Polkadot Investment Analysis: Technical Concepts and Market Performance

The popularity of Polkadot continues to rise, with its price climbing steadily. The upcoming slot auctions have attracted even more attention. Many people see Polkadot as the key to wealth in the cryptocurrency space in 2021.

Reviewing the market performance of Polkadot since its launch:

In July 2020, the Polkadot token DOT began to be listed on exchanges. From August to December, the price of DOT remained around $5, and by December 28, its total market capitalization did not exceed $5 billion.

On January 7, 2021, DOT surged for the first time, breaking through $10.6788, with an increase of over 100%. After a brief adjustment, it broke a new high again on January 15, surpassing XRP in total market capitalization and rising to fourth place in the cryptocurrency rankings. On January 17, DOT set a new all-time high of $19.3939.

As of the time of writing, the price of DOT is $18.12.

This round of market activity is somewhat related to the overall bull market, but Polkadot's strong technical architecture is a more direct logic for the rise. Polkadot aims to build a scalable blockchain architecture that allows for the coexistence and interoperability of different functional blockchains.

Founder Gavin Wood has stated that Polkadot aims to create a more universal model to address scalability issues, enabling more transactions and a more efficient network processing capability.

The Polkadot slot auction has attracted widespread attention in the industry, with many projects in the Top 10 ecosystem having backgrounds from Chinese teams. Compared to the EOS supernode election, the Polkadot slot auction is more valuable due to its complex architecture. The former involves the distribution of governance rights, while the latter concerns the distribution of usage rights, but fundamentally, it is still capital-centric.

Polkadot adopts a variant of the "candle auction" rules, randomly selecting the end time to avoid sniping. The goal of the auction is to maximize the amount of DOT locked for two years. This mechanism may trigger a continuous cycle of auctions, potentially impacting market conditions.

In terms of performance, Polkadot is seen as a major competitor to Ethereum. However, currently, Polkadot's daily trading volume is far lower than that of Ethereum. Data from January 20 shows that Polkadot's trading volume is only 0.7% of Ethereum's, while its market capitalization is about 10.94% of Ethereum's.

The DeFi craze highlights the urgency of performance requirements for underlying public chains. The Polkadot whitepaper promises to provide a natively supported method for kernel scalability to support global commercial-grade scalability and privacy.

From blockchain 1.0 to smart contracts, and then to the 3.0 phase, innovation continues. We look forward to a more diversified blockchain ecosystem, but solving transaction congestion and performance issues remains fundamental to current development.