Polkadot Breaks New All-Time High – Here’s A Reason For The DOT Rally
Monday November 1, DOT, the native token of smart contract platform Polkadot, rallied about 20% to set a new all-time high $51.47 according to CoinMarketCap.
What is Polkadot?
Polkadot is a network protocol which allows arbitrary data (not just tokens) to be transferred across blockchains. It is a multi-chain application environment where things like cross-chain registries and cross-chain computation are made possible. Polkadot can transfer this data across public, open, permissionless blockchains as well as private, permissioned blockchains.
All this enables building applications that get permissioned data from a private blockchain and use it on a public blockchain. For example, a school’s private, permissioned academic records chain could send a proof to a degree-verification smart contract on a public chain.
Parachains
An individual blockchain in the Polkadot ecosystem is known as a parachain (parallel blockchain), while the main chain is called the Relay Chain. Parachains and the Relay Chain can easily exchange information at any given time. Parachains could be compared to individual shards in the planned implementation of ETH 2.0.
Any developer, company, or individual can spin up their custom parachain through Substrate, a framework for creating cryptocurrencies and decentralized systems. Once the custom chain is connected to the Polkadot network, it becomes interoperable with all other parachains on the network.
DOT token
Like most other blockchain infrastructure projects, Polkadot has its own native token, called DOT, which serves as the network token, just like ETH is the token for Ethereum and BTC is the token of Bitcoin.
Dot has several use cases. For example, it grants token holders with governance rights of the entire Polkadot platform, including determining network fees, voting on overall network upgrades, and the deployment or removal of parachains.
It is also designed to facilitate network consensus through staking. Like other networks that involve staking, all DOT holders are incentivized to play by the rules at all times.
DOT can also be used for bonding. This is required when new parachains are added to the Polkadot ecosystem. During a bonding period, the bonded DOT is locked. It’s released once the bond duration has ended and the parachain is removed from the ecosystem.
DOT Price
After breaking to a new all-time high $51.47, DOT price has corrected some, and at the time of writing it is trading at $49.39 with 17% gains on a daily and 12% gains on a weekly chart.
Several crypto analysts and traders have predicted DOT to become one of best performers in Q4 2021. Pseudonymous trader known as Capo, called it to outperform all other crypto assets, including Bitcoin and Ethereum.
Polkadot’s parachain auctions upcoming launch driver for the rally
Many have attributed the rising strength of DOT largely due to the upcoming launch of parachain auctions on the Polkadot protocol. It could well be that traders are looking at the success of the parachain auctions that took place on Polkadot’s sister network, Kusama, and expecting the same to occur for Polkadot.
A popular crypto analyst Lark Davis called the parachains to mark “face melting season,” predicting very strong performance for DOT.
$dot face melting season will come as soon as Gavin announces parachains.
Polkadot’s parachain auctions have been in development throughout 2021, and the excitement surrounding their November 4 launch appears to be the driving force behind DOT rallying to a new all-time high at $51.47 on November 1.
The motion to enable parachain registration and crowdloans has passed Polkadot's council and gone to a public referendum. If passed, parachain teams will be able to register their parachain and open their crowdloan on Nov. 4, 2021 at approx. 19:15 CET. https://t.co/5ouDWBmnvc
