Polkadot—a scalable heterogeneous multi-chain platform that connects blockchains—enables new developers to build blockchains that trustlessly communicate in a secure environment.
In order to solve the scalability and interoperability challenges facing many blockchains, Polkadot creates a sharded ecosystem that includes a main relay chain and individual parachains (shards). The relay chain is responsible for achieving consensus and transaction delivery (message passing) among parachains. Early testing suggests that Polkadot, when multi-threading and parachains are included, could reach as high as 1,000,000 transactions per second.
|Total Initial Supply||10 million|
|Total Planned Inflation||Unlimited|
|Maximum Token Supply||10 million minted + inflation|
|Inflation Rate||Dependent upon the staking rate in the network, but maxes out at 10% as the staking ratio approaches 50%|
|Maximum Stake||No maximum|
|Minimum Stake||No minimum|
|Unbonding / Undelegating period||28 days|
Polkadot uses Nominated Proof of Stake (NPoS) as its consensus method. There is a known and limited number of validators in the active set and this active set number is decided by governance. Inclusion in the active set is determined by your total self-bonded and delegated stake. The minimum stake to get in the active set varies daily and depends upon the number of validators attempting to be included and the amount of stake on each. In a NPoS system, each elected validator has equal say in consensus.
Once included in the active set, every validator has equal voting powers and gets equal rewards. For example, if there are two validators, one with 15k DOTs and another with 100k DOTs, assuming both are in the active set, they will receive equal rewards on an annual basis.
Because of this equitable distribution of rewards, it is preferable for a DOT holder to distribute their stake and run multiple validators. Optimizing your participation on Polkadot, or any NPoS network, requires more active management than other PoS networks.
On Polkadot, there is no minimum self-bond to run a validator. It is possible to meet the minimum stake necessary to be elected to the active set with almost 100% nominated DOTs. The goal is to get in the active set without being significantly higher than the minimum. As such, many validators maintain a low self-bond and delegate to themselves with the majority of their DOTs from a separate account. This set up allows them to remain flexible and distribute their stake as the minimum for election to the active set changes.
Every validator in the active set receives the same amount of DOTs for equal work. They then take a validator fee (a percentage commission) before distributing the remaining rewards to their nominators (delegators to the validator) and the validator’s self-bonded stake on a pro-rata basis. All rewards are distributed automatically on-chain.
Polkadot employs a nonlinear model to set inflation upon mainnet launch. Those staking in the early days will see steadily increasing inflation until 50% of the supply is staked. This model is a significant incentive for token holders to participate in the earliest, most critical days of the network.
The blue line is the rate of inflation in the network and the green line is the rate of reward (the inflation divided by the staking rate):
Validators can be slashed for misbehavior (e.g. being offline, equivocation). The slashed amount is a fixed percentage. A validator with more stake gets slashed more total DOTs. Since rewards are evenly distributed among validators elected to the consensus group, there is no economic advantage in staking more DOTs than required to be in the active set. In fact, staking excess DOTs increases the loss in the event of slashing.
In general, Polkadot slashing is based on security threat levels:
|Threat Level||Slashable Behavior||Max % Slashed|
|Level 1||Low security threats such as isolated cases of unresponsiveness||0.1% (or kicking the validator out of the active set)|
|Level 2||Misconduct that occurs in good faith but is due to bad practices||1%|
|Level 3||Misconduct unlikely to happen in good faith or by accident, but does not lead to serious security risks or resource use||10%|
|Level 4||Misconduct that a) poses a serious security risk to the system, b) shows large levels of collusion among validators, and/or c) forces the system to spend a large amount of resources to deal with them||100%|
By design, Polkadot requires more active node management than PoS networks. We make it easy for anyone to run reliable, automated, and decentralized Polkadot validating nodes that strengthen and secure the network.
Bison Trails is uniquely positioned to provide unparalleled enterprise-grade node infrastructure for Polkadot validators:
Bison Trails is an Infrastructure-as-a-Service company, based in New York City, specifically focused on blockchain participation. We’ve built a platform for anyone who wants to participate in new chains effortlessly (e.g. by running Cosmos Validators, Tezos Bakers, and Libra Validators, etc.)—without having to invest time and resources into developing any of the engineering, protocol, dev ops, or security competencies in-house. Our goal is for the entire blockchain ecosystem to flourish by providing robust infrastructure for the pioneers of tomorrow.
Contact us to learn more about our enterprise-grade blockchain infrastructure, running Polkadot nodes on the Bison Trails platform or Polkadot staking.