Still Holding That Bag of DOT? Use Cases Within the Polkadot Ecosystem

By Michael @ CryptoEQ | CryptoEQ | 30 Oct 2023

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Polkadot’s native network token is DOT, which assumes various distinct roles within the ecosystem. DOT token holders control the network's direction in governance matters such as determining network fees, auction dynamics, and scheduling additional parachains. Like in other blockchains, DOT holders are responsible for making decisions around special events, such as network upgrades to the Polkadot platform via its governance mechanism, OpenGov. 

Polkadot’s OpenGov

Introduced in 2023, Polkadot's OpenGov emerges as a leading governance system in the Web3 space. It empowers any DOT holder to propose or vote on referenda, marking a significant leap towards decentralization from its predecessor. Alongside NPoS, OpenGov positions Polkadot as one of the most decentralized networks in the Web3 domain.

OpenGov offers several advantages over traditional systems. Its ability to handle multiple referenda concurrently accelerates the deployment of changes and, in certain scenarios, expedites the release of Treasury funds. The concept of "conviction voting," where locking in tokens for extended periods can amplify one’s influence, addresses the imbalance for those with fewer tokens.

DOT holders are not only encouraged to engage with OpenGov but also provided with resources on the OpenGov page and Polkadot wiki to familiarize themselves with the process. Governance proposals are deliberated and decided upon through interfaces like Polkassembly and Subsquare. For those unable to participate actively, delegating their voting power remains an accessible option.


Staking within the Polkadot network assumes a pivotal role, fulfilling the dual objectives of safeguarding the ecosystem from hostile entities and promoting its decentralization. This mechanism fortifies the network's security and offers DOT holders the opportunity to accrue rewards in recognition of their contribution to network security. In Polkadot's Nomination-Proof-of-Stake (NPoS) system, participants are categorized as nominators whose primary function is to select validators responsible for the network's security, consensus, and block production. Validators are entrusted with a more intricate role, encompassing the technical aspects of network security and participating actively in the consensus process.To disincentivize malicious intentions in the network, participants face the potential risk of forfeiting one’s stake. The amount of DOT required to participate in the network depends on a few factors, such as the activity, duration for which DOT is staked, and the total number of DOT staked.

Native staking, a process of staking directly on the Polkadot platform without intermediaries, offers holders full control over their DOT tokens. This approach contributes significantly to network security and decentralization. The simplest avenue for native staking is through joining a nomination pool, which requires a minimal entry threshold of just one DOT. This option provides a relatively passive staking experience, exempting participants from the responsibilities of selecting and monitoring validators or updating nominations frequently.

For those seeking a more proactive engagement, direct nominating is an alternative pathway. This method involves choosing up to 16 validators independently, necessitating a thorough analysis of validators, regular performance assessments, and periodic nomination updates. However, direct nominating is not devoid of risks. A misstep in selecting a malicious validator can lead to a loss of DOT tokens through a process known as "slashing."

The active nominator must also surpass a threshold—currently around 450 DOT, a figure that fluctuates with participation levels—to be eligible for rewards. For those confident in their judgment, establishing their own nomination pool and inviting others to join is also a feasible option.


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Michael @ CryptoEQ
Michael @ CryptoEQ

I am a Co-Founder and Lead Analyst at CryptoEQ. Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.


Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.

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