Polkadot has experienced a decline in price compared to other leading layer 1 tokens in 2024 due to concerns about its ecosystem. This year, DOT has dropped by more than 20%, while coins like Ethereum, Tron, Toncoin, and BNB have seen double-digit increases.
The reason behind Polkadot’s underperformance in the market is the perception that it has a relatively weak ecosystem compared to its peers, such as Ethereum and Solana. Ethereum, in particular, boasts some of the industry’s largest players in its ecosystem, including Lido, Maker, Compound, RocketPool, Uniswap, and Aave.
Similarly, Solana is home to popular meme coins like dogwifhat (WIF), Popcat, and Book of Meme (BOME). It also has rapidly growing DEX exchanges like Raydium, Orca, and Jupiter in its ecosystem.
Third-party data reveals that Polkadot’s ecosystem has not been as active, which explains why its token has underperformed and why some investors consider it a “ghost chain.” Data from DeFi Llama shows that Acala Network’s total value locked (TVL) has dropped to around $60 million, with stablecoins on its platform amounting to just $61,000.
Other components of the Polkadot ecosystem, such as Centrifuge, Interlay, and HydraDX, have not gained much traction among developers and investors.
Despite these challenges, one prominent crypto analyst remains bullish on Polkadot’s price. In a post by Rekt Finance, it was noted that Polkadot is currently the analyst’s favorite layer 1 crypto.
The analyst highlights Polkadot’s entry into the artificial intelligence (AI) race through platforms like Phala Network and Origin Trail. Phala Network, a platform on Polkadot, provides AI coprocessor solutions with over 34k online workers and 150,880 vCPU in its network. This solution enables developers to build AI agents that seamlessly integrate with on-chain smart contracts.
On the other hand, OriginTrail offers verifiable internet for AI through its Decentralized Knowledge Graph (DKG). By leveraging the synergies of crypto, internet, and artificial intelligence technologies, it addresses challenges like misinformation, data ownership, and intellectual property.
Polkadot has also ventured into Real-World Asset (RWA) tokenization, which is expected to become a multi-billion dollar industry. Some of the RWA platforms in its ecosystem include Centrifuge, Energy Web, and Phyken Network.
However, while Rekt remains optimistic about Polkadot, its recovery will likely depend on Bitcoin’s performance and the vibrancy of its ecosystem.