The New Resource Allocation Mechanism of Polkadot 2.0 and Its Impact on DOT

Recently, Polkadot founder Gavin Wood proposed the concept of Polkadot 2.0 at a conference. This new version will make significant adjustments to the allocation method of the core resource Coretime(, aiming to enhance the flexibility and efficiency of resource distribution.

Major Changes in Polkadot 2.0

) 1. Coretime procurement replaces slot leasing

The most significant change in Polkadot 2.0 is the allocation method of Coretime. Coretime refers to the time required to execute validation and consensus on the Polkadot relay chain, which is the scarcest resource in the network.

In the new version, Coretime will become a liquid, tradable, and accumulable resource used for purchasing or selling block time. The primary market offers two ways to acquire it:

• Bulk Purchase: Coretime is sold at a fixed price every four weeks, suitable for parallel chains with long-term demand for block time.
• Instant Purchase: Pay as you go, prices fluctuate with market conditions, can be used to increase trading throughput or reduce latency.

Entities with excess Coretime can sell it on the secondary market to other demanders, thereby generating revenue. This mechanism makes the allocation of block time more flexible and efficient.

2. From locked positions using slots to payments using Coretime

There are significant differences in the value capture methods of resource usage between Polkadot 1.0 and 2.0.

In version 1.0, after a parachain wins a slot auction, it only needs to lock DOT for a period of time, and the full amount will be returned after expiry, similar to a model where only a deposit is paid without rent.

Version 2.0 sells Coretime directly, where the chain/application pays the corresponding price to obtain usage rights, making it closer to the traditional rental concept. In this model, the chain/application pays for the direct costs.

3. Coretime sales revenue can be redistributed into the national treasury.

In Polkadot 2.0, the proceeds from Coretime sales may flow into the treasury, which will then redistribute them. Under the OpenGov governance mechanism, DOT holders can vote to decide the use of treasury funds.

Possible uses include:

• Fund ecological projects to attract more projects to join.
• Burn part of the DOT to reduce supply, decrease inflation, and even achieve deflation.

The Potential Impact of Polkadot 2.0 on DOT Demand

Polkadot 2.0 may drive the value of DOT through the following ways:

1. Native staking demand: Holders stake DOT to participate in network validation and consensus, earning rewards.
2. Increase voting weight: Holding more DOT can enhance governance voting weight.
3. Purchase Coretime: Pay the Coretime fee directly with DOT.
4. Secondary Market Trading Coretime: Excess Coretime can be sold for profit.
5. Participate in DeFi: DeFi services on the Polkadot network provide more use cases for DOT.
6. Treasury Burn: If holders decide to burn a portion of the treasury funds, it may increase the scarcity of DOT.

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Conclusion

Polkadot 2.0, as a significant upgrade, will change the traditional model of blockchain resource allocation. Coretime's flexible allocation mechanism provides a more efficient operating environment for parachains, threads, and sharding, while bringing new revenue sources to the treasury. These innovations could lead to significant changes and opportunities for the Polkadot network and even the entire blockchain industry.