Foreign media survey: The narrative "script" of Polkadot's popularity in the Chinese market

On January 24, the well-known American blockchain media Decrypt published an article titled "Why Polkadot Is The Hottest Crypto," authored by Shuyao Kong. The article provides a detailed investigation and analysis of the story behind Polkadot's rise in the Chinese market, making it quite valuable for readers. To facilitate reading, Chain Catcher has compiled the article and made several edits and adjustments that do not affect the original meaning.

In China, it is generally believed that Polkadot is similar to a newer and better version of EOS.

The core is that both projects have inspired foreigners, especially white leaders, who frequently participate in blockchain conferences and cocktail parties in China. (I don't want to sound racist, but white people have played a significant role in this positive fact, as some Chinese Ponzi schemes would hire white actors to deceive retail investors during their tours.)

EOS and Polkadot are supported by Chinese capitalists, who spread the story of Ethereum killers within cryptocurrency WeChat groups. These capitalists include exchanges like Binance, Huobi, and MXC, which have substantial funds to attract entrepreneurs into the Polkadot ecosystem. Interestingly, both projects have garnered strong interest from Chinese retailers, yet they remain relatively unknown abroad.

Although these two projects appear similar, Polkadot has developed its own narrative and community. Therefore, this article will review the rise of Polkadot and the state of the Chinese crypto industry behind it.

1. Rome Wasn't Built in a Day

If the project team does not spend time and money attending blockchain conferences and roadshows, they cannot win the Chinese market. There is no doubt that Polkadot has perfected this game; founder Gavin Wood is not only a semi-resident of Shanghai but has also formed a community composed of industry KOLs, investors, developers, businessmen, and speculators who believe in Polkadot's technological vision and its compatible financial outlook.

More importantly, Polkadot has attracted many developers who have abandoned Ethereum, co-founded by Vitalik and Gavin Wood, to develop projects within the Polkadot ecosystem.

According to a report by Outlier Ventures, as of May 2020, Polkadot's monthly active developers grew by 44%, while Bitcoin and Ethereum experienced a slight decline.

Chinese developers are particularly active in the Polkadot community. According to a recent announcement from Web3, nearly 20% of the 200 projects they funded came from China.

For example, Marvin Tong, founder and CEO of the privacy computing smart contract network Phala Network, told me that when he initially tried to introduce privacy into the blockchain world, he looked into EOS, Ethereum Layer 2, Cosmos, and Polkadot.

"We chose Polkadot because its technology is advanced, and I believe we made the right decision. Moreover, importantly, Substrate is a crucial tool that helps developers reduce repetitive blockchain development work," Tong said.

However, it is still too early to determine whether Polkadot is more advanced than other public chains. Data shows that at its peak, Polkadot processed 12,619 transactions daily, which is significantly lower compared to Ethereum's average of 1.1 million transactions per day. (Even in January 2017, when ETH was around $10, Ethereum still had an average of 50,000 transactions per day, four times higher than Polkadot's best day.)

However, in China, there are other factors beyond technology that can make Polkadot stand out.

Tong told me, "The combination of Web3 Foundation, Parity, and Gavin Wood is very powerful." "When selecting grant recipients, no other foundation is as generous and strategically significant as the Web3 Foundation; they provided substantial support for our project marketing."

This has fueled the enthusiasm of entrepreneurs.

Entrepreneurs not only need startup capital but also visibility and support. Ethereum and many other public chains have taken a neutral but distant approach to the Chinese market, partly due to language barriers and a lack of understanding of the Chinese market. In contrast, Polkadot has managed to penetrate the Chinese market like a well-oiled marketing machine.

Cynics might think that this "concern" stems from a desire for token acquisition, but the cryptocurrency world is ultimately built on "consensus," so any narrative that can convince people is a victory.

2. Missing DeFi, Catching Up with DOT

Polkadot has also filled a narrative gap. Last summer, the Chinese market did not realize the value of the DeFi liquidity mining wave until September. Shocked by the five-digit annualized rates from Degens, they wondered, "What’s the next hot topic?"

At this time, Chinese developers entering Polkadot not only gained profits but also satisfied the FOMO sentiment of the Chinese market.

First, Polkadot has a legitimate founder, Gavin Wood, who is described as the true core developer behind Ethereum, a narrative that resonates with many Chinese people.

Second, Polkadot employs an auction game similar to EOS, requiring investors to stake tokens for influence. For EOS, users stake EOS to become super nodes; for Polkadot, users stake DOT to win parachains.

In fact, the Chinese cryptocurrency circle experienced a frenzied EOS super node competition back in 2018, so having this competition again in 2021 is not a bad idea. The winning strategy in this game is to raise enough funds for your node or parachain to secure a final seat.

How to raise funds? Mainly relying on good marketing and community promotion, which are familiar strategies that Chinese capitalists can easily navigate.

Finally, DeFi arrived. As Ethereum began its journey to find a true product-market fit, Polkadot would also benefit from this narrative, even stating that DeFi would perform better in the Polkadot ecosystem compared to the congested Ethereum system.

Additionally, Binance established a $10 million fund to attract developers to build DeFi projects around the Polkadot ecosystem, effectively killing two birds with one stone.

While local Chinese projects like Acala are merely building financed lending or DEX products on the Polkadot ecosystem, as long as DeFi on Ethereum continues to innovate, Polkadot can maintain its DeFi ecosystem for a while.

3. The Game is Still On

Polkadot's rise in China should not be surprising. It showcases a perfect script for how foreign projects can succeed in China: an iconic founder, relentless marketing, and an enthusiastic audience waiting for the next cryptocurrency narrative.

However, let’s not forget one thing: it’s all about the community, as the community builds consensus. Polkadot has established a well-regarded consensus in China, becoming the most trusted Ethereum alternative. This claim has received increasing support from international investors, such as Polychain, which announced the establishment of a fund focused on Polkadot in October 2019.

But can Polkadot escape the rise and fall fate similar to EOS? It is still too early to draw conclusions, but some Polkadot projects, such as the MakerDAO imitator Mantra, which claims to be the first DeFi project on Polkadot, have received very negative coverage in China.

Nonetheless, the game is far from over. As long as the community continues to expand and entrepreneurs keep developing on Polkadot, the platform will remain a favorite in the Chinese cryptocurrency circle.