Is Polkadot Dying Or Delivering the Promise?

In the white paper he published in 2016, Gavin Wood, the principal co-founder of Polkadot, listed five major shortcomings of the blockchains that existed then as follows:

1. Scalability
2. Isolatability
3. Developability
4. Governance and
5. Applicability.

His goal, as explained in the white paper, was to build a decentralized network framework that overcame these failures.

This is how he described the Polkadot project in late 2017 during its public token sale (Initial Coin Offering):

“A substrate of trust-freedom underpinning the economic activity between people, business and organizations; changing the landscape of bureaucracy, trade and industry as much as Google, Facebook, and Wikipedia changed the landscape on which the telephones, libraries and the post office operated.”

The question today is whether Polkadot is failing or living up to its promise. That is what this post explores.

The Polkadot backstory

Even before the launch of the Polkadot mainnet in May 2020, the project had stirred up a lot of excitement. Initially, the network was supposed to support and enable Ethereum to scale and acquire more use cases. In particular, it was intended to facilitate companies and other enterprise users to build their own custom blockchains that could share resources with the Ethereum blockchain through bridge protocols.

Yes, the Polkadot core protocol was supposed to be basically an extension of Ethereum. Polkadot was designed and built by Ethcore, the same company that had built Ethereum.

All of that explains why almost all the principal co-founders of Polkadot were also part of the founding team of Ethereum. Gavin Wood, in particular, is credited with proposing and helping to develop Solidity, the programming language Ethereum and most of its applications are built on. The other co-founders, Robert Habermeier and Peter Czaban, also had worked as Ethereum core developers at Ethcore.

Ethcore later rebranded to Parity Technologies. It dropped the idea of treating Ethereum as a special blockchain in the ecosystem it was constructing. It chose to accommodate it as just one of many public and private blockchains that could connect with the Polkadot networks to build a super network that would eventually become the backbone of the World Wide Web.

Nevertheless, Polkadot retained the goal of being a foundational framework on which new blockchains could easily be built. It takes care of the foundational needs of anyone who wants to build a customized blockchain for their unique needs. That means providing a ready-to-use network, consensus mechanisms, and templates.

With Polkadot, developers no longer need to burn time and resources building blockchain platforms from the ground up. Instead, they can simply download the substrate node template, which is a tiny repository that serves as a skeleton of a blockchain on which to build and customize.

That means they can focus on building the decentralized applications needed to deliver their unique services or experiences to users.

Further, this framework, known as Substrate, also provides the mechanisms through which essentially all blockchains, public and private, share data and process interchain transactions through special bridge protocols.

And what is Kusama, and how does it relate to Polkadot?

Kusama serves as an experimental development environment where dev teams typically innovate and test their applications before deploying them on Polkadot.

Ultimately, the Polkadot network would play a critical role in the transition of human society to Web3, which is more decentralized and gives end users more control over their data.

In 2017, Gavin Wood, Peter Czaban, and Ashley Tyson founded the Web3 Foundation to incentivize and support the building of protocols, applications, and technologies that decentralize the Internet.

The Polkadot ICO

The excitement in the crypto community for the Polkadot project translated into significant financial support.

In October 2017, the project raised $80 million through its first private token sale, alongside an additional $65 million during the concurrent public sale. In two subsequent private sales, the project secured over $100 million. Altogether, Polkadot has successfully raised over $250 million from investors.

As the mainnet launched in May 2020, many investors, developers, and technology enthusiasts believed that this was the project that was going to bring blockchain to the mainstream.

Within the first year, DOT, its native token, was the fourth largest cryptocurrency with a market capitalization of close to $20 billion.

Has Polkadot achieved its goals?

To assess whether Polkadot is on the path to success, we should examine six key areas. Five of these are based on the shortcomings of first-generation blockchains, as outlined by the Polkadot team in the project’s initial white paper.

The sixth is the performance of the DOT token as an asset traded on exchanges. While this has no foundation in the goals that the Polkadot team set for itself, it is important because most people do use the market performance of a blockchain’s native token as a measure of success.

The Market performance of DOT

DOT is the native token of the Polkadot network. It is to the Polkadot network what ETH is to the Ethereum network. The DOT token is used to pay transaction fees, support the consensus mechanism through staking, and serve as a vote in the governance structure.

For many people, especially traders, the value of DOT is the main focus when it comes to determining the success of the Polkadot network. While its performance can be an indicator of how the project is fairing, one should not look at it in isolation. Great projects have their assets, often performing poorly in the marketplace at one point or another. Meanwhile, there are assets that do not represent any meaningful inventions, but they are, at least initially, pumped at the marketplace.

For the most part, DOT, like the majority of assets in the crypto market, is positively correlated with Bitcoin. Meaning, in general terms, its price moves up and down as that of Bitcoin and the rest of the assets in the crypto market.

But over the years, there have been notable unique trends. For example, the coin has moved from being in the top ten on the CoinMarketCap list to being in the top 20. That could, however, be explained by the fact that many new assets have come into the market and not because DOT is performing poorly compared to others.

So, purely on the marketplace performance of DOT, we can say that Polkadot has maintained its value considering the overall market situation.

Scalability

“How much resources are spent globally on processing, bandwidth, and storage for the system to process a single transaction, and how many transactions can be reasonably processed under peak conditions?”~The Polkadot white paper.

Since its inception, the primary selling point of Polkadot has been scalability.

At the time in which the project was conceived, scalability was considered to be the primary hindrance to the adoption of blockchain technology.

The Bitcoin Mempool was clogging, creating delays in confirmation and driving transaction fees through the roof. The same thing happened on the Ethereum network, especially as more decentralized applications were being launched.

It occurred to the Polkadot dev team that the major obstacle standing in the way of scaling blockchains was the canonical arrangement of transactions into a global state that needed to be validated in a synchronized manner.

The Polkadot protocol is designed so that the validation of transactions is separate from their organization on the shared ledger.

Instead of having all transactions forced into a linear arrangement, which slows down the process of confirming them, the transactions on Polkadot are confirmed separately without the need to have them on a single queue. This is achieved by having multiple blockchains that, while they interoperate and pool their security through a central main chain known as the Relay Chain, have independent consensus mechanisms. These blockchains are known as parachains (as they act parallel to one another).

This creates a potential for the global Polkadot network, confirming hundreds of thousands of transactions per second.

While this is impressive, scalability has gradually become less of an issue on most blockchains. Indeed, Polkadot has lost the edge when it comes to being the leader in scalability.

This is especially true given that other major blockchain projects have adopted scalability solutions similar to that of Polkadot. For example, Avalanche has Subnets, Ethereum has restaking, and Cardano has partner chains.

It could be argued that the focus on scalability seems to have blindsided the Polkadot team and has led to the project becoming less innovative in other ways and, therefore, has struggled to compete.

Nevertheless, in the recent past, the core developers of Polkadot have made three major updates that are meant to scale the Polkadot network to what has been described as Polkadot 2.0.

The first of those updates is Asynchronous Backing, which makes the blocks 4 times bigger and cuts the confirmation time from 12 seconds to 6 seconds.

The second update is Agile Coretime, which makes resources, in particular, block space, allocation, and management on the network more flexible.

The third update is Elastic Scaling, which allows for dynamic scaling of parachains by giving a parachain multiple cores. That means a parachain can have multiple blocks of its own processed in a single global block of the Polkadot network, translating to more transactions being processed.

Indeed, all these updates add to the transaction throughput of the overall Polkadot network.

Isolatability

“Can the divergent needs of multiple parties and applications be addressed to a near-optimal degree under the same framework?”~ The Polkadot white paper.

The second problem that Polkadot set out to solve is the existence of blockchains in isolation from one another.

The dev team has created the mechanism for interoperability among private and public blockchains. The native blockchains (parachains) on the platform are linked through the relay chain through which they share data and assets.

By 2024, there will be over 50 parachains that have been launched on the Polkadot substrate platform. These chains can share data and digital assets through Cross-Consensus Message (XCM) and Shared Protected Runtime Execution Enclaves (SPREE) protocols.

Blockchains that are not built on the Polkadot network can be linked to it through various bridge protocols.

For example, Ethereum connects to the Polkadot ecosystem through the Snowbridge protocol. Meanwhile, the Bitcoin network connects through the XClaim protocols, through which users can lock their BTC on the Bitcoin chain and mint them as iBTC on the Polkadot network. The reverse transaction is also supported.

As far as interoperability among blockchains goes, the Polkadot network seems to have among the best solutions already widely implemented in the market.

Developability

“How well do the tools work? Do the APIs address the developers’ needs? Are educational materials available? Are the right integrations there?”~The Polkadot white paper.

Polkadot is designed to host various applications just like Ethereum and other similar networks do.

The Polkadot substrate framework provides the capacity that is easily harnessed to build a customized blockchain for every application.

Developers are assigned ports and cores through which they can launch unique parachains.

The Polkadot Wiki is highly resourceful when it comes to the need to understand the procedure and learn how to leverage it, and it is constantly being updated.

The Polkadot SDK is designed to support the execution of complex processes through relatively simple logic. Meanwhile, the Substrate platform provides the building blocks of new blockchains without the need to re-engineer complex mechanisms.

The Polkadot Substrate platform supports the use of WebAssembly, making it easier to implement core development processes. Of course, several bridge protocols are already implemented, which makes it easy to interoperate with new projects.

As far as providing tools to build, implement, and integrate projects, it could be argued that Polkadot is actively adapting to market needs.

The dev team is more busy than ever. One indicator of this is the fact that the most commits of the over 10,000 made since the launch of the project have been made in 2024.

Also, based on data from Electric Capital, an entity that tracks developer activity in the crypto space, the Polkadot ecosystem has the second-highest number of monthly active developers after Ethereum. Even individual parachains, in particular Kusama, Moonbeam, Moonriver, and Acala, make it to the top 10 list of projects with the highest number of monthly active developers.

Governance.

“Can the network remain flexible to evolve and adapt over time? Can decisions be made with sufficient inclusivity, legitimacy, and transparency to provide effective leadership of a decentralized system?”~The Polkadot white paper.

The Polkadot network is designed with considerable control offered to the collective of all holders of the DOT token in a structure known as OpenGov. The project is essentially a decentralized anonymous organization (DAO).

The holders of the DOT token directly or through delegation elect members of a governance Council whose functions include processing proposals to change the core protocols and appointing technical committees that work on harmonizing protocol upgrades.

Nevertheless, any holder of DOT can make a proposal, and if it garners support from other holders of DOT, it could be put through a referendum.

The Polkadot ecosystem also has a treasury that is funded through part of the network fees and slash fees. The resources in the treasury are assigned to various projects through a direct or delegated vote of the community.

In other words, a community member can request funds to perform a task that benefits the project. These proposals are voted on, and if they get enough support, they get funding from the treasury.

There have been a few concerns, though, in the governance of the Polkadot ecosystem.

In the early stages of Polkadot and Kusama, Parity Technologies invested a significant amount of resources in marketing and building a community. At some point, it took a back seat.

Considering Polkadot is supposed to be a decentralized project, this was the right call. The community was supposed to take up the role of spreading the adoption of the technology.

Unfortunately, that has removed a more focused marketing approach, resulting in the slow adoption of the project and its applications.

Nevertheless, the project offers one of the most seamless governance structures in the crypto ecosystem.

Applicability

“Does the technology actually address a burning need on its own? Is other “middleware” required in order to bridge the gap to actual applications?”~The Polkadot white paper.

There are close to 60 active parachains on the Polkadot network.

With that being the case, there have been concerns that a significant number of parachains that have been launched on the Polkadot ecosystem have remained dormant. That sheds doubts on the future of the ecosystem.

A notable parachain built using the Polkadot substrate framework is Bittensor, a decentralized machine-learning platform. Its native TAO is ranked at position 24 on CoinMarketCap.

Another notable project is the Astar Network, which is basically an incubator for decentralized applications and layer 2 solutions and offers developers infrastructure for Web3 interoperable, financial incentives, and technical support.

Other projects built on the Polkadot platform include Enjin, OriginalTrail, Centrifuge, Moonbeam, Aleph Zero, Celer Network, Moonriver, Phala Network, and Acala.

Coinmarketcap lists close to 100 projects that have been launched and are live in the Polkadot ecosystem.

Conclusion

While Polkadot faces some challenges, it still offers great solutions and contributes to the adoption of blockchain in a major way. And it is definitely not dying.