27 July 2020

DOT will have a new initial supply after token transfers go live in August

Polkadot token holders have voted to change the denomination between DOT and its smallest unit, Plancks, by a factor of 100. Thus, the initial DOT supply will now be 1 billion as opposed to its original 10 million. But similar to a stock split, the supply change won’t impact Polkadot’s pre-market valuation as the dollar amount of each DOT will decrease by 100x. This change will officially occur about 72 hours after DOT transfers unlock at block #1,205,128 (estimated to arrive on Aug. 18).

The vote allowed DOT holders to choose whether to increase the DOT supply by 10x, 100x, 1,000x, or keep it the same. The 100x split received support from roughly 86% of the participating supply (1 DOT per vote), while the next closest option received only 26% (DOT holders were able to select multiple options). What’s remarkable is very few participants (~4%) had any interest in keeping the original denomination.

Why it matters: - The vote saw participation from over 2.86 million DOTs, which amounts to a 32.3% turnout. Of note, the Web3 Foundation and Parity Technologies, who combined might hold as much as 45% of the initial DOT supply, abstained from voting. Therefore, the participation rate might have surpassed the respectable level of 50%. High voter turnouts are critical for on-chain governance systems, as low participation rates give whales more control over the outcome of any proposals. - Despite the respectable turnout, it’s hard to ignore how much of the supply is in the hands of the Web3 Foundation and Parity Technologies. The foundation recently completed another token sale, which should help the breadth of distribution. But these two entities could continue to wield a substantial amount of voting power within the network for the foreseeable future.

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