Early this morning, the SEC approved applications from exchanges including Nasdaq, CBOE, and NYSE to list Ethereum ETFs . Although the issuers of these ETFs still need to obtain final approval before launching their products, this means that we are one step closer to the launch of Ethereum ETF products.
As early as January this year, the first batch of Bitcoin spot ETFs were approved and listed, allowing a large number of investors to invest in Bitcoin conveniently and compliantly through ETFs, which also marked the further entry of Bitcoin into the mainstream financial market.
Who will be the next Crypto ETF? It is very likely to be Polkadot (DOT).
Here are a few reasons (just my personal opinion):
1. Ethereum ETF was approved for listing on the exchange, sending a positive regulatory signal
Bitcoin and Ethereum are two different asset classes. Bitcoin is more of a decentralized peer-to-peer cash and value storage medium, while Ethereum is a token with utility value, mainly used as gas for applications on the Ethereum blockchain; on the other hand, Bitcoin is a PoW chain, while Ethereum is a PoS chain.
Therefore, if the listing of Bitcoin ETFs indicates that Crypto as an asset class has finally been accepted by US regulators, then the Ethereum ETF being allowed to be listed on exchanges sends another signal, that is, regulators recognize the value of utility tokens and PoS chain tokens . This indicates that in the future, more practical PoS chain tokens may pass regulatory review, including DOT.
This week, the U.S. House of Representatives passed the FIT 20 Crypto Act, which aims to establish a clear regulatory framework to promote the healthy development of the Crypto industry. This represents the United States' positive regulatory attitude towards the crypto industry and also suggests that more Crypto ETFs may be listed in the future.
2. SEC determines that DOT is software rather than securities
If a cryptocurrency is classified as a security by the SEC, it means that these projects may face regulation under the Securities Act and be prosecuted as a result.
However, Polkadot has taken precautions in terms of compliance. Since 2019, the Web3 Foundation has actively communicated with the U.S. Securities and Exchange Commission (SEC). After three years, it finally announced that the native digital asset DOT of the Polkadot blockchain was recognized as software, not securities. DOT is the first and only token recognized by the SEC as a software token, which provides it with unique advantages in compliance and also points out a reference compliance path for other crypto projects.
3. Polkadot is highly decentralized
The degree of decentralization of a network may become an important factor for ETF considerations, as centralized networks may be subject to artificial risks (both Bitcoin and Ethereum have a high degree of decentralization).
Polkadot also performs very well in terms of decentralization. Its on-chain governance system OpenGov allows all coin holders to participate in network decision-making, giving the Polkadot network the highest transparency in the crypto industry. Decentralized on-chain groups such as the Technical Fellowship and community funding programs such as Decentralized Futures have further improved Polkadot's decentralization in code maintenance, marketing, and other aspects.
In addition, the distribution of Polkadot's validator nodes is also highly decentralized. According to Messari data , the Nakamoto coefficient of the Polkadot validator model in the first quarter of 2024 was as high as 93 , significantly higher than other networks, showing a decentralized node distribution.
4. Polkadot technology is highly mature and the network is stable
Regulators may consider the technical maturity and operational stability of blockchain when approving ETFs. Polkadot has a strong technical background and a first-class team of protocol developers in the crypto industry. And Polkadot has one of the largest developer communities. In December last year, the Polkadot ecosystem had 2,100 developers , second only to Ethereum.
The Polkadot network has been running stably since its launch in 2020, and has never had any serious accidents or vulnerabilities. On December 21, 2023, due to the inscription casting boom, the Polkadot network processed 6.5 million transactions in one day, but it only occupied 3% of the network capacity. The network did not interrupt, significantly delay, or increase gas, showing extremely high stability and robustness.
5. Polkadot leads the trend of technological progress in the industry
Polkadot has used a very advanced technical architecture since its design, and is constantly upgrading its technology to lead the industry's technological trends. For example, Polkadot SDK (formerly Substrate) is a pioneer in modular chain development, Polkadot relay chain and parallel chain models are the industry's first batch of online sharding models, and the XCM cross-consensus message format is also the industry's first cross-chain standard. In addition, Polkadot's technology stack is fully open source , including chains and modules, consensus, networks, smart contracts and other categories, making important contributions to the industry's technological progress.
The upcoming Polkadot 2.0 will provide more flexible block space resources, expected to reach 1 million TPS, and will be able to support extremely high-performance Web2 application scenarios (for example, Visa's daily throughput is about 2,000 TPS, and the peak is around 50,000 TPS).
6. Polkadot has a strong ecosystem
Polkadot has a powerful ecosystem, including more than 50 parallel chains and more than 700 projects , covering various fields such as infrastructure, DeFi, NFT, games, DePIN, AI, etc. There are many leading projects in various fields. In particular, it has attracted many large enterprises and promoted the process of traditional enterprises adopting Web3.
For example, Vodafone, one of the world's largest mobile communications operators, has cooperated with Polkadot ecosystem Aventus to track air cargo warehouses for airports; Deloitte, one of the world's largest accounting firms, has cooperated with KILT to provide customers with reusable digital identity credentials to support KYC/KYB verification; MeWe, a social application with 20 million users, has cooperated with Frequency to provide users with autonomous blockchain identities and universal accounts; JR Kyushu, one of Japan's largest railway networks, has cooperated with Astar to issue NFT ride certificates to 330 million train passengers.
7. Large market value, large number of holders, and large market demand
DOT is a top 20 cryptocurrency by market capitalization, with broad market demand and a large user base. Many investors hope to invest in DOT indirectly through traditional financial instruments such as ETFs. According to Messari's latest report , in the first quarter of 2024, the number of active addresses in the Polkadot ecosystem reached 514,000, a record high.
Summarize
In summary, Polkadot has great potential to become the next cryptocurrency ETF. As the cryptocurrency regulatory environment matures, the U.S. market's attitude towards cryptocurrencies is gradually turning positive. DOT is the only token that is recognized by the SEC as software rather than securities, which gives it a unique advantage in compliance.
The high degree of decentralization of the Polkadot network, its stable operation over the years, its leading technological innovation, and the continuous development of the Polkadot ecosystem have further demonstrated its strong competitiveness in the encryption field. Coupled with the successful approval of Bitcoin and Ethereum ETFs, market expectations for DOT ETFs are also increasing.
Looking ahead, if DOT can successfully pass the ETF application, it will not only bring more investors to it, but also inject new vitality into the entire cryptocurrency market and push the entire industry forward. Let us wait and see how the Polkadot ecosystem performs in this ETF competition.
Follow us:
PolkaWorld Telegram Group:
https://t.me/+z7BUktDraU1mNWE1
PolkaWorld Youtube Channel:
https://www.youtube.com/c/PolkaWorld
PolkaWorld Twitter:
https://x.com/polkaworld_org（English） https://x.com/polkaworld_pro (Chinese)
