New frontiers in blockchain development

On Tuesday, digital asset manager () highlighted that it has generated revenues and profits from several projects it has supported on the Polkadot blockchain, a network that some consider to be the new frontier in the development of blockchain technology and the arena of ‘decentralised finance’.

Since its token, DOT, went live in mid-August, Polkadot has quickly established itself as a key contender in the blockchain industry, with the value of DOT having risen around 60% in value to just over US$4.80.

WATCH: KR1 says staking is ‘giant step’ and a ‘transformational leap for shareholders’

In a nutshell, Polkadot is a blockchain network that can be upgraded and scaled more efficiently than others. It also allows a process called ‘on-chain voting’, a new method of managing and upgrading the system that is transparent to users. Users use their DOT tokens to vote on various decisions that may affect how the blockchain runs.

Polkadot was founded by Gavin Wood, one of the co-founders of Ethereum, a blockchain system that some have dubbed the “world computer” due to its versatility of use. However, Polkadot is among a number of new blockchain systems aiming to grab a share of Ethereum’s market.

According to KR1’s co-founder and managing director Keld van Schreven, Polkadot currently has around 300 projects running on it and had the fastest growth in developer activity of any blockchain network over the summer period.

“[Polkadot] could be a very important part of this new world we are entering”, von Schreven told Proactive, adding that the pandemic and subsequent economic fallout has provided a “shock to the system” and left people searching for “alternatives that are much more resilient”.

“This is the starting flag these new assets needed…this will be the accelerator event to lots of activity”, he said.

The co-founder added that the current quantitative easing environment is boosting the performance of digital currencies in general. This can be seen in the price of Bitcoin, the first cryptocurrency, which this week surpassed US$17,000 in value, levels not seen since December 2017.

Staking is the new mining

KR1 also said that it has engaged in staking activity across a number of its projects on the Polkadot blockchain.

Staking is often seen as a less resource-intensive alternative to extracting digital currency from a blockchain network than mining, which often requires high energy usage and investment in computer processors to solve the algorithms required to validate transactions on a network.

By contrast, staking involves simply holding funds in a digital cryptocurrency wallet which are then used to support the security and operations of a blockchain network. The tokens are locked in the wallet for this purpose, and in return, the staker receives financial or another form of reward. The more tokens a user decides to stake, the higher the reward.

Due to staking requiring less computational power than mining as a method of maintaining blockchains, it is also considered by some to be a way of scaling networks to a higher degree.

For investors like KR1, staking also serves a method for the company to extract revenue without having to sell off assets or cryptocurrency holdings, with von Schreven saying staking revenues operate similarly to interest accrued on savings in a bank account.

He adds that due to its lower energy requirements, staking is more of a “green and lean” way for blockchain networks to secure themselves in future, which he says is “essential” as the world focuses more on efforts to curb climate change.