1. Project Background and Positioning: The Vision and Development of Polkadot

Polkadot is a third-generation public blockchain project positioned for multi-chain interoperability. It was proposed and whitepapered in 2016 by Dr. Gavin Wood, co-founder of Ethereum. The project envisions becoming the “blockchain of blockchains” by connecting numerous parallel blockchains through a central relay chain, enabling message passing and value transfer across heterogeneous chains, thereby laying the infrastructure foundation for Web3.0.

In October 2017, Polkadot raised approximately $144 million through its initial coin offering (ICO). After years of development, the Polkadot mainnet launched on May 26, 2020, and officially enabled parachain functionality in December 2021, marking the operational phase of its multi-chain ecosystem.

The Web3 Foundation, headquartered in Switzerland, backs Polkadot and is committed to supporting decentralized blockchain network technologies. As a leading project in the multi-chain interoperability space, Polkadot is seen alongside Cosmos as a major driver of the cross-chain era. The name “Polkadot” refers to the interconnected nature of the network, like a pattern of connected blockchain nodes.

Polkadot positions itself as a scalable, upgradeable, and token-holder-governed Layer-0 protocol that aims to resolve the scalability, interoperability, and decentralized governance bottlenecks of single-chain architectures. In summary, Polkadot aspires to be critical infrastructure for the Web3 era, enabling shared security and cross-chain communication through a network of interconnected “parachains.”

2. DOT Tokenomics: Issuance, Inflation, and Staking Mechanisms

DOT is the native token of the Polkadot network and plays multiple roles in its operation and governance.

In terms of issuance and distribution, Polkadot generated 1 billion DOT (after a 1:100 redenomination) in its genesis block as the initial supply. DOT follows an inflationary model without a fixed supply cap. From 2020 to 2023, the inflation rate was set at approximately 10% annually and was automatically minted by the network.

To encourage sufficient staking participation, Polkadot established an ideal staking rate (around 50%): when the staking ratio falls below 50%, more inflationary rewards go to stakers; when it exceeds 50%, excess inflation is directed to the treasury. This mechanism has, in practice, led to substantial DOT accumulation in the treasury, sparking community debates over inflation efficiency.

In 2024, through governance proposal Referendum 1271, the Polkadot community adjusted the inflation model, lowering the annual inflation rate to a fixed 8%. Under this new model, 15% of newly minted DOT goes directly to the treasury, and the remaining 85% is allocated as staking rewards. This change made inflation more controllable and treasury funding more predictable.

Source:Polkadot Documentation

DOT serves several core purposes:

• Network governance: DOT holders can participate in on-chain governance of Polkadot, including proposing, voting on network upgrades, adjusting parameters, etc. Polkadot adopts a permissionless open governance model, where any coin holder can submit a governance proposal, and the voting weight is related to the amount of staked DOT and the lock-up period.

• Staking and Security: DOT can be used for staking as a nominator or validator to earn block rewards. Nominators endorse their DOT stake to trustworthy validators to help them get selected for the active validator set, while validators are responsible for packing blocks and validating parachain data. It is worth noting that, to prevent malicious behavior, Polkadot has a Slash penalty mechanism for validators and nominators. Once a node double signs or defaults, the related staked DOT will be slashed by a certain percentage, further safeguarding the role of DOT in security.

• Parachain Slot Auction: DOT is used for parachain slot bidding and leasing. Polkadot distributes parachain slots through candle auctions, where projects need to stake a large amount of DOT to bid for slot lease (up to 2 years). The DOT involved in the auction will be locked during the lease period and returned when it expires. Therefore, projects often initiate crowd loans, calling on the community to stake DOT to support their winning of slots, and offering project tokens as a reward.

• Transaction fees and bonding: Transferring, governance voting, and other operations on the relay chain in Polkadot require a small amount of DOT as a fee. However, due to the relatively low transaction volume on the relay chain itself, coupled with Polkadot’s design of low fees and high-performance architecture, the impact of transaction fee expenses on DOT demand is limited.

Inflation and Burn: The economic model of the Polkadot network also includes a fee burn mechanism, whereby a portion of transaction fees and penalty fines are directly burned to offset some of the inflationary issuance. In particular, as the treasury balance accumulates, if the treasury budget for each period is not fully utilized, the excess amount beyond the limit will also be burned. This design can slow down the growth of token supply during active market periods, providing support for the value of DOT.

3.DOT Coin market performance and future price prediction

Since its market debut in 2020, DOT has undergone sharp bull and bear cycles. Historical data shows that DOT reached an all-time high of $54.98 in November 2021, during the late bull market. At the time, Polkadot had just activated parachain slot functionality, and high expectations for cross-chain ecosystems fueled a multi-fold price surge. However, as the crypto market entered a bear phase, DOT dropped significantly, falling to around $2.70, close to its early 2020 launch price.

Source:CoinGecko data
Throughout 2023’s market downturn, DOT consolidated within the $4–$7 range. In early 2024, with slight macroeconomic recovery and improving market sentiment, DOT briefly rose to the $6–$7 range in January. However, the overall trend remained weak. As of April 21, 2025, DOT trades at approximately $3.906, down over 90% from its peak, with a market cap of around $5.9 billion, ranking between 12th and 15th among crypto assets by market cap.

This price level is near historical lows and reflects cautious investor sentiment regarding Polkadot’s current valuation. Factors influencing DOT’s price include: macroeconomic tightening leading to risk asset sell-offs, 2022’s cascading crypto crises (e.g., Luna collapse, exchange failures), and the Polkadot ecosystem’s slow conversion of growth into token demand.

This article references multiple forecasts and AI models to project DOT’s future price:

• AI model prediction: According to the cryptocurrency market prediction platform, the model estimates that the average price of DOT in 2025 is around $3.9, with a range between $2.0 and $4.2. This means that in a conservative scenario, the price of DOT may remain stable or experience slight fluctuations. From 2026 to 2030, as the industry environment improves, the model predicts that the price of DOT will gradually rise. This forecast corresponds to a single-digit annual growth rate, which is a relatively conservative growth path. Refer to Gate.io’s previous articlesPolkadot Price Prediction & Forecast for 2025, 2026, 2030 | Gate.io)。

• Market Situation Analysis: Given the high volatility of the cryptocurrency market, users also need to consider the potential performance of DOT in different scenarios. In an optimistic scenario, if the global liquidity environment loosens from 2024 to 2025 and the cryptocurrency market restarts a bull market, while at the same time Polkadot 2.0 technology upgrade is implemented, bringing a significant increase in users, then DOT is expected to break the current downturn and recover to a price level of about $10, which is 1/3 to 1/2 of the previous cycle’s peak, and more optimistic forecasts, such as the $10.32 peak value in 2025 given by digital currency research platforms. These forecasts are based on the premise of a overall market recovery and the continued expansion of the Polkadot ecosystem. Reference Gate.io’s previous articles,Learn about the DOT Coin Price Prediction In 2025 In One Article)

On the contrary, in a pessimistic scenario, if the macroeconomy falls into recession, the Fed’s monetary policy continues to tighten, or regulatory crackdown continues to depress the crypto market, then DOT may further test support levels along with the overall market. Referring to Gate.io’s previous articles, Polkadot Price Prediction 2025: Tech-Driven Ecosystem Expansion …)。

• Value support factors: Intrinsic factors supporting the future price of DOT, including the demand for parachain slot renewal, the attraction of staking rewards to investors, the continuous generation of actual transaction fees and cross-chain message usage scenarios in the Polkadot ecosystem, etc. If the regulatory authorities clarify that DOT is not a security in the future, more compliant funds may be allocated to DOT, increasing its market demand. In addition, the Polkadot treasury currently holds a considerable amount of DOT.As of the end of 2024, approximately 382,845 DOT are retained.These funds will be used for ecosystem development and community construction, and as long as they are well utilized, they will also indirectly enhance the intrinsic value of DOT.

From a multi-party perspective, the AI prediction model gives a relatively neutral long-term path: DOT prices will climb slowly in the next few years, but the increase will not be drastic. For medium- to long-term investors, Polkadot’s solid technology and expanding ecosystem may bring steady value growth to DOT; Short-term speculators, on the other hand, need to note that the impact of market sentiment on DOT is still significant. In the next crypto market upcycle, DOT has the opportunity to get out of the trough and achieve a revaluation of value. But whether the crazy gains of the last bull market can be repeated will depend on whether the Polkadot ecosystem can produce “phenomenal” applications and strong network effects.

Source:Gate.io Spot Trading Area

4. Conclusion

As a pioneer of multi-chain connectivity, Polkadot has laid a strong technical foundation over the past few years. Its relay chain + parachain architecture has attracted a diverse array of projects, jointly building a highly scalable and interoperable “network of networks.” DOT, the native token, serves as the core linkage within this system, representing the needs of network security, governance, and ecosystem prosperity.

From a project perspective, Polkadot benefits from a reputable team and clear vision; architecturally, it balances blockchain interoperability and independence, offering rare capabilities in shared security and cross-chain communication; in terms of ecosystem growth, the ongoing development of parachain projects and active developer community provide a solid base for DOT’s future value.

A rational evaluation of its risks and opportunities, along with tailored investment strategies, is essential for navigating future market dynamics. For timely updates on DOT and other digital assets, download the Gate.io App for a one-stop experience in market insights and trading. Also, explore the Gate Learn education channel to gain deeper blockchain knowledge and stay ahead of the curve in your investment decision-making.