Is Polkadot ($DOT) at the end of the road, or is this a new beginning? Polkadot is struggling. It has fallen out of the top 20 by market cap. Back in May 2021, it was still ranked #8. In November 2021 it even reached a $54 billion market cap. Now, that’s $6 billion.

Many $DOT fans have sold off their bags. There are plenty of newer, shinier chains that promise better returns. Or seem to have better tech. Or is it? Can Polkadot turn the tables with their 2.0 version on the horizon? The rebirth of a network, as they call it. Let’s take a closer look at Polkadot 2.0.

Polkadot History

Polkadot is a layer 0 chain. That means, it takes care of all the infrastructure, and other chains can build on top of this. You can compare this to a city that offers roads, gas pipes, electricity, sewers, and so on.

Dr. Gavin Wood is the main architect behind Polkadot. He was also one of the original Ethereum co-founders.

So, Polkadot is best known for its parachains. Projects could bid on 2-year slots in a parachain. If needed or wanted, it could also renew that bid after the initial slot period ended. See the picture below for a list of current parachains.

Polkadot

Source: CoinMarketCap

These projects are the layer 1 chains that are built on Polkadot, the layer 0 chain. However, that was an expensive adventure. Projects, in the race for a parachain, needed to lock up an essential amount of $DOT. 

The way to raise this number was by auctions. In other words, crowdfunding. Fans of a project could lock up their $DOT for two years. The project with the highest number of $DOT won the auction. After two years, the supporters got their $DOT back, plus a reward.

Acala Network won that first auction with a bid of 32 million $DOT. On Nov. 18, 2021, that was worth around $1.3 billion. However, only nine months later, in June 2022, you could win a slot for 9,900 $DOT or $55,000. So, that set up didn’t quite work out that well. Still, there are 47 parachains and some 200 projects utilized the Polkadot SDK. Nonetheless, something had to give. So, the parachains went out and Polkadot 2.0 came in.

Polkadot 2.0

So, Polkadot 2.0 steps away from parachains. There’s a technical side to it and a side that makes the user experience friendlier. 

Polkadot 2.0 the Technical Part

The technical side offers three main features.

  1. Async backing

This is asynchronous backing, and it introduces pipelining. This should improve the throughput time of the entire network. In other words, make the chain faster. This feature is already in place. 

It reduces block time from 12s to 6s. There’s also parallel transaction validation. This offers up to 4x more data storage per block.

2. Agile Coretime

This should make the network more agile. According to Wood, parachains, with their slot auctions, are not agile. 

So, instead, there are now ‘core times’. You can find such a core time on specific marketplaces. For example, on Lastic or CoreHub. Currently, it’s active on Kusama. That’s Polkadot’s canary chain or testnet. 

This is a much more flexible approach to network computing resources. The core times are NFTs, and you can fractionalize them. So, in a way, a new set-up for crowdfunding. 

Core times are available both on-demand or instantaneous and long-term or bulk. For example, monthly.

3. Elastic scaling

Elastic scaling is the final stage of the Polkadot 2.0 launch. This could find its way onto Polkadot by January or February 2025. 

This allows projects to lease extra cores as needed. In other words, it offers dynamic scalability. Once projects grow, they can upgrade their coretime. This way, it meets their computational needs. 

Polkadot 2.0 the UX Side

For users, there are also three new updates.

  • A new website — It makes interacting a lot easier.
  • An updated messaging framework — Easier to communicate.
  • Enhanced visual identity — A new visual design.

On top of that, Polkadot works very hard on its decentralization. There’s an on-chain governance system in place, led by the community. So far, there have been 1,000+ proposals. 

If we look at the Nakamoto Coefficients, Polkadot leads this table. The higher the number, the more decentralized a chain is. 

Polkadot has a 136 rating. For instance, Ethereum has 2. It’s the number of node operators that combined can control a third of a network’s stake. So, it’s easier for 2 validators to combine forces than 136.

JAM

Beyond Polkadot 2.0 there’s JAM. This will keep the finger on the project’s pulse, so to speak. Continued improvement is on its list, and also further decentralization. JAM will replace the current Relay chain as layer 0 chain. That’s Polkadot’s current center point.

How Will Polkadot 2.0 Affect the Ecosystem and the $DOT Price?

The idea behind Polkadot 2.0 is to revitalize the chain and bring it back to its previous glory. It improves the chain’s interoperability and scalability. 

Polkadot shifts its focus away from a chain-focused approach. Now it focuses more on an application-focused approach. This should attract more projects to its ecosystem. 

On a smaller scale, that is already happening. However, once we are near the launch of Polkadot 2.0, there should be more to follow. Currently, Polkadot has seen the following developments. 

  • Mythical Games has joined Polkadot. This is one of the biggest blockchain gaming projects. For example, they have NFL Rivals. They also have a partnership with Pudgy Penguins.
  • Frequency also chose Polkadot. This is a decentralized social media protocol.

There are also various grant and funding programs in place. For example,

All this should also bring a new upside to the $DOT price. The current $DOT price is $4.17. A far cry from its $55 ATH. That’s a 10x right there, and not impossible during a bull run. However, $DOT has an infinite supply, something I’m not a big fan of. Nonetheless, it is hard to tell how the $DOT price will develop. 

The crypto landscape is dynamic, and many projects barely survive one bull and bear cycle. Now, in all fairness, Polkadot has a good track record. However, there are plenty of new chains that challenge its position. For example, Sui, Aptos, or Sei. It sure will be an intense battle for survival.

So, what do you think of Polkadot 2.0? Is it the impulse the project needs to get back on its feet again? 

Disclaimer

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