The Polkadot blockchain runs on on-chain governance; this implies that votes on the blockchain are binding by code. The blockchain members are currently voting on whether or not to change the total supply.
At the time of genesis, 10 million $DOT tokens were created. Now, the redomination vote proposes a change of underlying denomination of $DOT from 10^12 Plancks to a new lower one. This will effectively increase the supply of dot and accordingly scale its price.
The project raised $145 million in 2016 via an ICO. It is founded by Gavin Wood, a counter of Ethereum and offers blockchain interoperability at scale.
The tokens are in IOU phase now, meaning that they haven’t been distributed or is being staked by the investors at the moment. (The $DOT tokens are still locked on Ethereum, the complete mainnet launch of the network is still due.) In the later phases of updates on the network this year, the community validators will be selected to maintain the network according to their overall DOT backing and Proof-of-Stake system (NPoS) will go live.
In mid-May, the Web3 Foundation held the redomination vote for a while after a significant backlash from the community after the non-binding vote. The majority was in favour of the proposal. However, the opposers feel strongly against it, and unlike other chains creating a fork on Polkadot is designed to be fork resistant.
Unlike Bitcoin and Ethereum, where Improvement Protocols (BIPs and EIPs) undergo ‘rough consensus governance,’ this form of voting is more definitive.
While the overall wealth of the investor stays the same, the tokens will be diluted to lower values, with a larger supply. As the market for trading is not live, the decision will avoid major price swings. Some might argue that lower prices make tokens attractive. However, dilution leads to ample demand, hence negatively affecting the price.
“If passed, the value of 1 $DOT would change from $100 to either $10, $1, or $0.1, an unprecedented change for a major protocol.” On redomination he added, “I personally see the advantages of redenomination as enduring and practical and ultimately within the spirit of Polkadot itself.”
The Polkadot network also partnered with Chainlink [LINK] earlier this year to integrate their price oracle with their interoperable network.
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