Polkadot: Can it shake the throne of Ethereum and become the "king of cross-chains" in the future of blockchain?
The current leader in the encryption market is still Ethereum. With more than 4,000 decentralized applications (DApps) and a stable smart contract ecosystem, it firmly ranks as the world's largest blockchain platform. However, Polkadot, as a new generation of public chain projects, is rising rapidly with its unique cross-chain technology and innovative ecology, and is known as the "Ethereum killer". Can Polkadot really change the situation? Let’s dig into it.
DOT coin: the heart of Polkadot
DOT currency is the native token of the Polkadot network. There is no upper limit on the total issuance, and the current circulation is about 1.2 billion. DOT's functions cover network governance, parachain slot bidding, and protocol staking.
Early price and skyrocketing records: DOT’s price was only $0.3 during the crowdfunding stage, and then soared to $55 in the 2021 bull market.
Current situation and challenges: The current price is around US$5. Although it has fallen back from its high point, there are still a wide range of application scenarios to support its value.
What is Polkadot: a "multi-chain network" of technological innovation
Polkadot is an ecological network that supports the collaborative work of multiple blockchains and is committed to solving the pain points of the "single-chain island effect" of traditional blockchains. This means that different blockchains such as Bitcoin and Ethereum can seamlessly interoperate through Polkadot.
Core technology innovation
Relay Chain: Polkadot’s main chain, responsible for confirming transactions and ensuring the security of the overall network.
Parachain: A side chain that is tailored to specific needs and has independent governance and functions but can interact seamlessly with the relay chain. Currently only 100 parachain slots are supported, which is a scarcity issue.
Bridges: Connect external networks (such as Ethereum, Bitcoin) to the Polkadot ecosystem to expand cross-chain communication capabilities.
Consensus mechanism: NPoS (Nominated Proof of Stake)
Polkadot uses Nominated Proof-of-Stake (NPoS) to divide participants into:
Nominators: Select trustworthy validators.
Validators: Responsible for block verification.
Collators: Collate transaction data on parallel chains.
Fishermen: Monitor and report online misconduct.
Ecosystem and market position
The Web3 Foundation behind Polkadot was founded by Ethereum co-founder Gavin Wood, who is also the inventor of the Solidity smart contract language. Based on the Web3 concept, Polkadot has attracted multiple projects to participate in the parachain auction, including:
Acala (Decentralized Financial Center on Polkadot)
Moonbeam (parachain supporting Ethereum-compatible smart contracts)
Polkadot 2.0: Future Planning
Polkadot is promoting the popularization of the "XCM cross-chain communication protocol" to further improve resource interoperability efficiency and network throughput. This technology will attract more developers and capital to join, injecting strong power into the ecosystem.
Polkadot vs. Ethereum: Differences and Challenges
Advantages
Transaction efficiency: Polkadot greatly improves transaction speed and reduces costs through the parallel chain architecture and NPoS mechanism.
Scalability: Supports the simultaneous operation of multiple chains and can meet diverse business needs.
Cross-chain capabilities: Polkadot allows interoperability between chains, which is currently difficult to achieve in Ethereum.
Disadvantages
Insufficient network effects: Compared with Ethereum’s more than 4,000 DApps, the number of Polkadot’s ecological applications is obviously insufficient.
Market acceptance: Ethereum has higher recognition and market value in the capital market, and Polkadot will still be difficult to shake its position in the short term.
Outlook for the future of DOT currency
short term influencing factors
Parachain auction progress: The entry of more high-quality projects will directly drive increased demand.
Macroeconomic environment: If the Federal Reserve further relaxes monetary policy, funds are expected to flow back into the risky asset market, and DOT is highly likely to benefit.
long term potential
Technological innovation: Polkadot takes cross-chain as its core selling point and has high technical barriers.
Web3 trend: With the popularization of the Web3 concept, Polkadot will occupy an important position in the construction of decentralized Internet.
Polkadot’s “Road to the Future”
Whether Polkadot will surpass Ethereum depends on multiple factors, including the speed of its ecosystem construction, market acceptance, and the development direction of the overall blockchain industry. Currently, Polkadot has significant technical advantages, but it needs to accelerate the expansion of application scenarios and user groups. If you are a long-term investor, DOT currency deserves continued attention, while if you are a short-term trader, you need to carefully seize speculative opportunities in market fluctuations.
Who does the future belong to? Let’s wait and see!
Uncle Qian has been deeply involved in the cryptocurrency circle for many years, and I know very well how precious and ever-changing market opportunities are. In order to help everyone seize every opportunity in the ever-changing market, Uncle Qian will continue to provide you with the latest market analysis and professional trading strategies.
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