What is Polkadot?
Summary
Polkadot connects purpose-built blockchains so they can share security and exchange messages. DOT supports the network through staking and governance; an asset issued by one connected chain is separate from DOT.
- Polkadot lets specialised chains exchange information under shared security.
- DOT is used for staking and governance, not as a synonym for every asset on a connected chain.
- Virtune Staked Polkadot ETP holds DOT as collateral and manages staking within the product.
Why connect different blockchains?
Polkadot is built for blockchains with different purposes to work within one larger network. A payments chain and a chain serving another app can follow different rules yet exchange messages and use shared security1. For a user, the connection becomes useful when one service can actually receive an asset or information from the other.
Unlike Avalanche’s dedicated L1s, Polkadot’s connected chains draw on shared security. These connected chains are often called parachains. They differ from a single general-purpose chain: each can be designed for its own task while Polkadot coordinates how they connect. An asset issued by an app on one parachain is not automatically DOT.
What does DOT do?
DOT is Polkadot's native crypto-asset. It can be used in staking and network governance1. Staked DOT supports validators that help confirm blocks. Rewards vary, and slashing can reduce staked DOT2 if a validator breaks network rules.
The network becomes more useful when services on different chains can work together. DOT's staking and governance roles explain why the asset exists, but activity on an individual app does not by itself establish DOT's price.
Holding DOT or a Polkadot ETP
Direct DOT ownership allows participation in network functions and requires a wallet or custodian. Virtune Staked Polkadot ETP instead gives DOT price exposure through an exchange-traded security. It is physically backed with DOT held as collateral3; the investor owns the security, not DOT in a personal wallet.
Staking takes place within the product. Its Final Terms say the issuer and staking provider may receive a commission of at most 50% of rewards4 earned, if rewards arise. The remainder is added within the ETP, rather than paid as interest to an account.
The product is listed on Nasdaq Stockholm.
Costs when buying Virtune Staked Polkadot ETP
| Cost | Charged by | When |
|---|---|---|
| Brokerage commission | Broker | On every purchase and sale |
| Difference between bid and ask price | Market | On every trade |
| Management fee, 1.49% per year | Issuer | Ongoing, from the product's value |
| Currency conversion | Broker, if applicable | If the product trades in another currency |
Risks to understand
DOT's price can move sharply regardless of whether a particular app succeeds. Staking rewards may vary, and validator misconduct can cause slashing. Direct holding brings wallet or custodian risks; the ETP adds issuer, custody and exchange-trading risks. Physical backing does not prevent a price loss. Crypto-assets can lose substantial value5.
Related product
Sources
- Polkadot: Polkadot protocol overview
- Polkadot: Offenses and slashes
- Virtune Investor Relations: Collateralization Methodology
- Virtune: Final Terms: Virtune Staked Polkadot ETP, 2 April 2026
- EBA, EIOPA and ESMA (the European Supervisory Authorities): EU financial regulators warn consumers on the risks of crypto-assets
