Polkadot is one of the most exciting projects in the crypto world, with its own token skyrocketing. The DOT’s total market value reached 5.4 billion U.S. dollars, overtaking EOS, BCH, LINK, and other currencies to reach the sixth position among all digital currencies. Meanwhile, KLP, KSM, and PCX - all of them Polkadot ecological projects - have increased by 330%, 166%, and 56% respectively.
What is Polkadot?
Polkadot is a scalable multi-chain system developed by the Parity and Web3 Foundation led by Gavin Wood, who has himself defined his project as a “network of networks”. In other words, a platform for blockchain innovators that can be used to create new businesses and integrate them into a system.
Which is exactly what has happened, with various startups tapping into its potential. "Missing Ethereum in 2014 is a stain on our investment career. Fortunately, after doing the Polkadot ecological track for two years, I finally got a boost," said the founder of a blockchain fund.
Another Polkadot investor said that all public chains can bridge Polkadot with the DOT playing the role of DAO governance, and all ecological assets can be DeFi.
The next EOS?
It appears that the Polkadot network module is mainly composed of three parts: Relay chain, Parachain and Bridgechain. It can transmit data to all blockchains, allowing for the circulation of assets and data between each chain.
Cross-chain technology was controversial before Polkadot, but right now the Polkadot ecosystem has more than one hundred applications/subjects, covering cryptocurrency wallets, verifiers, forums, browsers, and various projects based on Substrade, such as privacy, bridging, DeFi, smart contracts, etc.
Some see similarities between Polkadot and EOS. Indeed, they both have claimed they want to surpass ETH, and create an “Internet 3.0”. Plus, they both need the support of nodes/parallel public chains.
But in reality, Polkadot and EOS are different in terms of ecological construction and support. Two years after the EOS mainnet was launched, Block.one, the development company behind it, had used US$1.7 million to fund a total of 34 projects. In contrast, Polkadot Web 3 Foundation had funded 129 projects with a total amount of US$6.45 million even before its mainnet was launched. Facing a prolonged downturn of EOS, many investors have switched to DOT.
Can Polkadot surpass Ethereum?
"One-click to issue coins" is the slogan of Ethereum supporters. Polkadot fans have a more powerful one: "one-click to issue chain".
In the eyes of experts, the difference between Polkadot and Ethereum mainly comes down to on-chain governance. Polkadot reacts quickly and upgrades quickly. Any new technology and cryptography can be added to the DOT chain. (This requires the community to vote in order to implement.)
On Ethereum, the creation and submission of EIP (Ehereum Improvement Proposal) is open to everyone and then handed over to the core development team for review and voting. However, Ethereum lacks a promotion mechanism, resulting in low efficiency.
With Polkadot, the development of the network is instead determined by DOT holders. A management group composed of active token holders and a board of directors will make decisions about network upgrades and vote.
Compared to Ethereum, which has almost no threshold, developers must stake a certain amount of DOT. Projects that require a high degree of stability need to be involved in the parachain, and for some verification projects with low transaction volume and parallel channels can be used.
The resources of the Polkadot network are limited, and the number of parachain slots is also limited. In the first year of Polkadot's main network operation, the number of slots in the parachain will increase from about 5 to 50, and then to 200.
If one looks at the data on the chain, Polkadot is still a long way from Ethereum. Ethereum's daily active accounts are around 600,000, Polkadot's daily active accounts are around 12,000. Furthermore, Polkadot's market value of $5.6 billion is a mere 13% of Ethereum ($43.2 billion).