Polkadot (DOT) is not giving up its position: will blockchain maintain its place among the crypto
The last quarter of 2023 was positive for the crypto market, as Bitcoin and altcoins showed rapid local growth, and some significant projects regained their leading positions. Polkadot is one of them.
What is Polkadot?
Polkadot is an open blockchain protocol that allows different, even incompatible, blockchains, such as Bitcoin or Ethereum, to be securely combined. In other words, Polkadot is a multichain infrastructure.
Polkadot's decentralized network consists of:
- The underlying or parent blockchain (Relay Chain);
- Parachains — individual chains that function on top of the parent Relay Chain;
- Parathreads — networks similar to parachains but with limited runtime;
- Bridge Chains — networks that connect other blockchains.
The Polkadot blockchain platform was launched in May 2020 with the support of the Web3 Foundation, a non-profit organization.
Polkadot indicators
For the last 4 months, the project has been showing positive dynamics amid the general upswing in the crypto market. Since October 2023, the capitalization of Polkadot has grown by more than 92% from $4.52 to $8.7 billion, and the native cryptocurrency of this blockchain DOT has risen from the 14th to the 12th line of the CoinMarketCap ranking.
The price of the DOT cryptocurrency rose nearly 88% from $3.65 to $6.86 over the same period, and has increased 18% over the past year, given that the exchange rate mostly declined during the first three quarters of 2023.
The fourth quarter of 2023 also saw a surge in messaging transactions on the Polkadot network: while January through September averaged about 17,000 such transactions per month, by December the number had already reached nearly 450,000.
Polkadot founder Robert Habermeier attributes this surge in activity to the growing popularity of blockchain inscriptions, also called "ordinals". As Habermeier noted, the Relay Chain's parent blockchain recorded a new all-time high in the number of transactions on Dec. 21, reaching 1 million.
After reaching a local peak at the end of December 2023, the price of the DOT cryptocurrency began to correct, and has since declined by about 34% amid a general correction in the crypto market.
However, an analysis of Token Terminal's data showed that the number of daily active users on the Polkadot network is on the rise, with the figure rising 69% to 10.9 thousand over the past month. According to Staking Rewards, the number of wallets with staked DOT tokens has grown by 183% to 109.5 thousand over the past 90 days, and the ratio of cryptocurrencies in staking to total issuance has increased by 6.7% to 54.9%. This is despite the fact that in October 2023 the so-called "great unlocking" took place — the unlocking of tokens that had been blocked since 2021 in the Acala, Moonbeam, Parallel, Astar and Clover networks during the first parachain auctions.
The Dotlake service also recorded a strong spike in transactions related to transfers, swaps (exchanges on the blockchain) and staking. The number of daily transactions in the Polkadot network often exceeded 10 million.
Why is Polkadot growing, and will the project continue the trend in 2024?
Polkadot is one of the most advanced blockchain projects in terms of technology, with more than 2,000 developers working on it every month. At the same time, there is a growing trend of developers of decentralized projects and Web3 applications (dApps) being active in the Polkadot ecosystem.
In addition, the project is supported by significant funds and partners such as:
- Pantera Capital,
- HashKey Capital,
- 8 Decimal Capital,
- Fabric Ventures,
- IOSG,
- Three Arrows Capital (3AC) and others.
Among the developers of Polkadot is Ethereum co-founder Gavin Wood. The project has raised over $510 million, $327 million of which was raised through public token sales (token sales).
In 2024, users expect to launch additional para chains that will increase the functionality of the Polkadot network and possibly attract even more new users, investors, and projects to the ecosystem. Their number continues to grow and currently stands at 196.
Closer integration with DeFi and NFT is also expected. Despite a developed ecosystem that touches many blockchains, Polkadot is hardly integrated into well-known DeFi protocols such as Uniswap, Aave, OpenSea, etc. The reason is the lack of compatibility with the Ethereum Virtual Machine (EVM). Integrations will drive even more growth in the Polkadot ecosystem.
For example, in 2023, native USDT and USDC stablecoins appeared on the Polkadot network, contributing more than $250 million to the blockchain. The launch of tokens in the Polkadot Asset Hub will be able to attract additional attention to the project.
In addition, some well-known projects in the blockchain industry have announced plans to launch their parachains on the Polkadot network. These include:
- Agrotoken — the first global infrastructure for issuing tokenized agricultural commodities and "farm" stablecoins;
- Snowbridge — a cross-chain bridge connecting Polkadot and Ethereum blockchains;
- Logion is an innovative blockchain platform for converting digital assets into legally authenticated tokens using a unique "Proof of Law" algorithm.
Given the trend, Polkadot has every chance to maintain its position in the crypto market and return to the top ten blockchains.
