While Ethereum has become the blockchain of choice for many of the digital-asset world’s hottest cryptocurrencies, a next generation network is capturing the attention of application developers.
Created by Ethereum co-founder Gavin Wood, the innocuously named Polkadot platform has seen the biggest jump in active developers of all major crypto protocols, according to a recent report from Outlier Ventures. While developer interest in Bitcoin and Ethereum has declined, the number of monthly active developers building on Polkadot increased by 44% in the 12 months ended in May, the report found.
“It absolutely does stand out, from the sheer standpoint of design as well as the size of the community around it,” said Wilson Withiam, an analyst at crypto researcher Messari.
Some 253 projects, ranging from so-called stablecoins to social networks, are being built on the network, which was launched in May, according to tracker PolkaProject. That’s up from fewer than 200 in early September.
Instead of operating apps through smart contracts — relatively small pieces of code running on the Ethereum blockchain — Polkadot allows each app developer to create her own blockchain that can talk to other ledgers. Developers can decide what kind of transaction fees to charge and how fast to confirm blocks of transactions across the digital ledgers.
“We are going to see a lot of different innovative products that can’t exist in a smart contract environment,” Wood said in an interview from Berlin. “Game blockchains, ensuring gamers don’t cheat. Blockchains within consortia. They are difficult to deploy in a smart contract environment.”
The 40-year-old British programmer, who has a PhD in music visualization, joined in on the development of Ethereum a month after co-founder Vitalik Buterin issued his white paper.
Wood, also Ethereum’s first chief technology officer, was instrumental in creating features that made it so appealing for developers. But feeling that ultimately Ethereum’s design was limiting, in 2016 he wrote the Polkadot white paper, printed on polka-dot-colored sheets and proposing a new approach. He settled on the name Polkadot because that’s a pattern with no beginning or end, feeding into the idea of decentralized applications — a pattern with no center.
Polkadot has overcome some adversity to get here. While the project raised $140 million in an initial coin offering in 2017, a huge chunk of that money later became unaccessible due to a security vulnerability in a so-called Parity wallet that Wood helped create that a user exploited. Polkadot ended up raising a private round of funding in 2019, and another $43 million in a private sale this summer.
The building optimism can be seen through the surge in the value of Polkadot’s Dot tokens, which have jumped by about 25% since mid-August to around $3.75 billion. That makes Dot the world’s eighth-biggest cryptocurrency by market capitalization, ahead of long-time stalwarts such as Litecoin, according to CoinMarketCap.com.
“Polkadot is only trading at 10% of the value of Ethereum,” said Dan Morehead, founder of Menlo Park, California-based Pantera Capital Management, which has traded in Polkadot. “And our theory is that it has a much higher than 10% chance of being a competitor to Ethereum.”