Rising from the Ashes: Can Polkadot Reinvent Themselves?
Many say success is a result of all of your failures.
Fail more, fail better, until you succeed.
Nonetheless, once you achieve so-called success, it is a once-in-a-lifetime opportunity to get it right. This is especially true for Layer 1 (L1) blockchain networks.
More often than not, they only get one chance to establish themselves. A moment where everything aligns, and they are given the chance of a lifetime: the market conditions are favorable, the user mindshare and interest are at an all-time high, and protocols are excited to build on you.
This opportunity comes once in a lifetime (boom ba da boom).
However, not everyone can do so. What happens to them?
Can incumbent blockchain networks rise from the ashes and reclaim mindshare and market share in a landscape that is ever more competitive and fragmented?
We briefly look at Polkadot as a case study
Struggling for Recognition
On more than one occasion, Polkadot has come under the spotlight in the past couple of years, but not for the right reason.
In 2023, news came out of bizarre management practices before announcing massive layoffs:
https://www.dlnews.com/articles/defi/polkadot-workers-told-to-attend-retreat-after-being-laid-off/
How did Polkadot end this way? Being one of the first protocols to launch on wave of enthusiasm after the Ethereum ICO, Polkadot went from being one of the protocols with the biggest treasury to one of the most controversial blockchain networks.
There are several reasons for this, including:
Financial mispractices
Management errors
Lack of long-term comprehensive strategy for the ecosystem
This culminated in several forum posts calling for arms: for Polkadot, acting was a matter of life or death.
https://forum.polkadot.network/t/state-of-polkadot-react-or-die/9774
Time to React?
One of the biggest backlashes received by Polkadot was when details of their treasury spending for marketing emerged.
These included extremely high costs for media coverage:
As well as over $5m yearly in KOL deals:
Is this what happens when you have a considerable treasury? You start thinking you can spend your way out of irrelevance.
Nonetheless, this seldom works: on the contrary, many question the choice of focusing on marketing, where, for instance, they could have focused on boosting user acquisition for parachains.
In fact, parachains metrics have been down only since launch:
With this campaign, Polkadot seemed to focus on the details while failing to acknowledge the core issues hindering its adoption.
In fact, Polkadot is struggling to get new users: the daily active users (DAU) are at the same levels as at the beginning of 2023.
About 3k DAU use Polkadot, accounting for about 12-16k transactions on the network.
What can you really do on Polkadot? Para chains have failed to establish as native applications that users could leverage.
Consequently, most para chains have found their home elsewhere, and many users have left the chain disappointed.
I myself have participated in 4 para chains auctions, with only one project ending up launching (without much success).
Where does this leave us?
There are several applications still active on the Polkadot ecosystem:
Arthswap: main DEX on Astar Network.
Algem_io: a native liquid staking DeFi dApp on top of Astar Network.
AstridDAO: a decentralized borrowing protocol for interest-free loans against multiple collateral assets (e.g., ASTR, ETH, BTC).
Starlay Finance: deposit and borrow assets on Astar Network.
ZenlinkPro: cross-chain DEX protocol.
xyfinance: a DEXs & Bridges aggregator.
SiO2 Finance: a Multi-VM Lending Hub on Astar for Polkadot (EVM + WASM)
TofuNFT: a permissionless, decentralized and full-featured NFT marketplace.
BluezNFT: another NFT marketplace.
Cosmize: everybody can create and customize community activities, events, quests, and more.
Heal3official: creates unique tokens ($UHT: Utility Health Token / $GHT: Governance Health Token) by engaging in ongoing healthy activities, especially diet, exercise, and sleep.
Yapping Their Way to Relevance
Following a common trend, Polkadot has announced the launch of rewards for the top $DOT yappers, with over $100k a month distributed.
https://x.com/_kaitoai/status/1890022107561816241
Will this be enough to bring Polkadot back to the dawns?
While an increased mindshare is undoubtedly contributing to its positioning, this has to be coupled with protocol and ecosystem developments, allowing users to want to use and transact on the chain. This can take the form of attracting existing protocols and nurturing native applications with unique value propositions.
No chain has ever become relevant after losing mindshare and market share.
Will Polkadot manage to do so?
We’ll keep an eye on their development: this week they announced a yapping leaderboard, what’s next?
Will Polkadot be great again?