The network has a highly sophisticated user-driven governance... - Deepstash

The network has a highly sophisticated user-driven governance system that also helps to secure it. 

Communities can customize their blockchain’s governance on Polkadot based on their needs and evolving conditions. 

Nominators, validators, collators and fishermen all fulfil various duties to help secure and maintain the network and eradicate bad behavior.

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  • Relay Chain: Polkadot’s “heart,” helping to create consensus, interoperability and shared security across the network of different chains;
  • Parachains: independent chains that can have their own tokens and be optimized for specific use cases;
  • Parathread: similar to parachains but with flexible connectivity based on an economical pay-as-you-go model;
  • Bridges: allows parachains and parathreads to connect and communicate with external blockchains like Ethereum.

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What is Polkadot (DOT)?

Polkadot is a network protocol that allows arbitrary data —not just tokens— to be transferred across blockchains.

This interoperability seeks to establish a fully decentralized and private web, controlled by its users, and simplify the creation of new applications, institutions and services.

Polkadot can transfer this data across public, open, permissionless blockchains as well as private, permissioned blockchains.

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Polkadot was founded by the Web3 Foundation, a Swiss Foundation founded to facilitate a fully functional & user-friendly decentralized web as an open-source project.

Its founders are Dr. Gavin Wood, Robert Habermeier & Peter Czaban.

Wood, the Web3 Foundation’s president, is the most well-known of the trio thanks to his industry influence as Ethereum co-founder, Parity Technologies founder & the creator of the smart contract coding language Solidity.

Habermeier is a Thiel Fellow & accomplished blockchain & cryptography researcher & developer.

Czaban is the Web3 Foundation’s Technology Director.

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P.T. Barnum

Money is a terrible master but an excellent servant.

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Polkadot is a sharded multichain network, meaning it can process many transactions on several chains in parallel (“parachains”). This parallel processing power improves scalability.

Custom blockchains are quick and easy to develop through the Substrate framework and can be connected to Polkadot’s network within minutes. The network is also highly flexible and adaptive, allowing the sharing of information and functionality between participants similar to apps on a smartphone. 

Polkadot can be automatically upgraded without the need for a fork in order to implement new features or remove bugs.

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How is the Polkadot Network Secured?

Polkadot’s mass interoperability through a set of common validators helps to secure its multiple blockchains and allows them to scale their transactions by spreading their data across many parachains.

The network uses the NPoS (nominated proof-of-stake) mechanism to select validators and nominators and maximize chain security.

This unique validity scheme enables chains to interact with each other securely under the same rules, yet remain independently governed.

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Polkadot currently has an allocation of 1 billion DOT tokens, following the network’s redenomination from an initial maximum supply of 10 million in August 2020. 

The redenomination was undertaken purely to avoid the use of small decimals and make calculation easier. While all balances were increased by a factor of one hundred, this did not impact the distribution of DOT or holders’ proportional share.

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What is Bitcoin (BTC)?

Bitcoin is a decentralized cryptocurrency originally described in a 2008 whitepaper by a person, or group of people, using the alias Satoshi Nakamoto. It was launched in January 2009.

Bitcoin is a peer-to-peer online currency, meaning that all transactions happen directly between equal, independent network participants, without the need for any intermediary to permit or facilitate them. Bitcoin was created to allow “online payments to be sent directly from one party to another without going through a financial institution.”

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What is a liquidity pool?

A liquidity pool is a collection of funds locked in a smart contract. Liquidity pools are used to facilitate decentralized trading, lending and many more functions.

  • Liquidity Pools are the game-changing innovation in Decentralized Finance (DeFi) that facilitates trading on Decentralized Exchanges (DEX) and provide liquidity through a collection of funds locked in a smart contract.
  • Users called liquidity providers (LP) add an equal value of two tokens in a pool to create a market. In exchange for providing their funds, they earn trading fees from the trades that happen in their pool.

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A world computer & a settlement layer

Ethereum is a “world computer”: It lets people build apps & products with money baked into the code. If you believe that web3 is going to continue to grow, then you likely believe that over time,

Ethereum will become the “settlement layer” of the internet: All sorts of transactions (whether on-chain or even Visa) will turn to Ethereum to exchange funds and keep secure, immutable records.

Owning ETH is like owning shares on the internet. Demand for ETH will go up with increased web3 adoption, while upcoming changes will decrease the supply of ETH and let more value accrue to holders.

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