How Polkadot Ecosystem Works, Is It An Ethereum Killer?

IMPORTANT: In this article, we present you data related to the Polkadot blockchain ecosystem. This in no way means that we recommend investing in the Polkadot blockchain or any other financial asset. The goal is to inform you. Each person must make their decisions based on their personal analysis. If you would like to receive financial advice, you should consult a licensed professional.

Introduction to the project

We’re going to talk about how Polkadot’s parachains and its blockchain token, DOT, work. On July 8, 2022, the value of a DOT token is $7.14. The market capitalization of the Polkadot blockchain is $7,053,074,501 making it the 11th blockchain by market capitalization, slightly behind Dogecoin which has a market capitalization of $9,347,561,610. Compared to other projects, the Dogecoin token has held up quite well against the fall in the crypto market that took place during the months of May and June 2022. This is partly due to its large fan community and the support of Elon Muskthe whimsical multi-billionaire.
Regarding DOT, like most cryptocurrencies, it has been very affected by the current recession in the crypto world and in the market in general. DOT had reached a market capitalization of $53.21 billion and the value of DOT had risen to $53.88 per unit in November 2021.
After this violent drop of almost 90% in the value of DOT in less than a year, many investors left the project. Other observers who continue to believe in the potential of the project believe that we may be in the right period to buy DOTs because, ultimately, financial markets operate in a cyclical manner. In general, when markets go down, they eventually go up. Today, it is possible to buy DOTS for a price much lower than the price you had to pay in November 2021.
If you want to buy the DOT token, there are several options on the internet. Several platforms give you the opportunity to buy them with the currency of your choice: euro, dollar, Swiss franc, etc. Among the best crypto platforms we can for example cite Bitcoin Profit or Kucoin.

How does Polkadot work?

Polkadot’s parachains are first layer, or layer 1, blockchains that run in parallel inside the Polkadot blockchain. You guessed it, Polkadot is a layer 0 blockchain. layer 0 blockchains therefore make it possible to implement within them these layer 1 blockchains which allow a interoperability between different blockchains. Being able to connect different blockchains in this way makes Polkadot a project that should be very useful in the future and bring a lot of benefits to the crypto community.

Is Polkadot an Ethereum Killer?

Many people think that Polkadot is a Ethereum Killer. However, it is important to note that its blockchain has a very different infrastructure and does not have the same purposes or utility as Ethereum at all. For two blockchains to be concurrent, they should belong to the same layer. In the case of Polkadot, it is a layer 0 blockchain while Ethereum is a layer 1 blockchain.
Polkadot is therefore not an Ethereum Killer. Its parachains make it possible to implement layer 1 blockchains and connect them to each other. A layer 0 is therefore a layer that puts everything in place to make layer 1 blockchains work. It is the basis on which layer 1 blockchains are built. Ethereum and even Bitcoin are for example layer 1 blockchains.

Of course Ethereum and Bitcoin are not on Polkadot and were not created thanks to Polkadot, but so are other layer 1 blockchains that are growing on Polkadot. The blockchains present on the layer 0 blockchain have sufficient autonomy to be able to validate and finalize transactions, without the need to use any other network. The problem with layer 1 blockchains is that they can only handle a limited number of transactions at a time. When there are a large number of transactions at the same time, the transactions become slower and slower and the transaction fees become higher and higher. Only people who can afford to pay higher transactions can complete transactions.

Are Polkadot Parachains Ethereum Killers?

Polkadot is therefore not an Ethereum Killer. However, parachains on Polkadot could be considered Ethereum Killers, because they are layer 1 blockchains which are numerous and efficient, because they support transactions in parallel. In addition, each of them has its own specificities and advantages that can be useful to the entire Polkadot ecosystem, since they are all interconnected and interoperable. Among the most interesting of Polkadot we can cite the very promising Moonbeam or Acala. We will come back to these two cases in a future article…