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- Despite providing numerous token incentives, Polkadot’s daily activity and revenue have been on a downward trend.
- Proposed changes including the addition of new validators and expansion of Polkadot’s cross-consensus message format (XCM) aim to rejuvenate the network, but the performance of its native token, DOT, remains lackluster.
The Struggle of Polkadot’s Token Incentives
Polkadot, despite efforts to stimulate its protocol, has witnessed a decline in daily activity and revenue. Token incentives aimed at attracting users to the network were introduced, but these measures have yet to show a positive impact on its performance.
As per the Polkadot Insider’s tweet on May 27, Polkadot [DOT] stood fourth in token activity, surpassing networks like Solana [SOL], Filecoin [FIL], and Litecoin [LTC]. In addition, the network provided token incentives worth over $11.4 million. However, according to Token Terminal’s data, the daily activity has plunged by a significant 69.9% over the last 30 days.
Gm ☕️
By the end of the year the value proposition of $DOT will be much clearer than any other token other than maybe #Bitcoin
1. As OpenGov goes live on @Polkadot, the community will truly be in control. DOT will be actively used to vote on the activities of the network at… pic.twitter.com/fZWSTvCs8M
— Csaint02 👑 (@csaint02) May 29, 2023
Concurrently, Polkadot’s revenue dropped by 25% within the same timeframe, raising doubts about the effectiveness of token incentives.
Proposed Changes to Rejuvenate Polkadot’s Performance
In light of this struggle, there have been proposals to make amendments to the Polkadot network. One such suggestion includes incrementally increasing the number of validators, adding five new ones in each period until reaching 400. This gradual addition is believed to strike a balance between security and network scalability.
Core developers are encouraging these changes, pushing for increased value and network participation.
On a positive note, Polkadot’s cross-consensus message format (XCM) saw notable expansion in the first quarter of this year, extending its capabilities beyond transfers. The number of channels using XCM surged by a remarkable 60%, signifying growing adoption of Polkadot’s interchain communication protocol. This could potentially promote greater interoperability and functionality within the network.
The Falling Performance of DOT
Despite these revitalization efforts, Polkadot’s native token, DOT, has been experiencing a steady decline, reflecting in its trading volume as well. Over the past month, DOT’s volume plummeted from 250 million to 90 million, resonating with the overall negative sentiment surrounding the token. The crypto community holds modest expectations for a swift price recovery.
Furthermore, stakers’ confidence appears to be waning, with only 45.3% of the circulating DOT being staked according to Subscan’s data. This decrease in staking participation raises concerns about the faith of token holders in Polkadot’s future potential.