Around 60% of Polkadot Token Holders Are Most Likely Individual Investors

By Crypto Li

In our previous article, we analyzed the crowdfunding of the cross-chain project Cosmos. We pointed out that the atom token distribution in its genesis block is highly concentrated, with all Cosmos tokens held in fewer than 1,000 wallets. How does that compare to the crowdfunding model of Polkadot, another star cross-chain star project?

According to the official website of Polkadot, we learned that Polkadot tokens are allocated as follows:


The total token supply of Polkadot is 10 million, which is far smaller than other digital currencies (Bitcoin has a rather small supply of 21 million tokens in total). Polkadot had its first crowdsale from October 14 to October 27, 2017, during which it sold 50% (5 million dots) of the total supply, through what was called a Spend-All Second-Price Dutch Auction.

This was not a traditional auction in which the price of the offering was set by the highest bid. Instead, the Polkadot team initially set a very high effective cap for the sale of dots, making it almost impossible for someone to buy all the tokens to end the auction. The effective cap went down over time. As more participants and funds entered the auction, the cap was reached before the auction ended, as shown below:


This auction had the following characteristics:

1. Those who participated in the auction in the first hour received an additional 15% bonus. For example, at the beginning of the auction, let’s say Alice spent 100 ETH to participate in the auction. After an hour, Bob participated in the auction with 115 ETH. In the end, both Alice and Bob would receive tokens worth 115 ETH. Therefore, if you wanted to buy dots, the sooner the better.

2. All participants will buy tokens at the same price when the auction ends. For example, the auction sold a total of 5,000,000 dots, and the auction received 485,331 ETH in total, so the crowdsale price would be 1 dot = 485,331 * 320 / 5,000,000 USD = 31.06 USD. (The price of 1 ETH at the time was around $320 USD).*

Unlike Cosmos' crowdfunding, there was no seed funding, private placement or a public offering, just a variation of a Dutch Auction. Looking at Etherscan data, we found that 3,050 addresses in total became dot holders after this auction, as shown below:


There are only four “whales” who hold more than 100,000 dots. Meanwhile 1,801 addresses, around 60% of all token holders, hold fewer than 100 dots. Since the cost of 100 dots is roughly $3,106, these holders are most likely individual investors. It appears that crowdfunding through this kind of auction might be more fair and friendly for regular people, making dot distribution more decentralized. As for the remaining 50% of dots, 30% go to the Polkadot team, while 20% have yet to be distributed.

Now, Polkadot is sought after by investors in the over the counter (OTC) market, which is also happening with Cosmos. This is probably related to the fact that Polkadot founder Gavin Wood is also one of the leading figures of Ethereum. According to the dot futures price of the Tokok exchange (as of April 1st), the current price of 1 dot = 1.6 ETH, around $224, has also increased a dozen times compared to its crowdfunding price of $31.06.

*This article was last corrected on April 2, 2019.

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