Polkadot Network ICO Review


Polkadot Network is the protocol that connects various blockchains. Will Gavin Wood, the co-founder of Ethereum and Parity, succeed again with Polkadot?

BASIC INFO

Name: Polkadot Network
Symbol: DOT
ICO Supply: 5,000,000 DOT (incl presale and crowdsale)
Total Supply: 10,000,000 DOT (50% goes into the reserve)
ICO Date: 15-Oct-2017
ICO Price:
Unknown. Dutch Auction.
Bonus: 15% discount on the final price of DOT for the first hour participation.
They are running a Dutch auction (higher price is paid first).
Whitelist: Currently running.
They are using a 3rd party for verification and it costs 0.024 ETH (cca $6).

Social Interest:
Twitter: 13,700
Reddit: 305

IDEA

• In the future, we see a world filled with diverse blockchains all serving specific and unique purposes. Currently, these blockchain networks exist in isolation with no communication or interoperability between them; this is an existential problem that needs to be addressed in order for a truly trustless ecosystem to develop and thrive. Polkadot is a network that connects blockchains. With Polkadot, various blockchains are able to send and receive messages between each other.

• Polkadot is a heterogeneous multi‑chain technology.It consists of many parachains with potentially differing characteristics which can make it easier to achieve anonymity or formal verification.

• Polkadot is a protocol that allows independent blockchains to exchange information. Polkadot is an inter-chain blockchain protocol which unlike internet messaging protocols (e.g. TCP/IP) also enforces the order and the validity of the messages between the chains. This interoperability also allows the additional benefit of scalability by creating a general environment for multiple state machines.

• Security is pooled within the Polkadot ecosystem, which means that individual chains can leverage collective security without having to start from scratch to gain traction and trust.

• Secure the relay chain by staking DOTs, validating proofs from collators and participating in consensus with other validators.

• Examples:
– A blockchain company requires contributors of their crowdsale on ethereum to be verified by a private bank chain before accepting ETH.
– A weather oracle confirms a hurricane and IOT oracles confirm damage to a homeowner’s property. The private insurance chain that covers the homeowner issues a token to payout appropriate damages.
– Decentralised exchange parachain allows users to anonymously deposit bitcoin using Zero knowledge proofs using the Zcash parachain
– Payment processor private chain requires users to be Verified with private bank chain to make purchases in Bitcoin

MY THOUGHTS

• Founder of Polkadot is Gavin Wood, co-founder and main developer of Ethereum. He left Ethereum team to develop Parity, a corporate-facing client and wallet.

• It’s a bit hard to find much information about the Polkadot ICO sale process. The countdown timer was set up today, without big hype. It makes me think that it might actually be quite a big thing, as obviously the team is not actively searching for investors, but rather the investors are coming to them.

• From what I was able to get from the chat, there was a presale already in July, and the way to be part of the crowdsale will be through Parity wallet (v.1.7.4) – there should be a Dapp for participation in Polkadot DOT token sale. Leave the comment if you are unable to find it or set it up, and I will try to help.

• Tokens purchased during this sale will not exist until the genesis block launch, currently estimated to happen in Q3 2019 (!). This is pretty big thing. There is no flipping with this one. There is a lot of risk. Who knows what will happen in 2 years. In Crpytos 2y=20y real world time. But if they really manage to pull this one out, it could be something on a scale of Ethereum.

• As a form of Dutch auction, the token price (and therefore “cap”) starts high and decreases over time until all tokens are sold. The timetable of how fast the price reduces is predefined, starting fast and getting slower over time.

• Tokens might not be so easily tradeable or liquid, as the main goal of the tokens is the network governing using Proof of Stake process. You would stake your tokens in order to get the rewards.

• Notable individuals and companies are following this project on Twitter, including Charlie Lee, Bitshares, Omega One, etc.

• Polkadot.io — maintained by Parity Technologies, the development team commissioned for the build-out of Polkadot.

CONCLUSION

• This goes up to my green list. If Gavin Wood manages to pull this one off, and he just might given his success with Ethereum and Parity, Polkadot Network could be really big thing (Donald Trump big). The scale of project is comparable to Ethereum. If you invested in Ethereum in 2013 when it was in the similar phase that Polkadot Network is now, you would do good for yourself.

• However, given that it’s only proof of concept and that you will get your tokens only in 2 years, it’s more like investing in Kickstarter project rather than in an ICO. My recommendation is to invest a small portion of money, that you won’t sweat about if nothing happens to the project. I personally will be looking to invest $200-300 in this one, where my usual ICO investment would be 10-20x larger.

UPDATE  (15-Oct-17)

I decided not to participate in this ICO. The team released the crucial information about the amount raised in the presale only one day prior to the crowdsale. This amount is CHF 83 million, which is a lot of money raised already in the presale. The crowdsale has started a bit more than an hour ago and they have the total amount of almost 400,000 ETH raised so far (I would assume this includes the presale amount), which gives them the current market cap of $130 million, which I think is already huge for a protocol and tokens which might be mined only in 2 years. Taking into consideration the opportunity cost of liquidity lockup, the valuation like that just doesn’t leave too much room for the upside, in my opinion.I decided to not participate in this ICO. The team released the crucial information about the amount raised in the presale only one day prior to the crowdsale. This amount is CHF 83 million, which is a lot of money raised in the presale. The crowdsale has started a bit more than an hour ago and they have the total amount of almost 400,000 ETH raised (I suppose this includes the presale amount), which gives them the current market cap of $130 million, which I think is already huge for a protocol and tokens which might be mined only in 2 years. Taking into consideration the opportunity cost of liquidity lockup, the valuation like that just doesn’t leave too much room for the upside, in my opinion.I decided to not participate in this ICO. The team released the crucial information about the amount raised in the presale only one day prior to the crowdsale. This amount is CHF 83 million, which is a lot of money raised in the presale. The crowdsale has started a bit more than an hour ago and they have the total amount of almost 400,000 ETH raised (I suppose this includes the presale amount), which gives them the current market cap of $130 million, which I think is already huge for a protocol and tokens which might be mined only in 2 years. Taking into consideration the opportunity cost of liquidity lockup, the valuation like that just doesn’t leave too much room for the upside, in my opinion.

Additional reads
• Another review of Polkadot ICO:
https://steemit.com/polkadot/@edwardthomson/my-preliminary-analysis-of-the-polkadot-ico
• Good read to understand the possibilities and what they are trying to achieve:
https://medium.com/polkadot-network/polkadot-is-coming-a8b86fde9161
• Must read as well:
https://blog.stephantual.com/web-three-revisited-part-two-introduction-to-polkadot-what-it-is-what-it-aint-657782051d34 
• Polkadot Network ICO Sale process:
https://medium.com/polkadot-network/polkadot-token-sale-update-a3060385c04f

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7 Responses to Polkadot Network ICO Review

  1. Pingback: Quantstamp Presale & ICO Review – BuddhaTrader.com

  2. Stan says:

    The thing is Ethereum price was few cents back in 2013 and price of DOT is 1 Ethereum=$340.

    • BuddhaTrader says:

      Hi Stan, we actually don’t know what the price of DOT token will be. It’s a Dutch auction and the hard cap is not know yet.
      The only new information we have is that the early contributions reached CHF 83 million already (published on their twitter).

  3. BuddhaTrader says:

    Polkadot ICO status 15 minutes into the crowdsale:
    DOT Crowdsale Status 15 minutes after start

  4. Chambsky says:

    I threw in $80 just to see what happens. So much can happen in 2 years. They may end up laying a ton of the early groundwork like they have already with Ethereum, but when you think about it, how many minds were thinking about crypto when they started up Ethereum compared to now…. lots can happen.

    Also, great review. Love to see more.

    • BuddhaTrader says:

      Sure, might end up being a good investment.
      For me, it was just too many unknowns in the end.
      My reasoning is that if I invest $300 and lock them up for 2 years – missing the opportunity cost of investing them in Ethereum for example, which might potentially increase in value 30-40x in the next 2 years, or missing potential flipping profits on various ICOs in the next 2 years, and given all the risks that the project might just fail, or never get the traction it needs (you should read their disclaimer to really understand the meaning of this – it’s scary) – what would be the reasonable return I would be satisfied with from Polkadot investment?
      Well, for me it’s 100x return.
      If Polkadot would have raised $15-20 millions in the Pre-sale and ICO phase, 100x return would give them valuation of $1.5-2 billions, which I think could easily happen for a project of this scale, and hence I would be more than happy to invest. And probably even more than 1 ETH.
      However, by all looks of it, the Polkadot will end up raising $150 million or more,
      100x price increase would give it the valuation of $15 billions – which means, if that would to happen now, it would overtake Ripple to become the third most valued cryptocurrency in the world today. And what are the real chances of that happening?

      • anonynomus says:

        They are quite high, given the scammy nature of even some highest valued cryptocurrencies.

        When you asssume a 30x increase in value for Ethereum, it will be a 900 billion evaluation.

        Lets say Polkadot with its universal vision will be valuated at 20% of what ethereum is, which gives a valuation of 180 billion, i.e. a 1000x increase. Because all succesfull blockchains scale with each other, i.e. the market cap of the whole ecosystem is connected.

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