DeFi has come a long way. With only one or two blockchains initially, DeFi, by the end of Q1 2022, has more than 1,050 public blockchains. One of the newest addition is Polkadot.
Polkadot is a blockchain protocol that enables different blockchains to run independently within one network, protected by a shared security system.
Polkadot (DOT) has become a rising star within the crypto industry, with its price seeing significant upwards momentum as the blockchain incurs growing utility.
Its massive surge seen throughout the past few weeks has allowed it to climb the ranks with regards to market cap, with it now being the tenth largest cryptocurrency – falling just behind Bitcoin SV and Cardano.
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Let’s Decode Polkadot!
Remember CryptoKitties? A fairly simple dApp that brought the whole Ethereum network to its knees, with up to a sixfold increase in the pending transactions, back in the day! Give that thought for a second – Ethereum, a general-purpose blockchain that can run programs getting choked by a single dApp, let alone the gazillion smart contracts deployed on-chain!
Polkadot came in to save the day! It is commonly referred to as a meta-protocol, or a Layer-0 protocol, upon which you can build and launch your protocol.
Analysts are observing DOT still appearing to be incredibly strong from a technical perspective, with it currently forming a strong base of support that could allow it to post its next leg higher. Polkadot is developed to evoke digital sovereignty and agency from powerful third parties, along with providing a strong foundation for new business models, services, and organizations to take shape and thrive in the future.
$DOT- Fueling the Polkadot Network
Polkadot’s native token called DOT is used for mainly three tasks on the platform:
Governance implies that DOT token holders can directly participate in the governance process by voting, which includes managing events such as protocol upgrades and fixes. Unlike other projects, DOT token holders have complete control over the protocol.
Polkadot has also introduced a new form of voting that includes time-lock, where token holders can ‘lock’ their tokens during the voting process. This facilitates users to show skin in the game and seriousness in their vote and discourages large token holders from manipulating the voting process. The minimum time-lock period is 4 weeks.
DOT can be used for staking on the platform. Every transaction goes through the relay chain and needs to be validated. Good actors are rewarded by this mechanism whilst bad actors will lose their stake in the network, ensuring network security.
This role of validation is performed by validators, who stake their DOTs and earn up to 12% APY.
Bonding here is nothing more than a revamped concept of ICOs bought into the market. Users can earn rewards by bonding their assets. New parachains are added by bonding tokens. Outdated or non-useful parachains are removed by removing bonded tokens. This is a form of proof of stake.
5 Most Promising Projects on Polkadot
More than 100 projects have been or are currently being built for the Polkadot ecosystem, stretching from core technical infrastructure to applications for DeFi, privacy-oriented data and digital identity systems, social networking, IoT, gaming, robotics, and supply chain logistics.
We have picked our Top 5! Take a look.
Pick 1: Kusama
Kusama is built using Substrate with nearly the same codebase and industry-leading multichain infrastructure as its cousin, Polkadot.
Kusama is a network built as a risk-taking, fast-moving ‘canary in the coal mine’ for Polkadot. It’s a living platform built for change agents to take back control, spark innovation and disrupt the status quo.
Both networks also share key innovations like on-chain governance, hot-swappable runtimes for forkless, on-chain upgrades, and Cross-Chain Message Passing (XCMP) for interoperability. Governance on both Polkadot and Kusama is designed to be decentralized and permissionless, giving a say in how the network is run to everyone who owns the native token (DOT for Polkadot, KSM for Kusama).
Pick 2: ChainX
ChainX is one of the earliest launched projects in the Polkadot ecosystem. Being committed to the research and application of Bitcoin layer 2 expansion, digital asset gateway, and Polkadot second-layer relay chain, it realizes cross-chain asset exchange, leading the new direction of Bitcoin Cross-Defi.
It has a highly compatible system architecture with Polkadot. ChainX 2.0 combines and coordinates various functions like a hybrid PoS consensus, on-chain council governance, WASM virtual machine, native execution of smart contracts, efficient light-client protocol, off-chain workers, and multi-signatures.
Pick 3: Acala
Acala is an Ethereum-compatible framework for fintech applications to use smart contracts or built-in protocols for a wide range of cross-chain use cases and robust security.
It comes with the three main built-in financial primitives:
- Decentralized Stablecoin
- DeX with unified liquidity provisioning
- Staking Derivatives
1 Acala Dollar = 1 US Dollar
Pick 4: EdgeWare
Edgeware is a smart contract chain with a community-managed treasury, decentralized proposal system, and network of DAOs. Edgeware enables Ethereum developers to deploy Solidity/EVM smart contracts with few or no changes, while new developers can get started with Rust and WebAssembly.
Edgeware helps people more easily connect, share skills, and receive funding for new projects as part of the existing ecosystem. It allows builders and organizers to find a place in one of Edgeware’s many collectives funded by the on-chain treasury to expand the network and explore new ideas.
Pick 5: ChainLink
Chainlink is now integrated directly as a pallet with the Polkadot blockchain, giving teams in the Polkadot ecosystem—specifically teams building parachains based on the Substrate framework—a straightforward approach for accessing high-quality external market data.
Chainlink’s decentralized oracle network provides reliable, tamper-proof inputs and outputs for complex smart contracts on any blockchain.
Chainlink Price Feeds will allow smart contract applications across the Polkadot ecosystem to access accurate, up-to-date, and tamper-proof price reference data for powering new products and markets.
* Disclaimer: The projects mentioned above are picked as per our views only. In no way do we mean to say these are the only ones. There are over a hundred projects on the Polkadot blockchain, you might find your favorite on it too!
Polkadot offers a new-gen platform to users upon which can be built a wide variety of applications, including NFT auction marketplaces, open lending platforms, cross-chain DEX, insurance protocols, and prediction markets. It has a lot to offer and a long way to go.
The Polkadot ecosystem is getting better and we can expect a lot of new and exciting projects in the coming future.
Is it the Ethereum killer though? We’ll let you decide on that one!
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