• Polkadot gears up to achieve scalability without compromising security, makes slow progress compared to Solana, Cardano.
  • Nearly $14 billion worth of assets are staked on the Polkadot network as staking rate hits 61.2%.
  • The first batch of five parachain auctions have taken place on Kusama through crowd loans from original token holders assuming "no risk."

Updates in the Polkadot ecosystem suggest it is competing with Ethereum in terms of transaction fees and network security. 

Polkadot races to offer lower transaction fees 

Polkadot is attempting to tackle the challenge of scaling and centralization simultaneously. Vitalik Buterin describes the "Scalability Trilemma" as the challenge to tackle three properties of a blockchain: scalability, security and decentralization. 

According to the Ethereum founder, you can only get two of three. For achieving all three, blockchain networks like Ethereum take assistance from layer-two solutions. 

Polkadot is described as "layer 0." DOT's blockchain network lets developers build decentralized and secure applications on top of it. Polkadot delivers what Ethereum had promised its community: "sharding." The DOT blockchain breaks new transactions into shards and processes them in parallel. 

At the same time, what is interesting is that instead of retaining control of the properties of these "parallel chains," DOT auctions them to developers to generate their own rules of operation and transaction processing and offers capabilities that give them further flexibility These chains are referred to as "parachains."

The core of the DOT network is the "relay chain" or layer 0, and all "Parachains" are plugged into it. The concept of "Layer 0" implies that blockchains like Bitcoin and Ethereum can run as "parachains" and plug into Polkadot's "relay chain." 

The crypto community has acknowledged DOT's efforts to surpass Ethereum and offer developers and projects a secure and scalable solution. Nearly $14 billion worth of assets are staked on the DOT network, and the staking rate is currently 61.2%.

Expanding its offerings to developers and projects looking for respite from high gas prices on the Ethereum network, Polkadot's first batch of five parachains were auctioned recently. Projects were offered the opportunity to buy a parachain by availing a “crowdloan”. 

Polkadot has built a mechanism where users assume "no risk" to secure the interests of crypto traders loaning their assets to developers. This ensures that tokens contributed to a crowdloan are used only for their intended purpose of winning a parachain slot. The project itself does not receive the assets and cannot transfer, stake, participate in governance or perform any other functionality using them. 

Polkadot is making headway slower compared to "Ethereum killer" competitors Solana and Cardano that enjoy higher social dominance on platforms like Twitter. This is further evident from traders’ and analysts’ bearish outlook on the altcoin's price trend.

FXStreet analysts expect a further price drop in DOT after the altcoin lost its support. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content

Recommended Content

Editors’ Picks

Scam Alert: How to avoid trouble on Terra’s LUNA 2.0 airdrop

Scam Alert: How to avoid trouble on Terra’s LUNA 2.0 airdrop

The LUNA hard fork is set to occur on May 28, followed by the subsequent airdrop of LUNA 2.0 tokens to eligible holders. Ahead of the real LUNA 2.0 airdrop, some scammers have tried to lure LUNA and UST holders to send their assets in lieu of receiving the new tokens. 

More Terra News

Bitcoin Weekly Forecast: On-chain metrics support multiplying downside threats

Bitcoin Weekly Forecast: On-chain metrics support multiplying downside threats

Bitcoin price consolidates above a weekly support level after the LUNA-induced crash on May 12. This coiling price action could cause BTC to trigger a move to the downside, further deepening the woes of investors.

More Bitcoin News

This Web3 move by Crypto.com could be a good bet for patient investors

This Web3 move by Crypto.com could be a good bet for patient investors

Crypto.com price stabilization on a high time frame chart indicates that a bottom formation could be taking place. This pattern combined with a bullish signal from a momentum indicator adds credence to the possibility of a reversal and a recovery rally for CRO.

More Crypto.com News

Why Elon Musk’s tweet failed to move Dogecoin price

Why Elon Musk’s tweet failed to move Dogecoin price

Dogecoin price slipped up as Bitcoin price triggered a sudden crash on May 26. This downswing, while serving as a great opportunity to accumulate DOGE, failed to recover alongside BTC.

More Dogecoin News

Bitcoin: The last rebound before capitulation

Bitcoin: The last rebound before capitulation

Bitcoin is showing bullish signs in the lower time frames, which can be taken advantage of by traders in the next couple of days. But looking at BTC from the higher time frames suggests that the bottom is not in yet.

Read full analysis