2021 was a sort of “coming-of-age” for many layer-one (L1) blockchain protocols because the growth of decentralized finance (DeFi) and nonfungible tokens (NFTs) forced users to look for solutions outside of the Ethereum (ETH<\/a>) network where high fees and network congestion continued to be barriers for many.<\/p>\n Protocols like Fantom (FTM), Avalanche (AVAX<\/a>) and Cosmos (ATOM<\/a>) saw their token values rise and ecosystems flourished as 2021 came to a close. Meanwhile, popular projects like Polkadot (DOT<\/a>) underperformed, comparatively speaking, despite the high expectations many had for the sharded multi-chain protocol. <\/p>\n Setting aside the specific capability that each protocol offers in terms of transactions per second and time to finality, here are several factors that may have played a role in DOT’s laggard performance when compared to other L1 competitors. <\/p>\n One of the major themes of 2021 was cross-chain interoperability between separate blockchain networks, with a bridge to Ethereum being the most important connection to establish due to the fact that a majority of projects currently run on the network. <\/p>\n Protocols like Fantom, Binance Smart Chain, Avalanche and Harmony\u00a0developed cross-chain bridges and this led to a noticeable bump in their token price, total value locked and on-chain activity. <\/p>\n Despite the fact that Polkadot was specifically designed to offer multi-chain support as a \u201clayer-zero\u201d meta protocol, there was no major release of a bridge that connected Polkadot with Ethereum in 2021 and this left the protocol unloved by crypto traders looking to engage with DeFi and NFTs. <\/p>\n Cosmos, likewise, didn\u2019t see the release of a major bridge that connected its ecosystem with Ethereum, but there were minor integrations like the addition of Ether as a collateral asset on Terra which demonstrated that cross-chain compatibility was possible. <\/p>\n As 2021 came to a close, all of the previously mentioned networks were seeing a healthy amount of activity and cross-protocol interactions while projects on Polkadot were still finalizing their preparations to launch on the mainnet. <\/p>\n This was in part due to the fact that the parachain auctions for Polkadot didn\u2019t begin until November 11 when Moonbeam (GLMR), an Ethereum-compatible smart contract parachain, secured the first slot. <\/p>\n DOT saw its price rise to an all-time high of $55 on Nov. 4 as those interested in contributing to the parachain auctions secured their tokens, but by the time the auctions had officially started its price was already on the downslope toward a low of $23.28 on Jan. 10. <\/p>\n Moonbeam official went live on the Polkadot network on Jan. 11 and has managed to rack up more than 1 million transactions as users were finally able to transfer ERC-20 tokens into the Polkadot ecosystem. <\/p>\n ⚡\u200b ONE MILLION TRANSACTIONS ⚡️ See the networkhttps:\/\/t.co\/6ZhRLYDHgX<\/a> pic.twitter.com\/tczI7mAjlR<\/a><\/p>\n \u2014 Moonbeam Network (@MoonbeamNetwork) January 20, 2022<\/a><\/p><\/blockquote>\n The price of DOT saw a slight bump higher following the launch of Moonbeam but has once again slid back down below $25. <\/p>\n Related: <\/em><\/strong>Moonbeam (GLMR) launch brings EVM interoperability closer to the Polkadot network<\/em><\/strong><\/a><\/p>\n A third factor that may be weighing on the popularity and price of DOT is confusion about what the token is used for and what benefits it provides to token holders. <\/p>\n Thinking about selling my $DOT<\/a>. I don’t see the purpose of the project anymore, many of the cool projects that were going to build on it migrated to $MATIC<\/a> or so.<\/p>\n Why should I keep it?<\/p>\n![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2022-01\/7e033eab-078b-4757-9cc1-0f3e4e3af382.png\" "\\"\\"")
Interoperability is a key factor<\/h2>\n
The late launch of parachain auctions<\/h2>\n
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Moonbeam hits 1M tx on the network! \u200b Moonbeam is lighting up @Polkadot<\/a>\u2019s ecosystem with new integrations, 100k+ wallets, 700+ ERC-20 tokens & 1M GLMR tokens locked with collators.<\/p>\nThe benefits of holding DOT<\/h2>\n
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