays in really launching
+ Unclear how $DOT is distributed among investors and whales
+ Inflation is aggressive
+ Bugs (they've had 2 exploits already)

11/ @gavofyork, co-founder of #Ethereum, has raised funds in 3 private rounds, a testamentto high investor demand.

Polkadot and Kusama has one of the largest developer communities. Project launches this year could be huge catalyst for $DOT

Deep dive -->
messari.io/article/polkad…