What is the issuance and circulation of DOT coins?

DOT coins, initially issued through a crowdloan mechanism in 2020, serve as the foundation of the Polkadot ecosystem, enabling staking, governance, bonding, and transaction fees.

Oct 19, 2024 at 07:36 am

1. Issuance of DOT Coins

DOT coins were issued through a crowdloan mechanism during the Polkadot blockchain's initial coin offering (ICO) in October 2020. The ICO raised approximately $480 million, with participants contributing other cryptocurrencies (such as ETH and BTC) to support the development of the Polkadot ecosystem.

2. Distribution of DOT Coins

Initially, 10% of the total DOT supply was allocated to the seed round, while 60% was allocated to the crowdloan. The remaining 30% was distributed as follows:

• 10% to the Web3 Foundation (a non-profit organization supporting the Polkadot ecosystem)
• 10% to the Polkadot Treasury (to fund future development)
• 10% to the founding team and advisors

3. DOT Coin Circulation

As of May 2023, the total circulating supply of DOT coins is approximately 882 million, out of a maximum supply of 1 billion. The remaining 118 million DOT coins are gradually released over time as rewards for validators and nominators securing the Polkadot network.

4. Use of DOT Coins

DOT coins play a vital role in the Polkadot ecosystem, with various use cases:

• Staking: DOT holders can stake their coins to support the network security and earn rewards.
• Governance: DOT holders can participate in network governance by submitting and voting on proposals.
• Bonding: DOT coins are used to bond validators and nominators, who contribute to consensus and earn rewards.
• Fees: Network fees are paid in DOT for transactions and smart contract execution.

Conclusion

DOT coins serve as the backbone of the Polkadot ecosystem, supporting network security, governance, and transaction processing. Their issuance and circulation were carefully designed to facilitate the growth and adoption of the Polkadot blockchain.