Why Polkadot will be the focus in 2021

one,

Hello everyone, I am Joie, co-founder of the Polkadot doter community and founder of the Polkadot ecosystem website doter.io.

Today I would like to share some of my views on Polkadot and the investment strategy of Polkadot ecosystem. Before sharing Polkadot, I would like to share my investment experience in the cryptocurrency circle.

I entered this industry in 2017. At that time, I had just graduated from college and lived a life of three points and one line in an office building like most people. I started my job as a programmer in a listed company. Although my monthly income was over 10,000 yuan, it was impossible for me to afford a house in a first-tier city. I felt very confused about the future.

Later, a good friend introduced Bitcoin to me. After studying it, I felt like I had opened the door to a new world. I felt that blockchain investment was the best opportunity for our generation to cross the class barrier. So, I went to the bank to apply for a loan and add a little of my own savings, and officially started my investment journey in the cryptocurrency circle.

When I first bought coins, I didn’t know anything. Like most newcomers, I also liked to chase the rise and sell the fall. I didn’t expect that I would experience a sharp drop just after entering the market in March 2017, and my principal shrank by half. Because most of the money was borrowed from the bank, I was in a bad mood. One day later, I began to think about the significance of cryptocurrency investment. Since it is an investment, I should not only focus on the K-line and care about short-term market fluctuations. It happened that I saw an article about Ethereum on Babbitt at that time. After researching it, I was very optimistic, so I invested all my funds in Ethereum and its ecosystem. Later, everyone knew that Ethereum shined in the first half of 2017, and the crazy IC0 made my funds soar dozens of times.

Later, I encountered 94, and many of my friends who traded cryptocurrencies with me left the market calmly. But I thought that the decentralized nature of blockchain would not be suppressed so easily, so after 94, I boldly took out a second loan, and sure enough, a big market followed. At the beginning of 2018, my highest capital exceeded 30 million.

At the beginning of 2018, I didn't cash out or even pay off my loan. Then in 2019, I experienced a big bear market, and many coins went to zero. In addition, I had to sell coins to repay my loan. My assets were only a few hundred thousand at the lowest point. From 30 million to a few hundred thousand, this is really not a joke. Many friends laughed at me why I didn't cash out or pay off my loan. In fact, I figured it out. If I didn't believe in value investing, I wouldn't have been able to make tens of millions from tens of thousands of principal.

But what really helped me get out of the trough was an important decision made after 1994. At that time, the entire cryptocurrency circle was immersed in the shadow of 1994. I accidentally saw the news about Polkadot IC0, and because I knew it was a project by Gavin, the founder of Ethereum, I paid attention to it. At that time, Polkadot IC0 had to be locked for two years and strictly undergo KYC certification. At that time, the official website listed a large number of disclaimers, which were scary, saying that DOT might not be online and might be worthless. Many people were scared by this clause and dared not invest or invested very little. Because I saw the huge potential of cross-chain in the future from Polkadot's research, I invested half of my remaining assets.

Three years have passed, and Polkadot has brought me huge returns. I am very glad that I invested in Polkadot, but this is due to my deep understanding of blockchain. If I didn’t have a good understanding, I would not have been able to invest most of my funds in the 1994 environment. I have summarized my investment experience in the past few years, and there are the following points:

1. Don’t do short-term chasing of rising and falling prices during a bull market. Those who make the most profit in a bull market are often those who hold on to their coins.

2. Don’t add leverage. I have seen too many people fall before dawn because of leveraged contracts. Using credit cards and taking out loans to buy coins is actually a way to add leverage. Adding leverage will make your mentality worse. Always make sure to only use spare money for investment.

3. You must cash out in a bull market, no matter how much or how little, and keep stable funds to cope with the possible bear market.

4. Grasp the trend and make money from the trend. What is a trend? In 2016, many bigwigs were optimistic about Ethereum, because Ethereum smart contracts and one-click chain issuance provided the soil for the popular ICO in 2017. Similarly, I participated in Polkadot's ICO in 2017 because I was optimistic about the qualitative changes that cross-chain can bring to the blockchain industry.

two,

For retail investors who are not very knowledgeable about technology, I would like to analyze from several non-technical aspects why Polkadot is the trend of the bull market in the next two years, and it can even be said to be the leader of the bull market.

First of all, the first thing I look at when I look at a project is the founder. The reputation of the founder often determines whether the project has the potential to become a mainstream currency. For example, EOS is well-known to everyone. Everyone knows that BM is a very powerful person. He has worked on the famous BitShares and Steem projects. With this reputation, many people naturally pay attention to it. Although the EOS team is not doing anything at present, it does not affect its popularity in 2018 and led the bull market in 2018. Everyone should also know about ADA. In fact, this coin has no technology and ecology, but the founder is one of the co-founders of Ethereum. This name alone made ADA hit the top ten in market value in 2017.

The founder of Polkadot is Gavin Wood. Those who are familiar with him know that he is the former CTO of Ethereum and can be said to be the creator of Ethereum. Vitalik only proposed his idea that Ethereum is a programmable blockchain, a smart contract and a decentralized application platform. But it was Gavin who actually wrote the code to realize it. Let's see what contributions Gavin has made to Ethereum.

1. In January 2014, he completed Ethereum's PoC-1, which was also the initial prototype of the C++ version of the Ethereum client.

2. In March 2014, he completed the Ethereum Yellow Paper. The level and value of this document are beyond words.

3. In August 2014, he invented Solidity, a high-level language designed for smart contract development. Solidity has almost become the industry standard for smart contract development in the following years.

He made almost all the important technical decisions in the early days of the Ethereum project, so it is no exaggeration to say that Dr. Gavin Wood is the "Father of Ethereum" in engineering.

Think about it, Ethereum is firmly in the second place in the market value of blockchain, and it is the undisputed king of public chains, but the people who created it saw its drawbacks and decided to make a more perfect project. This alone is enough to attract people's attention. To be honest, in 2017, I was willing to lock up my position for two years to invest in Polkadot. Not only did I value the huge halo of the founder Gavin, but in fact, you can also think about it. From the perspective of technical difficulty, there are only a few teams in the world that can achieve cross-chain, but it is different when the person who is most familiar with Ethereum in the world does it. Gavin is the one who successfully created Ethereum, and it should not be difficult to create a cross-chain giant ship that is the mother of all chains.

So what we can see is that Polkadot is not like 99% of the pie-in-the-sky projects on the market, which only make promises and brag without doing anything. Instead, it has real technology that can be realized. No one can doubt Gavin’s engineering ability. This is the most important point we need to know before investing in Polkadot. You may not understand the technology, but you must understand Gavin as a person.

The second point is to see whether the project has done practical things and whether the raised funds have been used for research and development or ecological support. As mentioned above, EOS has been popular for a while because of the halo of BM, but in the long run, has EOS's BlockOne really used the raised funds to support the ecosystem? Everyone knows this well. After ICO in 2017, Polkadot did not trade DOT before the bull market like most projects, but had to lock up the position for two years and could not transfer the account. In the year when the market was the hottest, the Polkadot team was willing to lock up the position and refused to hype. Instead, it developed behind closed doors like a craftsman, and finally successfully launched it after three years of hard work. The Web3 Foundation, Polkadot's investment department, also supports Polkadot's ecological projects. You can see that most of the Polkadot ecosystems that can be presented to us now have received investment from the Web3 Foundation. In order to support these projects, they can even put their logos in Polkadot's light white paper. Everyone can see this, so I don't praise Polkadot, I just tell the facts.

The third point is to see if there are any points that can trigger a bull market. People have been enthusiastic about DEFI recently. The popularity of DEFI is inseparable from Ethereum smart contracts and the maturity of oracle technology. IC0 led the bull market in 2017. It is precisely because Ethereum smart contracts can issue coins with one click that there is soil for the bull market. Let's see what points Polkadot has that can become a booster for the bull market.

1. Polkadot's Substrate can launch a chain with one click. Ethereum can only launch coins with one click and can only write smart contracts, but Polkadot's Substrate framework allows a programmer to quickly build a blockchain and develop functions that can only be realized by public chains. Everyone should understand this point very well. This is a key factor in the explosion of blockchain ecological projects. With this technical tool, various blockchain applications can flourish everywhere, and killer blockchain projects may be born. In summary, Polkadot has greatly lowered the threshold for realizing a public chain, allowing more people to participate.

2. Polkadot's cross-chain interoperability empowers DEFI. If Ethereum's DEFI has planted a seed for the bull market, then Polkadot's cross-chain DEFI is the powerful hormone that makes this seed grow wildly. In my opinion, although DEFI is now less popular, it is still a booster for the bull market. After Polkadot's cross-chain DEFI is implemented, you can imagine that with the cross-chain technology of Wanlian Interconnection, the DEFI of public chains such as Ethereum, EOS, and Tron can be connected, freely interoperable, and freely cross-chain transfers, and Bitcoin can also join in, new public chains can also join in, and even open up your mind. Is it possible for the RMB digital currency DCEP to join in, and eventually form a DEFI carnival for the entire blockchain industry. I can't be sure that such a DEFI grand occasion will come, but what I can be sure of is that cross-chain empowerment of DEFI, and Polkadot must be a beneficiary.

3. Finally, there is the Polkadot slot auction that everyone is talking about. This should also be what everyone is most concerned about. Many people are doubting the necessity of slot auctions. From the perspective of the market, I will analyze why slot auctions are also the key point to trigger the bull market. In 2017, IC0 made Ethereum the leader of the bull market. The reason is very simple. One-click coin issuance allowed many project parties to raise ETH, and the market generated a huge demand for ETH. Similarly, in 2019, various IEO platform coins became the leader of the bull market, also because the project parties wanted to raise platform coins, and the market had a demand for platform coins. Then Polkadot's slot auction will also have more project parties participating because of the one-click chain issuance. Unlike IC0 and IEO, DOT is not transferred to the project party but locked in the Polkadot network. This is equivalent to renting DOT to obtain the project party's tokens for free, and the principal is guaranteed to be safe and additional income can be obtained. Wouldn't this make investors crazy? The ETH and platform coins raised by IC0 and IE0 are likely to be sold off by the project parties as the market is not good, but the DOT locked in the slot will not form potential selling pressure in the market. If you think from the perspective of supply and demand, you will understand the significance of the slot auction for DOT.

The cryptocurrency world is actually very simple. Wherever there is a money-making effect, a hot spot may form, leading the bull market.

three,

After talking about the potential of Polkadot, let’s talk about how ordinary investors should seize the opportunities of Polkadot and its ecosystem.

The first is staking mining, which is a relatively conventional method. Holding DOT can obtain an annualized staking income of about 13%. If you want to hold it for the long term, it is better to stake it instead of leaving it in a wallet or exchange.

The design of Polkadot’s token model is very interesting. Before the parachain auction comes out, it will force holders to make a choice. Either you stake and mine to maintain Polkadot’s network security, or you deposit it to the exchange to provide liquidity for transactions. Keeping it in your wallet for nothing and not mining is equivalent to a disguised loss of DOT. So for holders who are optimistic about Polkadot in the long term, I suggest that most of your positions should be staked.

The slot auction is essentially a model that sacrifices the income from staking mining to obtain the tokens of the parachain project. The variance of this income is relatively large. Some people who invest in relatively high-quality projects may even obtain parachain tokens that exceed the value of the staked DOT principal. However, some people who invest in not-so-good projects may fail in the parachain auction and may lock up DOT for more than 6 months in vain. If the parachain is not elected, the obtained parachain tokens may also return to zero. Since the slot auction has not yet been implemented, it is not available for participation at present. You can follow us to get the latest news.

In addition, some projects in the Polkadot ecosystem have good money-making points, for example, some projects can be used as validator nodes. Polkadot uses the NPOS consensus mechanism. To be a validator node, you only need to let people holding DOT nominate your node to earn income, but the threshold is very high. You need at least 3 million DOTs to successfully run for a formal node. For Polkadot's ecological projects, some also use Polkadot's NPOS consensus mechanism and can also be used as validator nodes. When the project is first launched, there may not be many people paying attention. If you can be more active in the community and accumulate a group of fans who trust you, you can be a validator node for Polkadot ecological projects. I think this is an opportunity that ordinary investors can participate in. The risk is relatively low, and there is no need to invest capital. The project party will also provide guidance on technical aspects. For example, ChainX, Bifrost, Darwinia and other projects can be used as validator nodes.

Regarding the Polkadot ecosystem, I think there may be dozens or even hundreds of times more projects. This is determined by Polkadot's slot auction mechanism. If the project party does not do a good job, the project cannot generate value and cannot pay the high slot rental fees. From this point of view, I think investing in Polkadot ecosystem projects is much more reliable than investing in Ethereum DAPP. There are many opportunities here, and you need to have a pair of wise eyes to identify truly valuable projects.

I think next year will be the peak of Polkadot, because Bitcoin halving has been around for a while, and the halving market has not really arrived. Although there are news that the parachain is being tested, according to the style of the Polkadot technical team, the parachain will not be easily launched until the test is perfect. I speculate that this time point is likely to be the beginning of next year, the second half of this year. Don't have too many expectations for DOT. Even before it really takes off, DOT will squat and wash out most of the speculators.