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A brief history
Polkadot was launched on May 26, 2020, by Ethereum co-creator Gavin Wood, with the nonprofit Web3 Foundation serving as the primary research organization that maintains Polkadot’s open-source code. The main goal of the Polkadot platforms is to connect blockchains and enable cross-blockchain transfers of data and assets. Polkadot does this through an innovative "parallel chain," or para chain, system to enable interoperability between blockchains. The Polkadot platform allows for the creation of three types of blockchains. At the centre is the Relay chain- the main Polkadot blockchain- which is where transactions are finalized. On top of that, there are Parachains -custom blockchains- that use the relay chain’s computing resources to confirm that transactions are accurate. Lastly, there are Bridges which allow the Polkadot network to interact with other blockchains.
DOT in practice
To keep its network in agreement about the state of the system, Polkadot’s Relay Chain uses a consensus called nominated-proof-of-stake (NPS)- a variation of Proof-of-Stake mechanisms. This system allows anyone who stakes DOT by locking the cryptocurrency in a smart contract to perform one or more of the following roles necessary to the operation of the platform. The four roles are validators, nominators, collators, and fishermen. Validators validate data in parachain blocks, participate in consensus, and vote on proposed changes to the network. Nominators secure the Relay Chain by selecting trustworthy validators. Nominators delegate their staked DOT tokens to validators and thus allocate their votes to them. Collators are nodes that run and store a full history for each para chain and aggregate para chain transaction data into blocks to be added to the Relay Chain. Lastly, Fishermen are tasked with monitoring the Polkadot network and reporting bad behaviour on the platform to validators. Users who stake DOT and perform any of these roles are then eligible to receive DOT rewards. DOT is also used in the platform's governance as anyone who purchases DOT tokens can use their DOT to propose changes to the network and approve or reject major changes proposed by others