DeFi ignited Ethereum
As we all know, when we transfer money in Ethereum, we need to pay a certain miner’s fee to reward the miners who package our transactions, which is commonly known as Gas fee. Miners usually pack transactions into blocks in order according to the level of miner fees.
If there are not many transactions, even if we pay the lowest miners’ fees, miners will still pack our transactions. However, if more people transfer money and want their transactions to be packaged into blocks, they need to increase the miner’s fee, so the amount of miner’s fee can directly reflect the current popularity of the Ethereum network.
On September 17, 2020, according to the Ethereum browser Etherscan, the average gas fee for a single transfer on Uniswap has reached 770gwei, which is approximately US$6.16, and the highest gas fee is 1,000gwei, which is approximately US$8, a record high.
This is because this year’s DeFi liquidity mining has brought new business models, and DeFi projects are on fire. More than 90% of DeFi projects are on Ethereum, which directly boosted the surge in Gas costs.
And on September 17th, Uniswap, one of the most well-known projects in DeFi, announced the issuance of its own tokens, with a total of 1 billion, code-named UNI, of which 110 million UNIs were airdropped to those who had used Uniswap before. People, the value of the entire airdrop is nearly $1 billion. This is probably the largest and most valuable airdrop in the history of cryptocurrency, and this time the red envelope from the sky has further aroused everyone’s enthusiasm and directly pushed up the gas fee to 1000gwei.
At the moment when the Ethereum ecosystem is so hot, some smart people are already thinking about where the next hot spot is, and they all began to pay attention to another ecosystem-Polkadot.
Why should you follow Polkadot?
Before talking about why we should pay attention to Polkadot, we need to briefly talk about the logic of investment. Although the cryptocurrency field is full of speculative and fraudulent projects such as speculation, plagiarism, follow suit, scams, etc., there are still capital and smart people who have made a lot of profit through value investment, such as those who bought Ethereum at low prices. Institutions and individuals.
There is no single answer to investment, but some classic investment logic is still more practical. Here are two directions, one is to look at your position in the investment scope, and the other is the value discovery of high-quality projects.
1. Layout the blue ocean market in advance
Arthur Rock, the father of venture capital who has invested in Fairchild Semiconductor, Intel, and Apple, once said: “If you want to make a profit, you must invest before the majority of people. High risks have high returns. “Because of this logic, many capitals will choose to invest in some excellent projects or companies before they go public, and this is the familiar primary market investment.
The same logic applies to the field of cryptocurrency. Excellent projects may go through multiple rounds of financing before being listed on the exchange. Among them, there are potentially huge opportunities.
Back to our question, why should Ethereum pay attention to Polkadot when it is hot. We look at the two projects from an ecological perspective. Polkadot is likely to become the next-generation blockchain infrastructure due to its strong scalability and interoperability (cross-chain function). From 2017 to this year, many projects were run or financed on Ethereum, and there were blockchain projects that combined various business forms or technical directions.
In this way, the Ethereum ecosystem that has been developed for many years already has enough projects, and Polkadot is the next-generation blockchain infrastructure, and it is still a blue ocean.
Then, there should be some directions or directions that are being tried on Ethereum and other blockchains for successful verification on Polkadot. For example, the current mature DeFi on Ethereum, the distributed storage of Filecoin, zero-knowledge proof, sidechain, expansion, NFT, games and other ecological niches, and vacancies on Polkadot means that there will be projects occupying this position in the future. From this perspective, we think Ethereum is more like another “test ground” for Polkadot.
In addition, Polkadot’s cross-chain function will also give birth to projects focusing on a certain function, which indicates that there will be many emerging projects on Polkadot.
Therefore, there are many potential new projects, which means that if there are high-quality projects that can participate in the early stage, then you can get rich benefits later. This is one of the reasons why you should pay attention to Polkadot, that is, the investment position should be as high as possible. However, the opportunities for participation in the primary market are rare, and it is difficult for ordinary people to obtain them. Can we only participate in the secondary market? In fact, there is no need to exclude the secondary market too much. This requires the second investment logic-value discovery.
2. Value discovery
Hillhouse Capital, as a young capital that has only been in operation for fifteen years, is now in charge of an amount comparable to established capital with a long history of decades. The reason is that it has introduced Chinese companies with huge potential to the US capital market. In 2005, they raised the first capital, but then they immediately took a heavy stake in Tencent’s stock. By this year, Tencent had grown from a valuation of less than US$2 billion to a behemoth valued at US$500 billion. Hillhouse Capital used their unique vision to unearth value that was not discovered in the market at that time.
Back to Polkadot, since we can already foresee that many new projects will be born in the Polkadot ecosystem, and behind Polkadot there is an epoch-making invention-the Substrate framework, which can be used to send a chain in 15 minutes, a single project R&D costs and development cycles have been greatly reduced, and the speed at which Polkadot’s own ecology can be established will be surprisingly fast. Facts have proved that the Polkadot mainnet has been launched for less than half a year, and nearly 300 teams have joined the Polkadot ecosystem, and its development speed has surpassed EOS and TRON (here refers to the development speed).
Nowadays, Polkadot is in the period of further improving the main network function, the parachain is about to land, the isomorphic cross-chain function is about to go online, and the ecological explosion is also brewing, which is like the period of Ethereum at the end of 2016. Polkadot and its canary network Kusama have been launched on exchanges. Very few people really understand this trend and its value. It can be seen from the number of currency holding addresses (currently about 50,000), but even now Under the circumstances, the market value of Polkadot has entered the top ten in the world. When more people learn about the potential of Polkadot, there will be a wave of huge dividends in value discovery.
How can we seize the opportunity of Polkadot
So back to realism, how can we participate in Polkadot’s opportunity? For different people, there may be different ways and paths, but it is still worth understanding.
1. Developer
For developers, participation from the code layer is the most direct way. Learn about Polkadot and the Substrate framework, you can participate in the officially organized technology development competition (hackathon), you can also initiate blockchain projects, and some high-quality projects can also get official allowances (Grant), and you can also according to the official rewards , Do some targeted development or tools.
For this, there is already a very complete process, including technical training, general education training, technical support and financial support when the project is initiated, and then the project has a certain degree of maturity to obtain official allowances (Grant), etc.
For the learning part, you can refer to the official course-Substrate Runtime Institute of Technology: https://mp.weixin.qq.com/s/Z5JqBqTuh_7i2eJHrgt3MQ. The PolkaWorld Polka First Chinese Community has also co-sponsored a Substrate entrepreneurship camp with a number of organizations, specifically to provide the technical and operational support required for the project from the initiation of the project, and then can also initiate official allowances under the guidance of the entrepreneurship camp (Grant) Application.
In addition, the official Web3 Foundation and Parity Technologies have cooperated with Wanxiang Blockchain Lab and China’s New Chainbase to launch a six-month Shanghai Web 3.0 Boot Camp, which is also worthy of attention.
As for the design idea of the project, one is that the old project is migrated to the Polkadot ecosystem. This applies to a blockchain project. You can consider adding it to the Polkadot ecosystem technically; the other is based on existing mature cases. , But there is no corresponding ecological niche project on Polkadot, make a Polkadot native project that occupies this niche; third, based on Polkadot’s unique scalability and interoperability (cross-chain function), make unique based on these characteristics Blockchain projects, such as the transfer bridge of Ethereum (there is currently a team following up on this demand), the smart contract chain of Bitcoin (currently there is also a team following up, this project is to expand existing projects or add smart contracts, etc. New features) and so on.
2. Investment institutions
For investment institutions, there are more opportunities to participate in the early financing of some high-quality projects. Firstly, the project party tends to find institutions rather than individuals for financing. Secondly, for the project party, it is more hoped that the institution will not only be able to finance Support can also empower its development.
Of course, if it is a powerful organization, it can also consider becoming a validator in its network under the premise of being optimistic about Polkadot and its canary network Kusama, and obtain additional issuance income (currently annualized at about 12%).
3 people
For individuals, some high-quality projects may have some opportunities to participate before they are listed on the exchange, such as using public offerings to raise funds, or zero-loss lock-up mining, or using the unique PLO on Polkadot. Distribute your own token.
After the project is listed, there are still valuable opportunities to discover. One is that it can be profitable through its own mechanism, such as the staking method of Polkadot and Kusama, and the other is that you can choose potential projects to deploy in the secondary market in advance.
Polkadot ecological risk reminder
As the saying goes, crisis and opportunity often coexist. We have already talked about some of Polkadot’s opportunities. Although Polkadot’s fundamentals are very good in all aspects, there are still many potential risks worth paying attention to, but we are used to calling them “Alpha risk”, because it may not be related to the opportunity risk of the Polkadot ecology, but comes from individual projects. Since Polkadot has great potential, the Substrate framework has lowered the technical threshold and is easy to distribute. A lot of projects will be born on Polkadot, which will inevitably attract some people who only collect money, send a project at will, and hype through packaging. Ways to attract the attention of investors, and then slowly reduce the level of operation later, causing the natural death of the project. Or there may be some people who really want to do a good job in the project to participate, but due to capacity problems, the project still fails to develop successfully, and the probability of this kind of situation is also very high.
Therefore, for the subject that we want to participate in, we need to be able to statically analyze the overall situation of a project, but also dynamically continue to pay attention to its operation and development, improve the understanding of the project itself, and pay attention to the development and prospects of the entire ecology In order to enjoy the dividend of value discovery. Once all successes are accomplished, Polkadot will bring about an ecological explosion of a hundred schools of thoughts, but most of them will fail, and the essence will be the last. When we participate in it, we must clarify this prerequisite so that we can proceed step by step, and always consider stopping losses and profit at the right time before we can retreat.
Outlook
It is worth noting that, in addition to Polkadot’s own development is in the initial stage of rapid growth, the overall environment of the entire cryptocurrency field is also advancing with the times.
In the second half of this year, the United States, South Korea, Switzerland and other countries have allowed banks to provide cryptocurrency custody and services. The scale of well-known cryptocurrency funds is also getting bigger and bigger. Among them, the largest gray capital, the scale of funds under management is close to tens of billions of dollars. Countries have accelerated the compliance process of cryptocurrency, which also means that traditional capital funds will increasingly enter the cryptocurrency field.
The superimposed effect of the two is likely to bring about a big bull market that exceeds the scale of 2017, and this time the protagonist may also be the same as Ethereum in 2017, with a “project building machine” like Polkadot. Yes, as for the specific development, let us wait and see.
