- Polkadot gears up to achieve scalability without compromising security, makes slow progress compared to Solana, Cardano.
- Nearly $14 billion worth of assets are staked on the Polkadot network as staking rate hits 61.2%.
- The first batch of five parachain auctions have taken place on Kusama through crowd loans from original token holders assuming “no risk.”
Updates in the Polkadot ecosystem suggest it is competing with Ethereum in terms of transaction fees and network security.
Polkadot races to offer lower transaction fees
Polkadot is attempting to tackle the challenge of scaling and centralization simultaneously. Vitalik Buterin describes the “Scalability Trilemma” as the challenge to tackle three properties of a blockchain: scalability, security and decentralization.
According to the Ethereum founder, you can only get two of three. For achieving all three, blockchain networks like Ethereum take assistance from layer-two solutions.
Polkadot is described as “layer 0.” DOT’s blockchain network lets developers build decentralized and secure applications on top of it. Polkadot delivers what Ethereum had promised its community: “sharding.” The DOT blockchain breaks new transactions into shards and processes them in parallel.
At the same time, what is interesting is that instead of retaining control of the properties of these “parallel chains,” DOT auctions them to developers to generate their own rules of operation and transaction processing and offers capabilities that give them further flexibility These chains are referred to as “parachains.”
The core of the DOT network is the “relay chain” or layer 0, and all “Parachains” are plugged into it. The concept of “Layer 0” implies that blockchains like Bitcoin and Ethereum can run as “parachains” and plug into Polkadot’s “relay chain.”
The crypto community has acknowledged DOT’s efforts to surpass Ethereum and offer developers and projects a secure and scalable solution. Nearly $14 billion worth of assets are staked on the DOT network, and the staking rate is currently 61.2%.
Expanding its offerings to developers and projects looking for respite from high gas prices on the Ethereum network, Polkadot’s first batch of five parachains were auctioned recently. Projects were offered the opportunity to buy a parachain by availing a “crowdloan”.
Polkadot has built a mechanism where users assume “no risk” to secure the interests of crypto traders loaning their assets to developers. This ensures that tokens contributed to a crowdloan are used only for their intended purpose of winning a parachain slot. The project itself does not receive the assets and cannot transfer, stake, participate in governance or perform any other functionality using them.
Polkadot is making headway slower compared to “Ethereum killer” competitors Solana and Cardano that enjoy higher social dominance on platforms like Twitter. This is further evident from traders’ and analysts’ bearish outlook on the altcoin’s price trend.
FXStreet analysts expect a further price drop in DOT after the altcoin lost its support.