The recent 256% dot (DOT) rally over the past 56 days has been nothing short of spectacular. Although the price is 23% below its all-time high of $ 49.80 four months ago, altcoin’s $ 39 billion market cap has outperformed Ether (ETH) by 66% as of during the last thirty days.
Polkadot is a blockchain network designed to support various interconnected and application-specific parallel chains called parachains. This scalability-focused project splits transactions into multiple fragments and processes them in parallel, in the same way that ETH 2.0 aims to achieve.
Polkadot refers to the entire ecosystem of parachains that connect to a single core platform known as the Relay Chain. This base layer ensures the security of the network and manages the logic of consensus, purpose and vote.
To support parachain launches, users vote for projects by locking DOT tokens. Currently, only Kusama – Polkadot’s “canary” network and an early, unrefined version of Polkadot – holds its own auctions for these slots. Polkadot is expected to launch the same process over the next few months.
Polkadot integration with DeFi increases
The Polkadot ecosystem has grown steadily, and on September 8, SubQuery, a decentralized data aggregator, raised $ 9 million to create Polkadot’s first layer of data aggregation.
As an example of this integration, the Moonbeam parachaine has tokens built on the Polkadot development tool (Substrate). These tokens can be sent transparently to Ethereum wallets and smart contract addresses. On September 9, Moonbeam announced a partnership with Lido, a decentralized liquid staking derivatives protocol currently deployed on Ethereum and Terra.
The latest update came from dTrade, a decentralized exchange. After successfully raising $ 6.4 million in a seed funding round in May 2021, DEX raised another $ 22.8 million market-making fund designed to provide “deep liquidity.” backed by some of the biggest crypto market makers.
Related:Layer two governance proposals and launches give altcoins a boost
Derivatives data shows potential for new all-time high
Technical analysts are quick to make price projections, but investors should analyze Polkadot’s derivatives data. For example, a non-existent futures premium means that investors are uncomfortable creating bullish positions using leverage.
Total open DOT term interest has increased from $ 360 million to $ 685 million in 30 days and this is a positive indicator as it reflects the willingness of leveraged traders to keep their long positions opened despite the rally.
In futures trading, long (long) and short (short) positions are matched at all times, but their leverage varies. Any imbalances are reflected in the funding rate and derivatives exchanges will charge the party that uses the most leverage to balance their risk.
The constant development of the protocol will be the ultimate driver of the price of DOT
During the first week of September, there was a good dose of optimism as the 8-hour funding rate hit 0.10%, which equates to 2.1% per week. However, the situation was reversed after the prices fell 35% on the morning of September 7th.
This intraday low of $ 22.70 from a week ago may seem irrelevant as the DOT price is above $ 36, but traders’ appetite for leveraged long positions has not subsided. not yet delivered.
The most likely case is a “half-full glass” scenario where investors will regain confidence as the project continues to operate.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of TBEN. Every investment and trade move involves risk. You should do your own research before making a decision.