The most common single sentence dismissal of Polkadot I see on Crypto Twitter is “It has no users”. This take comes in two main variants:
- The “things won’t change” argument: not many users now = not many users ever
- The network effects argument: not many users now = substantial hurdle to adoption where other networks have advocates, liquidity, and TVL based network security.
This second argument begs a few questions. Which network effects matter? Which things do we think of as network effects that aren’t at all? Which network effects are weak, and can be overcome by a marginally better tech offering? Which network effects are mission critical to cultivate, and therefore must be optimized for at an early stage?
A Starting Place
I’ll leave this as more of a discussion than a monolithic opinion post, but first here’s a list of some perceived network effects and where I think they rank in terms of importance to Polkadot’s success. I’m very open to arguments in favor of different importance weightings or disagreement about whether one of the below is a network effect
- Developer activity in ecosystem
- Developer activity in ecosystem languages
- Number and reach of active advocates
- User base/liquidity in hosted NFT auction houses
- TVL in staking protocols for POS or equipment/electricity cost for POW
- User base/liquidity in hosted fungible token exchanges
- Number of users with active wallets (This may become important as peer to peer transactions take off as a use case
- Unique users in social graph
Not a network effect
- TVL and user count for hosted dapps where each user only interacts with a central authority or isolated contract (EX: dapp that scrapes chain for requested data)