- Polkadot is huge in China among devs and retail investors.
- The community support, especially from the Web3 Foundation, is particularly strong.
- To some extent, it’s following a similar trajectory to EOS.
It’s not a secret that in China,resembles a newer, better , the public blockchain that swept the Chinese crypto ecosystem in 2018.
Both projects have inspiring foreign—in particular Caucasian leaders—who frequent China’s blockchain conferences and cocktail parties. (I don’t want to sound racist but the fact that they are white plays a huge role. Some Chinese ponzi scams have actually hired white actors during their roadshows to fool retail buyers.)
EOS and Polkadot are backed by Chinese capitalists, who spread the Ethereum-killer narrative whenever they can on crypto Wechat. These capitalists, especially exchanges such as Binance, Huobi, and MXC, come with a war chest of funds to lure entrepreneurs to the Polkadot ecosystem. Both projects have attracted strong interest from Chinese retailers but somehow are far lesser-known abroad.
Despite the two projects’ perceived similarities, Polkadot has developed its own narrative and community. This week’s da bing examines the rise of Polkadot and how that reflects the state of crypto in China.
It takes more than a day to build Rome
Obviously, Polkadot, whose selling point as a blockchain of blockchains, is big everywhere right now, having recently flipped XRP to become the fourth-largest cryptocurrency by market cap.
No project can win China without spending time and money on blockchain conferences and roadshows. And Polkadot perfected that game. Not only is its founder, Gavin Wood, a semi-resident in the Shanghai area, but he has also established a community of vocal influencers, investors, developers, marketers, and speculators. They believe in Polkadot’s technological vision, its monetary vision, or both.
Perhaps more importantly, Polkadot has gotten many developers to abandon Ethereum, which Wood co-founded, and build on its blockchain instead. A report from Outlier Ventures shows that Polkadot saw a 44% increase in monthly active developers in the 12 months ended in May 2020, while Bitcoin and Ethereum saw mild decline.
Chinese developers are particularly active in the Polkadot community. Based on Web3’s recent announcement, among its 200 grant recipients, close to 20% of recipients come from China.
For example, Marvin Tong, founder, and CEO of Phala Network, a Substrate-based confidential smart contract blockchain, told me that in his original quest to bring privacy to the blockchain world, he examined EOS, Ethereum Layer2, Cosmos, and Polkadot.
“We chose Polkadot instead because we believe that its technology is the most advanced, and I think we made the right decision. More importantly, Substrate is an important tool. It allows us to reduce repetitive blockchain development work,” Tong told me. (Substrate is a framework that allows devs to build blockchains.)
It’s too early to say whether Polkadot is more advanced than other blockchains. Data shows that at its peak, Polkadot processed 12,619 transactions in a day, which, compared to Ethereum’s average of 1.1 million per day, indicates that the technology race is not over yet. (Indeed, even in January 2017, when Ether’s price was roughly $10, the network still had an average of 50,000 transactions per day—more than four times higher than Polkadot’s best day thus far.)
But in China at least, there’s something else beyond technology that differentiates Polkadot. “The Web3 Foundation, Parity and Gavin are very powerful together,” Tong told me. “No other foundations can be as generous and strategic when selecting grant recipients. They are also very supportive in marketing our projects.”
This sentiment of being taken care of hits a home run.
After all, entrepreneurs require not only initial capital, but also attention and cultivation. Ethereum, and many other blockchains, have taken a neutral but distanced approach to the Chinese market, partly due to the language barrier, and partly due to a lack of understanding. Polkadot manages to penetrate the Chinese market like a well-oiled marketing machine; it also shows that it cares.
Cynics could argue that this “care” stems from a desire to shill its token. Perhaps. But given that the crypto world is built on “consensus,” anything that can get people to believe in one narrative is a win.
Missed DeFi, gotta catch the $DOT
Polkadot also fills a narrative vacancy. China was late to the DeFi yield farming festival last summer. The country only woke up in September, shocked by the unstoppable force of the degens’ 5-digit APY farming, wondering “what’s the next hot thing?”
Chinese retailers move into Polkadot satisfies their FOMO while providing some comfort.
First, it has a legit founder, who is portrayed as the real developer behind Ethereum. Wood’s narrative of Ethereum-as-a-toy versus Polkdadot-as-the-real-thing resonates with many in China. After all, who there would not choose a senior engineer who has decades of programming experience over a 26-year-old “kid?”
Second, Polkadot adopted an auction game that’s similar to EOS’s, in which both projects ask investors to stake tokens to gain influence. For EOS, users stake tokens to become a supernode; for Polkadot, users stake $DOT to win a parachain.
The Chinese crypto circle already went through a wild EOS supernode race in 2018, so running another one in 2021 sounds, well, just fine. The winning strategy of such a game is to collect enough capital so your node or parachain gets the final seat. How to collect capital? Good old marketing and community shilling. These are familiar tactics that Chinese capitalists can play with their eyes closed.
And lastly, DeFi happened. As Ethereum embarks on a journey to find its true product-market-fit, Polkadot benefits from this narrative win as well, because it can simply claim that DeFi works better in its ecosystem rather than on the clogged Ethereum network. In fact, Binance established a $10 million fund to attract developers to solely build DeFi projects around the Polkadot ecosystem. Two birds, one stone.
Chinese home-grown projects such as Acala also managed to raise capital from known investors even though it’s just building Polkadot’s version of lending and DEX products. If Ethereum DeFi continues to innovate, Polkadot can sustain its DeFi ecosystem for some time, too.
Game is still on
The rise of Polkadot in China should come as no surprise. It showcases the perfect playbook of how foreign projects can succeed in China: iconic founder, relentless marketing, and a receptive audience awaiting the next crypto narrative.
But let’s not forget one thing: it’s all about the community because the community builds consensus. Polkadot has built a reputable consensus in China as the most credible Ethereum wanna-be. That narrative has been strengthened by international players’ increasing interest from the likes of investors such as Polychain, which announced a Polkadot focused fund in October, 2019.
However, can it escape the same rise and fall fate as the other Ethereum-wanna-be, EOS? It’s still early days and some Polkadot projects, such as Mantra, a MakerDAO copycat that claims to be the first DeFi project on Polkadot, are getting very bad press in China.
But the game is far from over. As long as the community is still expanding, and entrepreneurs are building on Polkadot, the platform will continue to be the Chinese crypto circle’s darling child.
Crypto Newcomer Explodes After Abrupt Altcoin Listing on Binance
A small-cap altcoin is shooting into the stratosphere after earning support from the global crypto exchange Binance.
The governance token Tranchess (CHESS) officially began trading today.
News of the coin’s listing triggered a 185% rise in the price of the asset – from $2.77 to $7.91. Its value has since settled to $5.09 at time of publishing.
CHESS is listed in Binance’s Innovation Zone, a dedicated trading area where users can buy and sell newer tokens that are likely to have higher volatility and pose a higher risk to traders.
According to Binance Research,
“Tranchess is a yield-enhancing asset tracker with varied risk-return solutions on Binance Smart Chain (BSC), which consists of 3 tranche tokens (QUEEN, BISHOP, and ROOK) and its governance token CHESS.
The platform offers various features including a DEX (Tranchess Swap), money markets (Primary Market), staking, and network governance.”
Tranchess recently raised $1.5 million from Binance Labs, Three Arrows Capital, and other crypto venture firms.
Binance proposes a real-time token burning mechanism to boost BNB value
- Binance has proposed the BEP-95 aimed to burn a percentage of transaction fees as a deflationary measure.
- BEP-95 will occur alongside the quarterly token burn and well after the 100 million token supply is achieved.
Binance Smart Chain (BSC) is taking further steps to incorporate an additional deflationary mechanism to increase token valuation. As announced today, Binance (BNB) is introducing a new Binance Evolution Protocol (BEP) known as BEP-95. The BEP stands out from the network’s occasional token burns since it introduced a real-time burning mechanism.
According to Binance, a fixed portion of gas fees collected by validators in each block will be sent to the burn address. The ratio initially set at 10 percent, is adjustable according to changes proposed by the Binance community. BSC validators get to vote on community proposals, where voting power is based on staked BNB.
For a proposal to be reviewed by the validators, it has to receive a minimum deposit of 2,000 BNB (mainnet). All BNB is returned to holders after the finalization of the voting process. A proposal that wins is that which gathers 50 percent of the total voting power on the mainnet. Binance notes that voted-upon parameters are implemented immediately.
Details of Binance BEP-95 token burning mechanism
BEP-95 became relevant as it speeds up the BNB token burn, and makes the network increasingly decentralized. The BNB supply cap is about 168 million tokens and Binance intends to burn until 100 million tokens remain in circulation. This will take about 5-8 years to complete, according to Binance. The network’s most recent quarterly burn wiped out over 1 million tokens, worth about $639 million, from circulation.
However, the latest update from its blog now says the BEP-95 burn “will continue functioning” even after the above target is attained. With the burn, Binance expects the intrinsic value of the BNB token to increase in tandem with demand. The network notes that validators and delegators may receive fewer tokens from staking, but the “fiat-denominated value of their rewards may increase.” Moreover, BNB has multiple use cases that benefit all holders of the token.
Currently, BEP-95 is in the draft stage and the network is yet to give a specific date for its implementation.
Several blockchains use the crypto-burning mechanism to create token scarcity and a subsequent increase in token value. Ethereum, for instance, uses the EIP-1559 for this purpose.
BNB price action
BNB, the fourth-largest cryptocurrency by market cap, was trading at $494 at press time, according to our data. The token has gained 0.8 percent in the day, and 4.8 percent week-over-week. Similar to other digital assets, BNB has rallied fueled by the Bitcoin-led gains. Crypto investor and YouTuber Lark Davis expects “good things” for the BNB price following its launch of a $1B growth fund.
Google warns crypto investors of Youtube scams amidst high hacking
- Google warn crypto investors to be weary of Youtbe scams.
- Google says hackers impersonate crypto influencers to run scams on YouTube.
- YouTube, a hotbed for crypto scams.
Google’s Threat Analysis Group has warned crypto investors to beware of cryptocurrency scams on Youtube as phishing and impersonation on the video-sharing platform surges.
The Google group noted that a group of hackers is taking over Youtube, rebranding popular Youtube channels of well-known crypto or tech companies. “The channel name, profile picture, and content are all replaced with cryptocurrency branding to impersonate large tech or cryptocurrency exchange firms,” the group said, adding that hackers would live stream videos promising crypto giveaways in exchange for “initial contributions.”
According to the Google group, if these hackers don’t rebrand, they sell pages to the highest bidder depending on how many subscribers the channel has. They note that fake Youtube pages sell anywhere from $3 to $4,000.
The Google group notes that a group of hackers recruited in a Russian-speaking forum are actors behind the campaign.
Crypto investors should be warned as YouTube remains a hotbed for crypto scams
The video-sharing platform so many times has been used as a tool to dupe unsuspecting crypto investors. In December, American crypto exchange Gemini exposed two fake YouTube channels that were pretending to be from the exchange.
“These scam accounts are not our company. We have reported these accounts to YouTube,” Gemini tweeted.
Funny enough, it was not the first time Gemini was being impersonated on Youtube.
Crypto scams have been well perpetrated on the platform that the video giants ban crypto content on its platform. Authorities in the UK also warned young crypto investors with campaigns on Youtube and TikTok against being victims of crypto scams.
The cycle of crypto scams across all platforms is one that may never end. As much as crypto exists, crypto scams would remain a thing. The rise in crypto scams recently has been attributed to the surge in price and adoption of cryptos globally. It is safe to say that with crypto prices going up and more people, corporate organizations adopting cryptos, more scammers will be threatening the burgeoning space.