From the global economy slowly starting to come back to life, only for it to shut down once again in the wake of Omicron rearing its ugly head in 2021, the year has had crypto investors all over the globe on the edge of their seats.
While last year did see Bitcoin ($BTC) and Ethereum ($ETH) showcase their dominance, with the flagship cryptos rising to new all-time highs, it also saw big momentum for projects like Polkadot.
To put things into perspective, over the course of the last twelve months, while BTC registered gains of approximately 25%, DOT was able to move up in excess of 160%. Not only that, an increasing number of studies released recently have shown that a growing forum of institutional as well as retail players have continued to diversify their investment schemes to include DOT.
DOT Was the Asset of Choice for Institutional Clients Last Year
Over the last couple of years several mainstream financial entities — including a whole host of banks, hedge funds, and others — have entered the crypto fray via Bitcoin, while 2021 has seen an increasing number of these companies explore the realm of digital assets using Polkadot.
In this regard, a report by blockchain analytics firm Messari revealed that 21 of the world’s 53 most prominent fund managers actively invested in DOT last year, making it one of the most sought-after assets, followed by other DeFi/alt tokens such as Near Protocol (NEAR), Terra (LUNA), and Oasis Network (ROSE).
One of the core reasons behind Polkadot’s growing dominance is the fact that the platform lays a high degree of importance on cross-chain interoperability, an aspect of crypto-tech that most experts believe will continue to define the future of this rapidly evolving space.
In terms of Polkadot’s native operational design, the project makes use of a unique concept — referred to as ‘Parachains’ — which allows it to support multiple layer-1 blockchains running in conjunction with its central chain.
The setup is able to mitigate many of the transactional bottlenecks being faced by prominent projects such as Ethereum, whose gas fee rates have continued to remain quite steep at around $40 on average despite the platform undergoing a number of highly awaited upgrades over the past year, most importantly EIP 1559.
Not only that, with the implementation of ETH2.0 still a fair bit away, in its current iteration the ecosystem is only able to process around 30 transactions per second (tps), which is substantially lower than Polkadot’s current running capacity of 170 tps.
Polkadot’s Network Keeps Growing
Another aspect of Polkadot’s rapidly surging popularity — one that has continued to pique the interest of individuals all over the world — is that an expanding pool of high-quality developer talent has continued to migrate towards it in lieu of other big-name projects. To this point, a study by Electric Capital shows that Polkadot currently has one of the largest ecosystem of developers within the burgeoning Web3 space.
Polkadot’s growth has been much faster than that of Ethereum when compared across similar points in their histories. Not only that, the project’s network expansion has outpaced that of other ecosystems including Solana and Terra — with the former boasting of an annual yield of 6,700% over the course of 2021.
Even projects like Avalanche, BSC, and Terra, that have redefined the decentralized finance (DeFi) landscape — making the space much more attractive to the average investor — have not been able to muster the same sort of traction as Polkadot, which to some shows not only the project’s intrinsic value but also the faith that crypto enthusiasts all over the world have in it.
DISCLAIMER The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss. IMAGE CREDIT Featured Image via Pixabay