Polkadot (DOT) became the talk of the cryptocurrency industry recently due to an unprecedented spike in value. Overnight, DOT went from relative obscurity to a spot in the top ten cryptocurrencies by market cap, currently holding at number seven. While Polkadot may seem like a new project, development began in 2017 – bucking the trend of crypto-projects looking to capitalize immediately on potential profit. The tactic paid off for them, with Polkadot now in a position to sustain their place in the top 10.
The recent spike in price came from a combination of two factors. The first and more direct factor came from the “redenomination” of DOT tokens. Originally, the total supply of DOT amounted to 10 million. The community voted redenomination increased that by a factor of 100, while maintaining hePld ratios. In effect, Polkadot held a stock split – where each original DOT became 100 new DOT tokens. While unusual for the cryptocurrency world, it did allow for greater liquidity and thus a greater price point.
Polkadot Transferability and Development
The original catalyst and first factor that allowed for Polkadot’s rise came in late August. The community voted to allow transferability – alleviating the prior onerous process for trading DOT. The new system of transferability allowed exchanges to list DOT and for users to trade individually in a much simpler fashion.
Without the newly enabled transfer option, DOT would have remained static. After the launch of their mainnet in May 2020, the enabling of transferability became inevitable. A slight hiccup occurred when some exchanges listed DOT earlier than the community allowed – but the situation smoothed itself over quickly.
Interoperability and Project Platforms
Polkadot offers cross-chain interoperability and a platform for new projects – potentially putting it at direct odds with smart contract juggernaut Ethereum (ETH). Considering the development team includes Gavin Wood, a co-founder of the Ethereum Project, this similarity is not surprising. They represent different approaches to the same problem – scalability. Ethereum’s new approach involves parallel processing through sharding but requires uniformity in the shards.
In contrast, Polkadot allows a greater level of flexibility in their “parachains.” These parachains are autonomous, while still being under the overall governance of the main chain. As such, cross-chain interoperability will be readily available on Polkadot. For new projects seeking the greatest scope of use, that cross-chain feature represents a major advantage for DOT.
Article By: Adam Stone