Polkadot is nascent technology which is just starting to launch after more than 4 years in development. It was designed by Gavid Wood, one of the original developers of Ethereum. It serves to fix a lot of the issues inherent to Ether by improving network transaction speed, permitting interchain communication and improving scalability.
DOT's tokenomics mean that in the event of a major catalyst, liquidity is reduced with more than 65% of the total circulating supply staked and subject to a 28day bonding period
In its simplest form, Polkadot is designed to permit spoke-like “parachains” to communicate with one another via a wheel-like “relay chain.”
Most block chains are constrained by a “walled garden” ecosystem which cannot rapidly, or efficiently, communicate with other blockchains. The ability to provide, secure, fast, blockchain to blockchain communication is a holy grail for crypto developers.
In this case, Polkadot has incorrectly been labeled an “Ethereum-Killer.” In fact, Polkadot complements Ethereum by serving as a level 0 base layer which connects the Ethereum blockchain to the Bitcoin blockchain or to any other blockchain which is connected to the Polkadot ecosystem.
Today, on 5/14/21, Polkadot took their first major step toward launching their final network version (expected in Q2 2021). Creator and developer Gavin Wood announced that the first Polkadot parachain was deployed on the Westend perma-testnet.
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5/14/21 Parachain Deployment on Testnet - coming together!
5/14/21 Parachain Deployment on Testnet - coming together!
The forthcoming Polkadot Dev Day is taking place on 5/19/21 – 5/20/21. An entire afternoon session has been dedicated to discussion the planned parachain auctions and launch. It can reasonably be assumed that the date for the parachain auctions will likely also be mentioned at this event.
Upcoming Polkadot related catalysts include: (https://polkadot.network/launch-roadmap/)
- May 19/20: The next Polkadot Decoded event.
- May 26, 22:30 UTC: Potential dispatch of referendum 21 if passed.
- June 23, 15:00 UTC Substrate Seminar by Bill Laboon.
- Q2 2021: Kusama Parachain release.
- Q2 2021: Polkadot Parachain release.
- Q3 2021: Secure Protected Runtime Execution Enclaves release.
I strongly believe that Polkadot is worth considering for both long- and short-term portfolios. From a long-term hodler’s perspective, the technology inherent to Polkadot has the potential to greatly disrupt Defi as interchain communication can permit it to become a so-called “ecosystem of ecosystems.” Long term price targets support a potential for 4-5x returns over time if the technology launches successfully this year.
In the short term, Polkadot has the potential for good gains secondary to its tokenomics. Specifically, DOT tokens garner 12-12.7% interest when staked. Staking requires a 28 day bonding period. Because of this, as of the day of this writing 5/14/21, 65.1% of all DOT is staked. That leaves limited liquidity (350M) available if a major catalyst occurred….likely leading to a short term price squeeze until additional DOT unstake.
Disclosure: As always, I encourage everyone to do their own due diligence in regards to any crypto investments. I hodl DOT, BTC and ETH in my personal portfolio.
If you’re interested in learning more about Polkadot and its Defi ecosystem, I strongly recommend checking out: https://www.parity.io/defi-on-polkadot-an-ecosystem-overview/
Likewise, two good overviews of the project are available in written form and on You Tube at:
https://medium.com/polkadot-network/polkadot-the-parachain-3808040a769a
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