Is Polkadot’s Decentralization Offering More Incentives Than Profits?

An important feature of any blockchain is its decentralized nature. Miners and validators in the decentralized world play an important role.

Not to forget, a chain’s ability to prevent any attack is of the utmost importance. And, Polka dot seems to be leading the way in this space.

Polkadot – the safest chain?

Calling Polkadot the safest chain would require detailed analysis. But it certainly has one of the most distributed numbers of validators on some of the most important DeFi chains.

According to a Solana analysis from Unstoppable Finance, when it comes to the Nakamoto coefficient, Polkadot has the upper hand.

This metric essentially represents the total number of validators or nodes that would have to collude in order to slow down or block the proper and successful operation of any blockchain.

In Solana’s case, that number is 27, as the top 27 validators are responsible for 33% of the total staked tokens.

While in the case of Polkadot, the same number is 82. Even Avalanche, one of the fastest growing DeFi chains as of 2021, was 28.

So Polkadot could definitely be the best choice in this case. But the same cannot be said from the perspective of investors seeking long-term profit.

Since November 2021 and at press time, Polkadot has experienced an extreme decline of 86.05% as the price of DOT fell from $56 to $7.84.

Over the past two days, the altcoin has shown signs of recovery. DOT is up 17% over the past seven days.

This means that investors who have been part of the network since last year are at a total loss right now.

However, for short-term investors, this could be a good opportunity as DOT is just coming off its lows.

The asset’s risk-adjusted return represented as the Sharpe ratio was also showing satisfactory readings at press time. The gauge was at a four-month high of 2.03.

Additionally, at press time, the Relative Strength Index (RSI) was also maintaining its upward trend

This highlights the fact that going forward, price cuts will be minimal. (ref Polkadot price action image).