Answers to the 5 most frequently asked questions about Polkadot blockchain
Polkadot was launched in May 2020. In a market dominated by Bitcoin and Ethereum, it quickly established itself as the next generation blockchain. The scale and interoperability problems limit Bitcoin's ability to transfer value without the assistance of central institutions. Ethereum and its more flexible network are therefore very popular. Here are some answers to people's questions about Polkadot blockchain.
1. What is the difference between Polkadot and other stakeholder networks?
The platform attaches great importance to the interconnection between blockchain countries to ensure that various networks can communicate with each other. Gavin Wood founded Polkadot, a name that sounds familiar for a reason. He developed Solidity smart contract language and co founded Ethereum. This infrastructure's ability to create a highly configurable layer 1 blockchain distinguishes Polkadot from similar projects. Ecology will not be isolated from them. The verifier responsible for governance, security and maintaining the continuous connection between "side chains" is the lifeblood of this network.
The important decisions made when Polkadot was founded helped shape the current ecosystem. A large number of pooling methods that users can choose eliminate the high access threshold that often prevents verifier nodes from collecting pledge rewards, which is a key difference.
2. What is the difference between a verifier and a nominee?
Being a verifier on Polkadot is expensive, but that doesn't mean you can't participate in the pledge process. According to the latest data, to make the node operator work, the authorizer needs to mark 2 million points; At the time of writing this article, it was worth $14 million. To gain the privilege of participating in the block validation process, each delegate needs to bet at least 120 points.
It is worth noting that Polkadot uses a specified proof of interest process, which slightly changes the way things are handled. This encourages DOTs owners to volunteer as nominees, who will be responsible for selecting up to 16 candidates as verifiers. In order to obtain rewards, everyone should lock their tokens.
3. What rate of return can investors get?
This may vary by platform, so it is important to ensure the sustainability of the output. Before the recent cryptocurrency pandemic, many investors were tempted by excessive returns and finally became unsustainable. Therefore, the withdrawal of thousands of consumers on different platforms has been frozen, and they were previously locked out of their accounts. Although it is possible to obtain a lower interest rate than that of a large bank, it is important to be cautious and choose a trading platform that you can rely on.
The pledge yield of popular brand Polkadot is between 9% and 16.5%. This is a considerable scope. Every idea has its advantages and disadvantages. Some investors use dollar point derivatives of their shares or lock them in the liquidity pool to obtain greater returns. While increasing your capital in this way may sound tempting at first, it is important to remember that it is risky.
4. Will pledge affect liquidity?
This is certainly possible. In some cases, you may need to lock your points for 120 days. A lot of things happened in 120 days. During this period, DOT fell 69%, from a historical high of $55 to a low of $17. This painfully proves the necessity of weighing your choice and considering the pledge provider, where you can earn profits without enduring a long lock up period and helplessly watching the value of your cryptocurrency plummet.
In some cases, it may take 28 days to unbind from the authenticator node, but in other cases, it may take a fixed period of 30, 60, 90, or 120 days. However, XGo is reassessing this strategy from scratch. Because there is no withdrawal lock up period or irrevocable period on this platform, you have full control. You can transfer your assets at any time, and the rewards will be paid every day. This crucial flexibility helps to maintain the control of HODLers, because the efforts of the Federal Reserve to raise interest rates and combat inflation have led to increased anxiety and uncertainty in the crypto market.
5. Are there any further restrictions to consider?
Yes, because it may be necessary to lock your money in order to distribute rewards. You need to entrust at least 120 DOT to some non custodial pledge providers to place bets. If the rewards are not continuously withdrawn, they may disappear after only 12 weeks. If you try to redeem your points early, you will sometimes lose your prize and pay a severe fine.
These are the answers to five common questions about Polkadot blockchain. Polkadot's developers include Gavin Wood, co-founder of Ethereum. It was launched on May 26, 2020. The non-profit organization Web3 Foundation is the main research institution to maintain Polkadot open source code.
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