Polkadot: Blockchain’s shopping Mall

Our industry loves narratives, I’m not sure why. Over many years in many markets, I’ve come to the conclusion that people love narratives as without them you need to face facts with the random walk theory of financial markets.** A stomach-churning proposition for any market participant. For example, the price of a flashy AI token gets bid up, onlookers instead of thinking the logical “more buyers than sellers,” they need to assign a storyline. A sort of logic their mind can comprehend

This is how we get to community members posting about the 10 top new narratives in crypto, when in reality their thread should say “the top 10 new tokens that have been pumped and the story I’m telling myself why.” The facts on the ground are, like it or not, narrative follows price, price does not follow narratives. If the price of an asset rises, confirmation bias directs the uninformed to literally go searching for good news to assign to this price move. When the facts on the ground merely show that there were more buyers than sellers, I do not believe narratives offer any edge or can predict prices in any way.

When we zoom out past some short-term social media posts and terrible technical analysis, I do like the idea of using narratives to tell a story. I find myself very regularly being asked to explain crypto to normal folk. I’ve always tried to avoid technical jargon and have used simple storytelling techniques to try to leave an impact on someone new to the industry. I always start simple: bitcoin is digital gold and Ethereum is software on money. Relatively easy topics to understand, but where does Polkadot fit in this equation?

To understand the value of Polkadot, let’s draw a comparison to a traditional shopping mall. On its own, a shopping mall is merely an empty shell — a collection of buildings and walkways devoid of any inherent value. However, when filled with a variety of shops, restaurants, and entertainment venues, a mall becomes a thriving hub of economic activity and a destination for consumers.

Similarly, Polkadot’s true worth is derived from the parachains, decentralised applications (dApps), and cutting-edge technologies that operate within its ecosystem. These projects, built on top of Polkadot’s robust and scalable infrastructure, bring utility, innovation, and value to the network, much like how individual stores contribute to the overall appeal and success of a shopping centre. If Polkadot has no successful parachains, then Polkadot itself cannot ever be a success.

Agglomeration Economies:

Have you ever wondered why all the clothes shops in your city are located next to each other? I’ve spent many days pondering the economy and could never understand why a new clothes shop would open directly next to all the other shops. My brain is always focused on the competitive free market, so the fact that GAP would open a new store on the exact same road as Primark, H&M, Nike, and countless others always baffled me. Would they not be better off finding a location where they could form a local monopoly in the discount clothing market?

Well, this is where agglomeration economics comes into play. These are localised economies in which a large number of companies, services, and industries exist in close proximity to one another. They benefit from the cost reductions and gains in efficiency that result from this proximity.

Don’t worry, you don’t need to understand this for this article. All you need to know is there are large competitive advantages to locating near your competition. Both via Agglomeration and in game theory, I’ll link an interesting TED talk about this below. Some examples of the benefits are cost reductions, gains in efficiency, ease of use for consumers, an ability to share information, and an inability to be exploited by aggressive competition.

To me, it’s clear that this is one of Polkadot’s biggest advantages. If a user is onboarded to Acala, then they can seamlessly also use HydraDX or any other parachain. We can share users, developers, knowledge, and resources. We should be leaning into these competitive advantages baked into our network. Unfortunately, this is something we rarely see. When you attend events or speak to founders, they always speak as if other parachains are in direct competition; it’s all become very political. A great example of this is the recent DED vs. PINK feud. I’m all for friendly competition, no doubt, but the deadlock they are currently in has become extremely counterproductive. Do the DED team not realise that if PINK is successful, that will increase their odds of success? Or does the PINK team not think that creating a positive memecoin culture will also flow down to their community? I don’t know, but I do know that this exact situation can be seen all over the ecosystem. DEXs fighting with DEXs, liquid staking providers at each other’s throats, influencer vs. influencer insult battles. It’s all a waste of time and a big ol’ negative value sandwich that is weighing the network down.

For the Polkadot shopping mall to be a success, I leave you with this thought: we need to work harder to support each other and collaborate. We should avoid insulting each other and go the extra mile to treat other communities on Polkadot with respect. If the GameStop in a mall is launching a new console attracting large footfall, this will also increase the revenue of the Food Hall, H&M, and shoe store. Polkadot is the exact same; if the Mythical Games launch is a raging success in April, that will bring new users, capital, and participants to the ecosystem as a whole. We can only obtain the benefits of agglomeration if we treat each other with respect. So let’s all try to play nice.

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Random walk hypothesis — The random walk hypothesis is a financial theory stating that stock market prices evolve according to a random walk (so price changes are random) and thus cannot be predicted.

https://en.wikipedia.org/wiki/Random%5Fwalk%5Fhypothesis

Why do competitors open their stores next to one another? — Jac de Haan https://www.youtube.com/watch?v=jILgxeNBK%5F8