Not too long ago, the cryptocurrency world was taken by storm. Polkadot entered the scene and blazed right into the top 10 and then even the top 5 cryptocurrency projects ranked by market cap, according to coinmarketcap. Let’s take a quick step back to see why.
Ethereum is the second most known cryptocurrency, losing out only to Bitcoin. It’s popularity rose significantly during the 2017 bull market and the corresponding ICO mania. This is because Etheruem is a decentralized platform – common now, but at the time it was the first of its kind.
For the first time ever, Ethereum made it easy for developers to build their own crypto, since Ethereum did most of the work for them. It also meant that the crypto was issued on the Ethereum blockchain, so the crypto uses ETH to pay for transaction fees. As a result, Ethereum became a huge ecosystem full of promising cryptocurrency projects.
Even in 2017 the huge amount of projects on Ethereum was taking its toll on the network, and scalability questions started to arise. But nothing could have prepared crypto enthusiasts for what’s happening now.
Decentralized Finance (DeFi) is the talk of the town right now, so to speak. It’s kick-started a new bull market and for the most part, DeFi is dependent on Ethereum. Which has led to some big scalability issues.
Just look at those fees. Right now the Ethereum network simply can’t handle all the traffic it’s got. It’s a good problem to have, but it’s also pushing DeFi outside of Ethereum. Fast.
Ethereum isn’t the only cryptocurrency platform in the game and many of the competitors seem to have cracked scalability. This is where Polkadot comes in.
Will Polkadot replace Ethereum?
Polkadot is a blockchain protocol that connects multiple specialized blockchains into one network. It is designed to be scalable and interoperable to its core. As we’ve already said, since launching Polkadot has caught a lot of attention in the crypto world.
In essence, Polkadot is bringing two of the missing links together, which could be a game-changer for the cryptocurrency ecosystem. Scalability is needed, especially for DeFi and Ethereum. But beyond that, interoperability and cross-chain communication means that one chain doesn’t have to do everything. Instead, chains can specialize and work together, which means technology can be better suited to a more narrow scope of tasks, which should increase performance overall.
Growing interest in Polkadot’s building blocks
Polkadot’s technology is catching attention and as a result, is already building up quite the impressive ecosystem. Here are a few projects that are using Polkadot’s technology, and are therefore part of the ecosystem.
RioDeFi is a blockchain project using Polkadot technology, aiming to rejuvenate the DeFi space by bridging the gap between traditional and decentralized finance. By using Polkadot, RioDeFi can offer a scalable, interoperable DeFi ecosystem. This means that specialized DeFi protocols can work in parallel, able to interact with each other and maintain continuous records across the ecosystem.
MANTRA DAO is a community-governed DeFi decentralized autonomous organisation (DAO). It has numerous core focusses including lending, staking and decentralized governance.
MANTRA is built on RioChain to leverage their interoperability and the overall Polkadot network. This will allow MANTRA to connect to other organizations like banks, merchants and decentralized applications on RioChain.
Fundraising is a big part of cryptocurrency culture, and Polkastarter is a permissionless DEX built for cross-chain token sales and auctions. By using Polkastarter, projects will be able to raise capital in a completely decentralized way. Since Polkastarter uses Polkadot’s technology, users benefit from tiny fees, fast transactions and the ability to swap assets between chains.
Uniswap is all the rage right now, but Polkaswap could be an upcoming rival. It’s an upcoming non-custodial automated market maker DEX designed for the Polkadot ecosystem. This means it’s a swap DEX that can offer fast, cheap, secure and cross-chain swaps.
Sora is a Polkaswap based project that’s aiming to build a new type of world economic system called a ‘Decentralized Autonomous Economy’ (DAE), in which users decide how to create new tokens. In Sora, users get votes based on their reputation, which are used to vote on which new products should be allocated newly created XOR tokens. It’s like decentralized crowdsourcing.
Polkadot’s ecosystem seems to be growing fast, since it has so many positives when compared to Ethereum. If DeFi moved to an ecosystem where cross-chain interaction was possible, cryptocurrency could have another interest surge because the experience would be greatly improved for all.
Unlike other alternatives, Polkadot isn’t an Ethereum killer. These technologies can co-exist and work together to build something great. That’s the entire point of interoperability.