Polkadot was created by Gavin Wood, the previous CTO and co-founder for Ethereum. Like many of the old core Ethereum team, they all had different ideas on how blockchain would scale and went on to make its own projects.
Wood has always stated that blockchain would never scale correctly with utilizing only one. The enormous amount of use-cases and utility that blockchain technology can deliver are all too unique and require too many of their own tools, permissions, and structure to run on only one chain.
Polkadot set out to create something called Parachains. These chains would be auctioned off to projects who could then set up blockchains to work efficiently for its use-cases. After five long years of development, the first set of parachains has launched. The first to commence include: Acala, Moonbeam, Parallel Finance, Astar, and Clover. The use cases behind these chains include decentralized finance and more.
These chains will come with a development fund the projects can use to launch on the chain. Development by these projects for their parachains has been long in the works, which means the launch of new decentralized applications is not far away. Wood has stated that there are thousands of requests already for a parachain and that this additional five will be followed by hundreds more.
Having unique blockchains that can work together relieves the issue of congestion and high gas fees. By having projects on their own blockchain, they do not need to worry about other spamming transactions and slowing down the network. The downside is that each chain will run independently and could be susceptible to faults and exploits in its coding.
The launch of these new parachains comes after the conclusion of the first auction round which ended in November. Many speculate that Polkadot will now be in the position to really change how blockchain is run and that Ethereum will now have real competition in the industry. In order for Polkadot to grow as rapidly as Ethereum, it needs to ensure that many more parachains are launched soon.
The biggest argument made against Polkadot and its blockchain structure is censorship. Many worry that running auctions to get your project launched on a parachain can lead to projects being delayed or denied the chance to run on Polkadot.
Polkadot currently sits in 11th in total market capitalization. Like many alternate coins, it has been hit hard by the decrease in the market for the past few months. Polkadot hit an all-time high of almost $55 before settling down at its current price of $25. Many hope the new utility will help boost them back up and past their previous records.