An uptick in new user accounts on Polkadot has lent weight to the suggestion that the era of centralization in crypto is finally coming to an end.
New analysis from Dot Insights shows there has been a big jump in on-chain activity on Polkadot. At the same time, account activity on the network has risen substantially over the past couple of weeks.
More specifically, the two increased metrics refer to the number of new and active accounts on Polkadot, which have soared despite the turmoil afflicting the wider cryptocurrency market.
Polkadot’s increased activity comes against the backdrop of the spectacular collapse of FTX, a highly centralized cryptocurrency exchange that, according to some, was the second-largest in the world based on its trading volume. Its collapse saw thousands of investors lose whatever funds they held on the exchange, and as bankruptcy proceedings begin it’s not clear if those users will be able to recoup their losses.
Centralized exchanges like FTX grew rapidly in recent years because they provided consumers with a simple onramp to crypto. However, as recent history has shown, many of those centralized exchanges disregarded consumer protections in pursuit of profitability, resulting in numerous meltdowns that have dragged on the industry.
Consumers are learning of the risks of centralization the hard way. FTX wasn’t the first, as anyone who held funds on Mt. Gox can testify. And it won’t be the last either – already, several other exchanges have come under pressure following FTX’s collapse, including BlockFi and Gemini.
The inevitable conclusion to be drawn is that centralized platforms pose a significant risk to crypto investors, and it’s time for the community to reject them for something better.
The community should take note that crypto was never about getting rich quick, as so many investors in the space seem to believe. Rather, crypto is about true individual ownership and self-sovereignty of our finances. It’s an alternative system of finance where individuals hold the keys to their own wallets, and can trade, borrow and lend without a centralized intermediary. The vision of Bitcoin founder Satoshi Nakamoto was to give people a way to take back control of their finances, in response to the 2008 financial crash. He or she created Bitcoin as a response to the truism that power corrupts – if someone controls your money, they’ll likely end up abusing that trust. This is evident in crypto, with centralized exchanges that misuse customer’s funds and dig themselves into a bottomless pit.
The only viable path forward is to embrace the true spirit of decentralization. Crypto must be controlled by its users, with no more reliance on corrupt exchanges that are no different from Wall Street’s bankers.
The good news is that the crypto community is taking note. In the last two weeks, the number of daily new accounts on Polkadot grew by almost 10 times. In the same period, the number of active accounts increased four times. Dot Insights, a project that monitors the Polkadot and Kusama ecosystems, said the number of active accounts on Polkadot increased from 1,000 to 4,516 in the last two weeks, amounting to a 300% increase.
2/ The number of daily new accounts on Polkadot has SURGED by nearly 10 times in the past 2 weeks alone, while active accounts have increased 4 times! https://t.co/bbHPRVPGcz
— Polkadot (@Polkadot) November 14, 2022
That people are turning to Polkadot in times of turmoil is no surprise, as Polkadot has always been among the fiercest of advocates for decentralization. The spike in new daily accounts and active users began just as news of FTX’s problems began hitting the headlines, and accelerated as the true scale of the disaster became apparent. So Polkadot’s growth in activity can be directly attributed to the liquidity that flowed out of FTX – as people withdrew their money from that platform, they looked for a safer haven, and there’s nothing safer than your own, non–custodial wallet. When times are tough, it seems that investors realize that their tokens are safer in their own possession. Many crypto influencers also urged their followers to withdraw their funds from exchanges and put them into cold storage.
Polkadot’s increased activity shows that the crypto world is ready for decentralization. Decentralized trading platforms provide big benefits over their centralized brethren. There’s a lack of counter-party risk, transparency and on-chain settlement. It’s impossible for any decentralized platform to take risks with customer’s funds, because they never actually see those funds. A properly implemented DeFi-based economy will therefore serve everyone equally, with consumer protection encoded within its very foundation.
There’s still work to be done. One of the biggest challenges is the need for a solution to avoid people losing their private keys, and therefore access to their funds. However, advances in multi-party cryptography and social guardians can solve this conundrum, allowing DeFi users to say goodbye to the days of seed phrases for good and finally take back control of what is rightfully theirs.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice