Launched in 2016, Polkadot was founded by Gavin Wood, a British programmer who co-founded Ethereum and Solidity, the programming language used by Ethereum.
At the time, Wood feared that Ethereum 2.0, which used a proof-of-stake algorithm instead of proof-of-work, was falling too far behind. "There was absolutely no indication that there would be significant development on Ethereum 2.0 for some time," said Wood in an interview.
Polkadot is a blockchain protocol connecting multiple specialized blockchains into one unified network. Having a shared multi-chain network means it can process many transactions on several chains in parallel, eliminating the bottlenecks that occurred on legacy networks (like Bitcoin) that process transactions one-by-one.
This parallel processing power significantly improves scalability, much like the Layer 2 solutions like Lightning Network do for Bitcoin.
Polkadot's most unique trait is that it enables cross-blockchain transfers of data and other assets — such as images, videos, music, NFTs, and other digital stores of value — with very low fees. Polkadot will allow any app to be connected in a fast, trustless and decentralized way.
Polkadot's interoperability and cross-chain communication allows information to be shared like millions of smartphones talking to each other, without relying on a centralized authority like Apple, Google or Facebook.
The Polkadot community can govern the network in a completely decentralized way, giving members a transparent stake.
The DOT coin is the main token of the Polkadot network. DOT first gained popularity after raising $144.65 million in an ICO on a Polkadot White Paper and has climbed to the 4th spot in the cryptocurrency rankings.
DOT is up 93.5% of the past month, 554% over the past 3 months, and is currently trading around $33 at the time of writing.
Polkadot has a market cap of $32 billion, compared to Ethereum at $175 billion and Bitcoin at $905 billion. In the words of one analysts, Polkadot is “stepping on EOS and pointing at Ethereum.”
To date, Polkadot has raised roughly $200 million from investors across two sales of its DOT cryptocurrency, launching on Coinbase and Kraken in 2020, making it one of the most well-funded blockchain projects in history.
Polkadot vs Ethereum
Polkadot and Ethereum 2.0 are undeniably similar in the design of the current operating mechanism. However, there are four unique advantages of Polkadot over Ethereum that are hard to ignore.
- Transaction fees on Polkadot are lower than on Ethereum.
- Transaction volume per second (tps) on Polkadot are higher than on Ethereum.
- Ethereum is intended as a general-purpose blockchain whereas Polkadot can design more complex blockchains.
- Ethereum can integrate well with other applications in Ethereum but is not cross-chain compatible. Polkadot apps can integrate with each other and with other blockchains (such as Bitcoin or EOS).
Polkadot has been labeled the "Ethereum killer" by some analysts mostly due to the unique technology of their parachains that allow the network to run much higher transaction throughput than Ethereum.
At present time, Ethereum is only 5X bigger than Polkadot, which isn't much by crypto standards. So is it possible that Polkadot outperforms Ethereum by a factor of 5X over the next bull cycle? Absolutely.
Web3 Foundation Grants
The Web3 Foundation, the organization responsible for stewarding the development of Polkadot, supports many of the Polkadot projects with grants — both public and private.
The Web3 Foundation General Grants Program focuses on technology grants which are meant to remain private. The General Grants are paid out in sums of $30,000 (fiat) or under to help develop the Polkadot ecosystem.
The Web3 Foundation Open Grants Program focuses on technology grants up to $30,000 for initial grants and $100,000 for follow-up grants, which are tracked publicly on GitHub and disbursed in bitcoin or DAI.
Projects range from low-level infrastructure to ecosystem pieces like wallets, parachains, bridges, tooling and other services.