Gavin Wood’s vision of an interoperable network of parachains is really taking shape. So far 13 parachains have launched and by this time next year, Polkadot should have more than 40 individual blockchains living on its network, dramatically expanding of the most innovative ecosystems within the crypto space.
Polkadot is a Layer Zero protocol that serves as the nerve center of multiple parachains blockchains built for different applications and use cases. This infrastructure enables the creation of a unique ecosystem of truly interoperable blockchains that all share the same network security and capabilities.
Polkadot’s Relay Chain can support anywhere from 100 to 250 parachains, and dozens of projects are already building on it, they must compete for a slot via an auction where the winner is determined by the number of most locked DOT tokens to the given projects where every DOT holder can participiate.
To secure a parachain, projects seek to raise DOT via crowdloans from their communities, offering their own native tokens in return for their backing. Whichever project wins a slot is entitled to lease that parachain for two years, during which time the bonded DOT tokens will remain locked up. Once the two-year period is up, those tokens will be returned to their owners, who also get to keep the parachain tokens they received.
Polkadot has successfully completed 13 parachain slot auction with a total of 128.8 million DOT worth $2.2 billion (over 11% of the total supply) from over 321 thousands addresses or holders. Polkadot current price is $17.880 with a marketcap of $19,6 billions.
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The first five parachain auctions concluded last year, and those projects all went live on Polkadot in December, with the following in March 2022. Each new project adds new functionality to the Polkadot ecosystem, expanding its possible use cases.
One of the first parachains to go live was Acala ACA, followed by Moonbeam GLMR, Astar, Paralell, Clover, Efinity, Composable, Centrifuge, HydraDX, Interlay, Nodle Network, Equilibrium and Phala Network.
Acala aims to become the decentralized finance hub of Polkadot. The project is building a foundational layer for DeFi that will support various products and services, including a decentralized exchange, borrowing, lending, and staking, with the benefits of Polkadot’s streamlined interoperability, low fees, high scalability, and strong security. Acala comes with various functionalities and features, including the Acala Dollar (aUSD), a stablecoin built on the Honzon protocol. Users can create collateralized debt position with approved assets such as DOT, LDOT, and ACA in order to mint aUSD.
The winner of the 2nd slot auction Moonbeam is an Ethereum-compatible smart contract platform on the Polkadot network that makes it easy to build natively interoperable applications. This Ethereum compatibility allows developers to deploy existing Solidity smart contracts and DApp frontends to Moonbeam with minimal changes. As a parachain on the Polkadot network, Moonbeam will benefit from the shared security of the Polkadot relay chain and integrations with other chains that are connected to Polkadot.
Another interesting parachain on Polkadot is Centrifuge, a DeFi protocol that is attempting to make credit more accessible for smaller businesses in underserved markets while giving investors the opportunity to earn high yields for supporting them. Centrifuge allows businesses to tokenize real-world assets such as unpaid invoices or real estate deeds, so these can be used as collateral for DeFi loans.
One of the most popular metrics for assessing a crypto project’s growth is total value locked is a measure of how much money is locked into various digital wallets and smart contracts on a blockchain. This is where Polkadot really shines, with over $4 billons TVL which makes over 20% of DOT’s total market cap of $19,7 billion. Polkadot’s parachains are generating a lot of widespread use. By February next year Polkadot should have 41 parachains live on network and running.
Kusama is the Polkadot’s canary network. The name canary comes from the idea of canaries that were used in coal mines to give warning to miners by detecting carbon monoxide and other toxic gases that could hurt them. Similarly, Kusama acts as a canary by warning and helping detect any kind of vulnerabilities or weaknesses in the Polkadot code base.
Kusama is a permissionless network which aims to become a testing ground for experiments with significant changes on Polkadot, It’s a kind of sandbox environment for Polkadot developers.
Kusama is even bigger than Polkadot, with 31 parachains active so far and $350m(which is over 25% of the Mcap of KSM) locked in parachains slot auctions, from 197,000 holders of Kusama KSM.
Karura was the first parachain on Kusama followed by Moonriver MOVR, Shiden, Khala, Bifrost, KILT protocol and others. Kusama current price is $155.82 with a marketcap of $1,4 billlions.
This unique ecosystem of both Polkadot and Kusama can be seen as a taste of things to come, these crypto giants are yet to be recognised force in Crypto market and the value of the Polkadot and Kusama ecosystem could be sky-high in time.
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