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What Projects Are Being Built on Polkadot?

Along with Cardano, Polkadot is among the hottest cryptocurrency projects in the space right now.

And for a very good reason.

Featuring unique technology and an innovative concept, the crypto project seeks to solve one of the industry’s most opportune problems: interoperability.

For that reason, over 300+ projects are being built on top of Polkadot. And, in this article, we have collected the most exciting ones to explore.

Polkadot 101: What We Know So Far

Before we deep-dive into the actual projects, let’s first revisit the essentials about Polkadot.

Founded in 2016 by the Web3 Foundation, Polkadot is a decentralized, open-source Web3 blockchain interoperability platform.

The protocol’s main goal is to bridge normally unconnected blockchains, including private, public, and consortium chains as well as oracles.

Polkadot’s main chain is called the relay chain, which functions as a communications hub between different parachains while providing security for the whole network.

Parachains are independent blockchains running on top of the relay chain, with each serving a unique purpose in the Polkadot ecosystem. While they run in parallel with the main blockchain, parachains can communicate with each other through the Cross-Chain Message Passing (XCMP) protocol.

Parathreads are similar to parachains. However, while the latter has a dedicated slot for their chain with continuous uptime, parathreads share a slot among a group and feature less-frequent operations.

On the other hand, bridges are responsible for providing interoperability for Polkadot, connecting the network, and allowing transactions between different blockchains.

Another important component of the project is its native DOT token that has three core use-cases:

  • Participating in the network’s governance.
  • Staking via the Nominated Proof-of-Stake (NPoS) consensus mechanism.
  • Bonding (locking DOT to add new parachains).

Due to Polkadot’s architecture, the blockchain network features a high level of security and scalability (up to 1,000 transactions per second on the main chain and up to 1 million TPS with parachains). Especially when you’re used to Bitcoin or even Ether, you’ll notice transacting DOT is very, very fast.

It’s also important to mention that Polkadot can upgrade its network without soft or hard forks, preventing future chain splits.

The Top 5 Projects Built on Polkadot

Now that we have reviewed the basics of Polkadot, let’s take a look at the most exciting projects built on top of the blockchain protocol.

1. Kusama

Kusama is among the most popular Polkadot projects. It’s part of the same foundation that created Polkadot.

Advertised as “Polkadot’s wild cousin,” Kusama functions as the ecosystem’s canary network.

Like miners used canaries in the past to detect the presence of carbon monoxide, Kusama serves as a testbed for Polkadot with the goal to pilot new features, discover bugs and potential vulnerabilities, as well as fix them.

Simply put, every new release or component that hasn’t been tested and audited yet gets implemented first on Kusama, which shares the same codebase as Polkadot.

What’s interesting about Kusama is that it is more than a testnet. It features its own functional KSM token while providing the option for anyone to explore new features potentially coming to Polkadot.

You will see new parachains and other projects on Kusama, first before they get added to Polkadot.

2. Acala Network

Acala Network is a decentralized finance (DeFi) hub and stablecoin platform on Polkadot.

The project’s core component is the Acala Dollar (aUSD), a multiple-asset-pegged stablecoin with a value of $1 per coin.

What’s interesting about aUSD is that, unlike decentralized stablecoins like DAI that are based on a single network, the Acala Dollar can be used across multiple blockchains thanks to Polkadot’s interoperability features.

In addition to its stablecoin, the whole Acala ecosystem has cross-platform functionality, consisting of different DeFi applications, such as lending and borrowing, liquidity staking, atomic swap, and price oracle solutions.

Acala also features its own native coin, ACA, which will serve as a governance and network utility token while providing an emergency solution against sudden price collapses of collateral assets on the protocol.

Interestingly, while its mainnet hasn’t been launched yet, the project had already raised $7 million from investors in August 2020.

3. Reef Finance

Based on Polkadot, Reef Finance is an interesting crypto project that seeks to solve DeFi’s liquidity and yield-related issues by connecting fragmented protocols and solutions under one platform.

What’s so special about Reef is that the DeFi protocol can aggregate liquidity from various sources on the crypto market, including both decentralized and centralized exchanges via the solution’s Global Liquidity Aggregator.

As a result, users will be able to trade and swap digital assets more efficiently and with reduced slippage.

Reef does the same for different, popular DeFi activities – such as borrowing, lending, staking, and liquidity mining – via its AI-driven Smart Yield Farming Aggregator to provide the best rates for users.

Another key functionality of the platform is smart asset management, which provides users access to various portfolio management features, such as active asset rebalancing, guided asset management, and diversification.

The project has its native token REEF, which it used to raise nearly $4 million with a public sale in September 2020.

In addition to governance, REEF can be utilized to pay protocol fees, stake coins in pools, as well as for yield distribution.

4. Centrifuge

Centrifuge is a DeFi project that is designed to be compatible with both Ethereum and Polkadot using the Substrate framework.

Centrifuge’s ecosystem consists of two main products: the Centrifuge Chain and Tinlake. While the prior is the main blockchain that is powered by its native Radial (RAD) governance token, Tinlake is a dApp that uses smart contracts for securitizing assets.

The project aims to connect the fintech and decentralized finance spaces by allowing businesses to tokenize real-world, non-fungible (NFT) assets, such as invoices, royalties, and mortgages, to borrow funds and access bankless liquidity.

To achieve that, investors provide liquidity using two different token structures: TIN and DROP.

Both coins represent the liquidity users have supplied to Centrifuge’s pools and offer interest to holders over time. However, TIN involves more risks with higher potential yields, while DROP is protected against defaults and provides lower returns to investors.

In addition to empowering the DeFi space with real-world assets in the form of NFTs, Centrifuge allows businesses to add liquidity to their normally illiquid assets and access more capital without going through the traditionally expensive process of securitization.

5. Moonbeam

The Polkadot relay chain lacks the functionality to support smart contracts natively.

However, the crypto project Moonbeam seeks to change that by deploying an Ethereum-compatible smart contract parachain on Polkadot.

As soon as Moonbeam is launched on Polkadot, it will add smart contract functionality to all other parachains and bridges that connect the network to other blockchains, such as Ethereum or Bitcoin.

Since the project’s chain supports Web3 and the Ethereum Virtual Machine (EVM) as well as popular development tools like MetaMask and Truffle, developers can easily deploy existing smart contracts on Moonbeam with minimal configuration changes.

As a result, Ethereum-based crypto and DeFi projects can extend their reach by creating a cross-chain solution or alternatively move their existing workloads to Polkadot to avoid Ethereum’s currently high gas fees with minimal effort.

Moonbeam features its own native Glimmer (GLMR) coin, which functions as a utility token.

GLMR’s main use-cases include participating in on-chain governance, paying for smart contract execution and transaction fees on Moonbeam, as well as staking the token to support the network.

Interestingly, the decentralized, blockchain-based data exchange Ocean Protocol announced earlier this year that it will integrate its solution with Polkadot via Moonbeam’s platform.

What’s Next For Polkadot

Polkadot has launched its relay chain in May 2020 and has since attracted numerous exciting projects.

While the network used the Proof-of-Authority (PoA) consensus mechanism initially, it later evolved into an NPoS blockchain. Later on, the project enabled on-chain governance and balance transfers.

Currently, Polkadot is in its most interesting phase, in which we will see the implementation and the launch of multiple parachains on top of the relay chain.

However, there are few steps before a parachain can be launched on Polkadot.

First, the community has to run pilots on parachain testnets and Kusama to eliminate bugs and potential vulnerabilities, as well as to ensure a stable release.

As the last step, if everything goes well during the parachain tests, the community will begin parachain slot lease auctions, in which users will choose the projects to launch on Polkadot.

According to the project, parachain slots will be auctioned one-by-one, and each auction will last approximately two weeks.

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