Polkadot is a network that allows interoperability between blockchains that plug into the Polkadot relay chain.
The Polkadot ecosystem refers to the entire ecosystem of parachains that plug into a single base platform known as the Relay Chain. DOT is Polkadot’s native token that serves four functions: payment for fees, governance over the network, interoperability, and bonding.
- Parachains are custom, project-specific blockchains that are integrated within the Polkadot (DOT) and Kusama (KSM) networks. These parachains exist as independent blockchains – with an entirely unique token, governance systems, and functionality. You can think of parachains as independent networks that are compatible with Polkadot and each other, allowing for seamless cross-chain interoperability.
- Similar to staking, DOT token holders can act as nominators by “bonding” their tokens to a dedicated validator to help secure the network. Bonding tokens helps increase the network’s cost of attack and allows DOT holders to earn newly minted tokens as staking rewards.
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