The year 2021 saw a lot of layer-one (L1) blockchain protocols come to age thanks to the growth of nonfungible
tokens (NFTs) and decentralized finance (DeFi). This growth forced many investors to look outside the Ethereum
network for solutions. The Ethereum network for a long time now has been raged with network congestion and
high fees causing so many barriers for investors. As a result, this solution was highly needed.
Protocols such as Avalanche (AVAX), Cosmos (ATOM), and Fantom (FTM) saw an increase in price in their
native coins as their ecosystems flourished. On the other hand, projects such as Polkadot (DOT) relatively
performed below par despite investors' high expectations for that project.
But let's put aside the unique potential each protocol possesses in terms of time to finality and transactions per
second. Here are several factors that may have influenced DOT's poor performance in comparison with other L1
competitors.
Interoperability is a key factor
Among the many themes of last year was cross-chain interoperability between distinct blockchain networks.
Ethereum took the center stage and became the most important connection to build on. And this is because most
crypto projects presently operate on the Ethereum Blockchain.
Protocols such as Harmony, Avalanche, Fantom, and Binance Smart Chain, built cross-chain bridges. This
eventually led to a significant increase in the price of their native token. On the other hand, even though Polkadot
was uniquely developed to provide support for meta protocol, no major bridge was released. Hence, this caused
many crypto investors and traders to be less enthusiastic about the project since many more look to engage with
NFTs and DeFi.
Meanwhile Cosmos like Polkadot also never saw a major bridge release that linked its ecosystem wijt Ethereum.
However, there were few integrations such as the addition of Ether which served as a collateral asset on Terra; a
proof that cross-chain compatibility is not a hoax.
The late launch of parachain auctions
As we approached the end of 2021, the networks mentioned above witnessed a healthy amount of cross-protocol
interactions and other activities. Meanwhile, projects like Polkadot were still dragging behind trying to finalize their
launch on the mainnet.
The late launch can be attributed to the fact that Polkadot's parachain auctions didn't commence until mid-
November. At that time, a smart contract parachain compatible with Ethereum known as Moonbeam (GLMR) had
already obtained the first slot
On November 4th, 2021, DOT witnessed a surge in prove reaching an all-time high of $55. This can be attributed
to many investors buying into the project as they contributed to the parachain. However, the price had eventually
plummeted, reaching a price range of $23 by the time the auction officially started.
On the 11th of January, Moonbeam officially launched on the Polkadot network and since then have recorded
over one million transactions. Moon beam amassed such a massive transaction since users can send ERC-20
tokens into the Polkadot ecosystem. Following Moonbeam's launch, DOT witnessed a price increase but once
again slipped further down. DOT now trades below $25.
The benefits of holding DOT
Another factor that might be negatively influencing the price and popularity of DOT is the confusion surrounding
its use and benefits. On several competing networks, the token is used to carry out contract actions like swaps
and token transfers. Meanwhile, DOT on the Polkadot ecosystem is used as payment for gas fees.
Apart from being utilized for parachain auctions, DOT is primarily used in governance votes, for network security,
and staking support for the operation. However, even though governance abilities are vital for the general
wellbeing of blockchain protocols, many crypto users are not enthusiastic about the process. Most crypto users
are instead more eager to participate in NFTs, gaming, and DeFi.
Presently, a 13.94% APR offer is being proposed by DOT to stakers but it seems that might not be enough to
quench yield farmers' appetite. Currently, these yield farmers are more interested in getting more bang for their
money.
Above all, while the project seems to be moving slow, Polkadot's long-term outlook remains strong. The project
still has a dedicated and active community of crypto enthusiasts who still believe in the project.
Digital Denarius: How a crypto revolution could have saved the Roman Empire
Two centuries apart, two similar currency crises. The Roman Empire and modern-day Venezuela share a lot
more things in common than you might believe. Both deeply understand the risks of rising inflation and the
consequences of a decline in investors' confidence. However, only one of the two has cryptocurrencies on its
side.
Bolivar is the official currency of Venezuela and for five years now it has suffered from hyperinflation. Factors
such as constant currency devaluation, heightened public spending, and an increase in the minimum wage are
responsible for this hyperinflation.
For a long period, the Roman Empire relished in commercial benefits and vast trades linked to the first fiat
currency. The roman currency was divided into three; brass or copper coins (Dupondius and Sestertius), silver
(Denarius), and gold (Aureus). While the value of these coins fluctuates over time, an imperial decree made sure
the exchange rates were fixed.
This very simple financial creativity gave way to untold riches and vast commercial opportunities to Roman
citizens. Eventually, this led to the transition of Ancient Rome which depended on imperial conquests and the
should of war to a society established on commerce and free trades.
Similar to modern fiat currencies, the coins were backed by a complex system of banking. This system allowed
for services to be rendered and goods to be purchased without the need for physical exchanges of plentiful
precious coins. Exactly like our modern economy, a larger percentage of the currency in circulation was held in
bank deposits. The only difference is the modern-day banking system is faster and instantaneous aside from that
the process is the same.
Eventually, the Roman Empire, similar to modern-day Venezuela began to experience a decline in investors'
confidence and heightened inflation. All this was courtesy of currency debasement and reckless public spending
by the Roman government.
However, what would have happened if the Romans like modern-day Venezuela were able to trade Denarius for
Ethereum. Or better still, if the Roman government were able to set up a digital Aureus could Ancient Rome have
survived?
Two thousand years apart, Caracas and Rome face the same problem: Hyperinflation
The complex banking system and fixed exchange rate came to an end in 244AD to 249D during the time of
Emperor Philip. Variable exchange rates made commercial activities very difficult for the Romans. Ultimately,
citizens could no longer ascertain the value of their coins and economic activities dipped. This then led to the end
of the very first government-controlled currency in the world.
While similar situations have transpired in Venezuela, the citizens of Venezuela have had a saving grace in
cryptocurrencies. They are now able to bypass the Bolivar through the adoption of digital currencies such as
Bitcoin, Ethereum, and so on. In fact, the Venezuelan government, in 2018, introduced its digital coin dubbed the
Petro.
While Venezuela had cryptocurrency to turn to, Ancient Rome didn't have that option. As a result, the country fell
into a turmoil of economic activity which triggered a decline in economic growth. A decline in the ancient
community would never really recover.
Romans could have made a mint from crypto
No doubt cryptocurrency would have saved the Romans from economic decline. Not just that, crypto would have
saved the Romans from constantly minting new currencies.
What led to hardship was the scarcity of silver and gold to make new coins. As a result, the government had to
intervene and so they cheated by coating each coin with the base metal. When discovered, this ultimately led to a
decline in investors' confidence in the coins they held.
The decline in investors' confidence turned for worse when a civil war caused the Roman citizens to abandon
vital reforms that controlled the economy. Once that was lost, trade and production also took a decline.
Even though Venezuela experienced similar circumstances, the advent of crypto paved a way out of their
hardship. Presently, Venezuelans use cryptocurrencies for everything be it pizza deliveries, hotel booking, rent,
and so on. A saving grace indeed.
Roman cryptocurrencies could have survived to modern times
The Venezuelan government, including other governments across the globe, are now starting to adopt crypto as
the official currency. The government of every country should take heed to the experience of Ancient Romans.
They should also understand the disadvantages that come with centralized currencies.
Maybe if the Romans had been fortunate enough to have access to crypto, their economy wouldn't have
collapsed. If so, we probably would have inherited a digital currency from the era of Vespasian and Nero.
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