Polkadot (DOT), a blockchain protocol founded by Ethereum co-creator Gavin Wood, achieved a $3.5 billion market capitalization. It comes merely six days after the protocol enabled DOT for transfers.
On July 13, DOT underwent a 100x split that would denominate the price of DOT 100x lower than before. Wood wrote:
“The vote was over a simple, non-binding declaration that the assembled Kusama community be in favour of changing the denomination of the ‘DOT’ token, essentially multiplying all balances across the system by one hundred. The result was a resounding ‘yes’, albeit with a sizable minority contingent against it, and voices questioning why it should be 100 and not 10 or 1000.”
Several major exchanges, including Binance, listed DOT upon its denomination change.
What is Polkadot, and why is DOT surging so rapidly?
Polkadot is a blockchain protocol that essentially links multiple specialized blockchain networks into a single protocol.
By allowing numerous blockchains to interoperate in one protocol, it allows more efficient scaling. The Polkadot team explains:
“Polkadot is a sharded multichain network, meaning it can process many transactions on several chains in parallel, eliminating the bottlenecks that occurred on legacy networks that processed transactions one-by-one.”
Polkadot appears to be seeing a noticeable increase in publicity due to a combination of three factors. The catalysts are the new denomination, major exchange listings, and the demand for scaling.
Following the explosive growth of the Decentralized Finance (DeFi) sector, fees on the Ethereum blockchain network soared.
ETH 2.0, which would bring Ethereum one step closer toward a proof-of-stake (PoS) network, is under progress. Until ETH 2.0 gets deployed, Ethereum could struggle with high fees as a result of surging transactions.
The demand for high capacity and scalable blockchain protocols, alongside second-layer scaling solutions, has increased in recent months.
The confluence of listings by top exchanges and the hype around scalable blockchain protocols and solutions could be behind Polkadot’s upsurge.
Since its listing on Binance on August 18, the DOT price has surged from around $2.09 to $4.1, by 96%.
The heavy involvement of Wood in the development of Polkadot also appears to be fueling the momentum of the blockchain project.
As a key developer of Ethereum, Wood wrote the Solidity smart contract programming language and co-founded Parity Technologies. Wood reportedly finished the draft of the Polkadot White Paper in October 2016.
Analysts optimistic around the blockchain protocol
While Polkadot and other high capacity blockchains, like Cosmos, might compete with Ethereum, analysts say they would not replace Ethereum.
Kelvin Koh from cryptocurrency fund Spartan Black said:
“I believe in a multi-chain world inter-connected by bridges. Polkadot and Cosmos will not replace Ethereum. Also wouldn’t rule out chains like Near, Solana, AVA, TRON, and others seeing development activity.”
The idea that Polkadot, Cosmos, and other PoS blockchains could co-exist with Ethereum could also buoy the case for the long-term survivability of DOT.