Blockchain

Polkadot’s sale of 500,000 tokens closes ‘successfully,’ foundation says in nod of confidence to $1.2B valuation

Quick Take

  • Polkadot, a next-generation protocol, has “successfully” closed a private sale of 500,000 tokens according to its managing foundation 
  • The Polkadot network was reported in January to be seeking a $1 billion valuation
  • The latest sale is said to be on track with previous estimates, despite rumours to the contrary

The latest Polkadot token sale has distributed 500,000 DOTs at a “successful” value, the protocol’s managing partner Web3 Foundation (W3F) has told The Block.

Although the foundation did not specify how much it had raised, the sale is said to be on track with the protocol’s $1.2 billion valuation reported by the WSJ earlier this year. The latest round saw the foundation liquidate and sell 5% of the total token supply, meaning Polkadot’s managing team would have expected to raise $60 million, although it did not confirm the figure.

Polkadot is the first project to come from Swiss-based Web3 Foundation (W3F), which aims to build a decentralized internet. If successful, Polkadot will facilitate cross-chain messaging between different blockchains, allowing for interoperability and scalability. Its first client, written in the Rust coding language, is set to launch by year-end.

W3F – which manages DOT sales – is said to have pitched discounted sales at investors wanting to buy large volumes, or at projects who could build on their protocol. This includes the likes of AragonOne – a DAO creation and management platform – which recently announced it had bought DOTs to launch a blockchain (Aragon Chain) on the network. Aragon cofounder Jorge Izquierdo called Polkadot  the “biggest competitor of Eth 2.0.”

Still, rumours have shrouded the latest sale, with CoinDesk reporting earlier this month that the $1 billion valuation “may elude the project,” citing unnamed sources. Meanwhile, as first reported by The Block, some tokens from the first sale found their way onto a secondary market in Asia, being sold at a severe discount, between $60 and $80 per dot. The current valuation would price each DOT at $120 on a fully diluted basis.

Polkadot’s first private token sale in October 2017 saw 5 million DOTs (half of the total supply) issued for $144 million at an average of $28.8 per dot – although some of those funds were frozen in a smart contract mishap. 

“Top teams in the space are interested in getting exposure to DOTs because they need them to build on Polkadot [once live],” Jack Platts, W3F Director of Communications, told The Block in January. “We’re working with strategically aligned projects to ensure they have access to DOTs… It’s critically important they have DOTs when the network goes live to ensure we have a vibrant community of parachains,” noting DOTs will be used for staking and governance voting.

The tokens are distributed in the form of SAFTs —Simple Agreements for Future Tokens—which gives investors the rights to the tokens once the protocol goes live.

Parity CEO Jutta Steiner, whose firm is helping build the Polkadot protocol, nodded to the governance considerations around token ownership in January. She told The Block “protocols like Polkadot need broad distribution to avoid collusion.” She also said she hoped token holders would “contribute in some meaningful way to the system.”

There are now believed to be 1.5 million DOTs still available for subsequent sales. As of today, 5.5 million have been sold to private investors and 3 million are reserved for the W3F to oversee Polkadot’s development. There is a total cap of 10 million genesis block DOTs according to the Polkadot Lightpaper and FAQ.