What are DOTs?
DOT is the native token of the Polkadot network in a similar way that BTC is the native token of Bitcoin or ether is the native token of the Ethereum blockchain.
Kusama tokens (KSM) and DOT tokens both have 12 decimal places, with the smallest unit being the Planck (a reference to Planck Length, the smallest possible distance in the physical Universe). You can compare the Planck to satoshis or wei, while the DOT is like a bitcoin or an ether.
What are the uses of DOTs?
DOTs serve three key functions in Polkadot, (i) to be used for governance of the network, (ii) to be staked for operation of the network, and (iii) to be bonded to connect a chain to Polkadot as a parachain.
DOTs can also serve ancillary functions by virtue of being a transferrable token. For example, DOTs stored in the Treasury can be sent to teams working on relevant projects for the Polkadot network.
These concepts have been further explained in the Usage of DOTs and KSM on Polkadot and Kusama
DOTs for governance
The first function of DOTs is to entitle holders to control of the governance of the platform. Some functions that are included under the governance mechanism include determining the fees of the network, the addition or removal of parachains, and exceptional events such as upgrades and fixes to the Polkadot platform.
Polkadot will enable any holder of DOTs to participate in governance. For details on how holders can participate in governance, as well as their rights and responsibilities, see the governance page.
DOTs for consensus
DOTs will be used to facilitate the consensus mechanism that underpins Polkadot. In order for the platform to function and allow for valid transactions to be carried out across parachains, Polkadot will rely on holders of DOTs to play active roles. Participants will put their DOTs at risk (via staking) to perform these functions. The staking of DOTs acts as a disincentive for malicious participants whom will be punished by the network by getting their DOTs slashed. The DOTs required to participate in the network will vary depending on the activity that is being performed, the duration the DOTs will be staked for, and the total number of DOTs staked.
DOTs for bonding
DOTs will have the ability to be bonded for a duration of time in order to add a new parachain to the network. The DOTs will be locked during their bonding period and will be released back to the account that bonded them after the duration of the bond has elapsed and the parachain is removed.
DOTs may have a lock placed on them to account for vesting funds. Like other types of locks, these funds cannot be transferred but can be used in other parts of the protocol such as voting in governance or being staked as a validator or nominator.
Vesting funds are on a linear release schedule and unlock a constant number of tokens at each block. Although the tokens are released in this manner, it does not get reflected on-chain automatically due to the fact that locks are lazy and require an extrinsic to update.
There are two ways that vesting schedules can be created.
- One way is as part of the genesis configuration of the chain. In the case of Polkadot and Kusama, the chain specification genesis script reads the state of the Polkadot Claims contract that exists on the Ethereum blockchain and creates vesting schedules in genesis for all the allocations registered as being vested.
- A second way is through an extrinsic type available in the Vesting pallet,
vested_transfer. The vested transfer function allows anyone to create a vesting schedule with a transfer of funds, as long as the account for which the vesting schedule will be created does not already have one and the transfer moves at least
MinVestedTransferfunds, which is specified as a chain constant.
Vesting schedules have three parameters,
configuration of these three fields dictate the amount of funds that are originally locked, the
slope of the unlock line, and the block number for when the unlocking begins.
Like simple payouts, vesting is lazy, which means that someone must explicitly call an extrinsic to update the lock that is placed on an account.
vestextrinsic will update the lock that is placed on the caller.
vest_otherwill update the lock that is placed on another "target" account's funds.
These extrinsics are exposed from the Vesting pallet.
Web3 Foundation will distribute up to 20% of mainnet DOTs prior to network launch in early 2020 (see the Light Paper or the Polkadot Network FAQ). As Gavin Wood, one of the project's founders, said in his year-end recap, there may be a generally available public sale for some portion of that amount at some point this year. Subscribe to the Polkadot newsletter on polkadot.network for further updates.
Warning: Mainnet DOT tokens are not transferrable until mainnet launch, expected in early 2020. Therefore any transfers of Mainnet DOTs are illegitimate and unauthorized. DOTs can not be moved from a current allocation address. Individuals with an allocation of DOTs who transfer their DOT address to someone else can always keep a copy of their private key, therefore there is extreme risk for individuals participating in transfers of DOTs before mainnet launch.
Testnet DOTs are freely available now - see below for various ways to obtain them.
DOTs are required to make transactions on the Polkadot network. Testnet DOTs do not have any value beside allowing you to experiment with the network.
You can also make your own WNDs (testnet DOTs) by becoming a validator.