- Moving into 2021, Polkadot is one of the few new cryptocurrency projects which appears to be on an upward trajectory.
- Polkadot had a very productive year in 2020. Will 2021 shape up to be just as good?
Polkadot (DOT) surged 62% during December, as the highly touted “Ethereum Killer” moved into 6th spot in the cryptocurrency market cap rankings, ahead of BCH. The surge builds upon Polkadot’s impressive growth since the DOT token officially commenced trading in August 2020. On December 30, Polkadot founder Gavin Wood published his retrospective on the year, and it crammed in an impressive reel of highlights. Here are just a few of them.
Polkadot surges into 2021
2020 has been a busy year for the Polkadot community, one in which it cemented a partnership with leading blockchain oracle project, Chainlink. On December 3, Polkadot held its first ever live event in Polkadot Decoded, where leading figures in the blockchain space gathered to discuss Polkadot’s long-term mission statement and its range of upcoming features.
Among those features are a Polkadot-based wrapped version of Bitcoin, dubbed PolkaBTC, which will allow Polkadot users to engage with the burgeoning decentralized finance (defi) movement without leaving the familiarity of the Polkadot network. The need for a defi-compatible version of Bitcoin is exemplified by the number of Bitcoin which is already wrapped up on other blockchains, such as Ethereum. According to WBTC.Network, the combined value of all BTC wrapped up on Ethereum now exceeds $3 billion – a figure which has more than doubled since October alone. In fact, Wrapped Bitcoin (WBTC) now holds the 13th largest market cap, such is the desire of bitcoiners to interact with defi.
One chain to connect them all
Polkadot’s reputation as a possible “Ethereum Killer” stems from its aim to create a heterogeneous blockchain network, enabled by sharding, which allows creators to tailor their own chain for their own specific needs.
Official documentation from the Polkadot team states clearly that they do not believe the crypto space will distill down to one single blockchain project. For this reason, Polkadot is attempting to become the blockchain which can connect with all other blockchains, effectively making it a one-stop-shop for cryptocurrency users. As stated in the Polkadot lightpaper, the project aims to gather all manner of blockchain services under one roof:
“Polkadot is built to connect private and consortium chains, public and permissionless networks, oracles, and future technologies that are yet to be created.” A taste of what this future could look like was hinted at when DENA, Germany’s energy innovation organization, revealed it is building a decentralized database in conjunction with Energy Web. The blockchain framework it’s using? Substrate, with the support of Parity Technologies, as crypto YouTuber Ivan on Tech revealed to his 269K followers, before venturing how, in the near future, everyone will be a prosumer, selling their excess energy back to the grid.
Projects building on Polkadot network
In early December, the Polkadot network gained a new addition to its ranks with the integration of Ampleforth (AMPL). Ampleforth is a unique cryptocurrency project which burst onto the scene in the summer of 2020, and uses an algorithmically adjusted elastic supply mechanism. The AMPL supply is automatically adjusted whenever there is a price fluctuation. Holders of the token retain a share of the overall supply, as opposed to a fixed number of tokens as is the case with other cryptocurrencies. The long-term goal is to balance the AMPL price at a stable $1, in order to create a unit of currency which is immune to wider market fluctuations.
Early testing conducted on the Polkadot testnet back in April 2020 threw up some very interesting results in terms of transaction capacity and speed. According to Polkadot creator Dr. Gavin Wood – who was also a co-founder of the Ethereum project – Polkadot testing resulted in a steady rate of 1,000 transitions per second. Compare this to Ethereum’s 15 transactions per second, or Bitcoin’s five, and the significance of this figure becomes obvious. Wood wrote:
Latest benchmarks indicate @polkadotnetwork, even without parachains or multithreading, will still push a sustained rate in excess of 1,000 tx/s. With parachains and multithreading then maybe 1,000,000 tx/s, 100% secure, upgradable and decentralised.
As noted by Wood, this test was done without the addition of parachains (Polkadot sidechains) or multithreading. With the addition of more projects building on Polka’s parachains, that figure could multiply exponentially.
“Over 2020, more than 200 projects have been funded between the grants programs and treasuries,” wrote Wood in his year-end retrospective. “Since launching with governance a few short months ago, Polkadot’s treasury has funded 23 proposals to a total of 118,465.63 DOT. In Kusama’s year or so of being live, its treasury meanwhile has funded 40 proposals awarding a total of 62,222.92 KSM. This is all in addition to the $4.1m granted to 145 proposals done as part of Web3 Foundation’s ongoing grants program.”
Where next for Polkadot?
Moving into 2021, Polkadot is one of the few new cryptocurrency projects which appears to be on an upward trajectory. Its immediate landing into the market cap top ten is a feat not witnessed since the arrival of Chainlink (LINK) as a top ten project.
One particularly notable metric which bodes well for Polkadot is the rate at which it has attracted developers. As reported in December, while Ethereum still retains the largest share of developers in the blockchain space, the initial adoption of Polkadot has occurred at an even faster rate than Ethereum, as witnessed by a much steeper early growth curve.
Polkadot is a product of the Web3 Foundation, a Swiss foundation which seeks to construct a new fully interoperable, decentralized and user-friendly internet. With a hive of development now centered around the rapidly expanding Polkadot ecosystem, the stage is set for the interoperable network to enjoy a bumper 2021 that will see new integrations, benchmarks, and applications built upon its Substrate framework.