- Polkadot is the best-performing blockchain in terms of developer activity.
- PolkaBTC is set to go live in February 2021.
What is Polkadot
Polkadot is a blockchain ecosystem created by Ethereum’s co-founder Gavin Wood together with the Technology Director of the Web3 Foundation Peter Czaban and Robert Habermeier, announced a Thiel Fellow in 2018.
Based on a sharded protocol, Polkadot promises a fully functional and user-friendly decentralized web where blockchain networks to operate together seamlessly. The native token of the project, DOT, is used for staking and bonding purposes. Apart from that, it serves as a governance token.
To put it simply, Polkadot aims to become a link that will unite independent blockchains into a global ecosystem. Currently, numerous private and consortium blockchains, public and permissionless networks, oracles operate separately. They are mostly incompatible, and users cannot move data from one chain to another seamlessly and securely. Polkadot is here to solve this issue. It serves as a bridge that connects decentralized applications, services, and institutions.
Polkadot is in vogue among developers
According to the report issued by the research company Outlier Ventures, the number of monthly active developers on Polkadot increased by 44% in the 12 months ended in May, while other protocols experienced a decline in the activity.
Developers’ activity on major networks
Source: Outlier Ventures
Instead of using smart contracts, Polkadot’s developers can create their own blockchains and decide on the transaction fees and speed. This feature attracts projects that cannot be built within the smart contracts infrastructure.
We are going to see a lot of different innovative products that can’t exist in a smart contract environment. Game blockchains, ensuring gamers don’t cheat. Blockchains within consortia. They are difficult to deploy in a smart contract environment, Polkadot’s founder Gavin Wood said in an interview from Berlin (cited by Bloomberg).
This differentiating characteristic allows the project to stand apart from the competitors and work within its niche. According to Dan Morehead, founder of Menlo Park, California-based Pantera Capital Management, Polkadot is currently trading at 10% of Ethereum’s value. Still, it has a good chance of becoming a strong competitor to the second-largest blockchain network.
Bitcoin comes to Polkadot in 2021
The developers of Polkadot blockchain announced that the wrapped Bitcoin would go live on the platform at the beginning of 2021. Notably, Wrapped Bitcoin already exists on the Ehereum blockchain. Currently, over 141k BTC worth over $1.6 billion are circulating in the ETH network.
BTC on ETH
Source: Dune Analytics
PolkaBTC will be based Proof of Concept consensus algorithm. The Alpha testing will be launched in November, while the fully functional mainnet will go live in February 2021.
According to the official press release, the token will be issued by the Interlay team with the financial support from Web3 Foundation. Polkadot’s based Bitcoin parachain will be decentralized and governed by the cryptocurrency community.
Moreover, the new chain is promoted as open and accessible to anyone.
In the spirit of permissionless systems like Bitcoin, anyone can participate in operating the bridge: contrary to other approaches, you do not need permission or any additional token to become a maintainer and start earning fees.
PolkaBTC can remain on Polkadot indefinitely, while the holders can redeem it for Bitcoin at any time.
PolkaBTC’s life cycle
DOT/USD: The technical picture
Polkadot jumped into top-10 coins by market capitalization following redenomination from the original sale. Denomination took place on August 21 and resulted in creating a new DOT, 100x smaller than the old DOT. Basically, the coin price became 100x lower, while the holders’ balance increased proportionally, meaning that their total value position remained unchanged.
At the time of writing, Polkadot (DOT) takes the 8th place in the global cryptocurrency market rating with the current capitalization of $3.45 billion. The token is changing hands at $4, mostly unchanged on a day-to-day basis and down over 7% on a week-to-week basis.
DOT/USD: daily chart
From the technical point of view, DOT/USD is initially supported by $3.7. This area stopped the decline on numerous occasions since the beginning of September. Once it is broken, the sell-off may be extended towards a psychological $3, followed by another technical support of $2.7.
On the upside, the local resistance comes at $4.6. This barrier is reinforced by the short-term moving average on a daily chart. Also, it has been limiting recovery since the end of September. Once it is out of the way, the upside is likely to gain traction with the next focus on $5.5.