Polkadot is the brainchild of Dr. Gavin Wood, who is one of the co-founders of Ethereum and the inventor of the Solidity smart contract language. Dr. Wood started working on his idea to “design a sharded version of Ethereum” in mid-2016 and released the first draft of the Polkadot white paper in Oct. 2016.
In 2017, Dr. Wood and Parity’s Peter Czaban founded the Web3 Foundation, a non-profit entity established to support the research and development of Polkadot as well as to oversee its fundraising efforts. The Switzerland-based Web3 Foundation hosted Polkadot’s first token sale in Oct. 2017, using a Spend-All Second Price Dutch Auction to distribute the funds. The sale raised $145 million in just under two weeks, selling 50% of the initial 10 million DOT (old) supply, and the Web3 Foundation chose Parity Technologies to develop Polkadot.
Parity Technologies was founded by Dr. Wood and Jutta Steiner and is known for maintaining the Parity Ethereum client in addition to Substrate, which serves as the development framework for Polkadot.
Parity Wallet hack and subsequent fundraising efforts
Ten days after the token sale ended (Nov. 6, 2017), someone permanently froze the funds in the Parity multisig contract (the second such incident in a matter of months) compromising a little over $90 million worth of ETH equaling around 66% of Polkadot’s token sale proceeds. Polkadot, along with Parity, has petitioned the Ethereum community to consider finding a way to return to the funds, but the situation remains unresolved. Despite the lost funds, Polkadot and Web3 Foundation reported the project still had enough funds to meet its development milestones.
The Web3 Foundation reportedly raised more capital to replenish the lost funds in a 2019 private token sale. In the sale, Polkadot sought to sell 500,000 DOT (old) tokens at a $1.2 billion valuation, pricing the tokens at $120 apiece. Although the foundation did not disclose any details related to the raise, it was reported that the sale closed in June 2019 at a “successful” valuation.
Polkadot technical developments and mainnet rollout
On the technical front, Polkadot started rolling out various proofs-of-concept (PoCs) in May 2018 to test its base relay chain, the relay chain’s support for parachains, and its finality agent (dubbed GRANDPA). PoC 3, released in Jan. 2019, also introduced the Alexander testnet, Polkadot’s first test network. But the project’s first significant release came in Aug. 2019 with the public launch of Kusama. Kusama is an early, unaudited, and unrefined release of Polkadot, designed to serve as a "canary" network for Polkadot to test governance, staking, and sharding under real economic conditions. Polkadot also dedicated 1% of the initial DOT supply to Kusama stakeholders in order to encourage participation.
Polkadot adopted a staged rollout strategy for its mainnet launch. Polkadot's first mainnet chain candidate, Phase 1, launched on $2. It marked the initial step in a multi-stage rollout process detailed in the project's mainnet launch roadmap. This early version of Polkadot operated as Proof-of-Authority (PoA) network managed by six validators belonging to the Web3 Foundation. Eventually, the network transitioned to its proposed Nominated Proof-of-Stake (PoS) system on Jun. 18, 2020 (Phase 2), which enabled DOT owners to claim validators slots and unlocked staking rewards. Phases 3 and 4 in late Jul. 2020 introduced Polkadot's governance functionality and handing control of the protocol over to the community, respectively. The final phase plans to unlock DOT token transfers on Aug. 18, 2020.
The Web3 Foundation continues to use the proceeds from DOT sales to fund ecosystem initiatives and back projects building on Polkadot (see: the $2). The foundation is governed by the Foundation Council, a governing body consisting of Dr. Gavin Wood (President and Founder), Dr. Aeron Buchanan (Vice President), and Reto Trinkler.
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