Popular crypto trading and market analysis show Coin Bureau claims a highly-anticipated milestone for Polkadot ($DOT) could push the asset’s price to a new high.
What Is Polkadot?
Polkadot is a network protocol that allows arbitrary data—not just tokens—to be transferred across blockchains. This means Polkadot is a true multi-chain application environment where things like cross-chain registries and cross-chain computation are possible. Polkadot can transfer this data across public, open, permissionless blockchains as well as private, permissioned blockchains.
“This makes it possible to build applications that get permissioned data from a private blockchain and use it on a public blockchain. For instance, a school’s private, permissioned academic records chain could send a proof to a degree-verification smart contract on a public chain.“
Polkadot “unites a network of heterogeneous blockchains called parachains and parathreads.” These chains “connect to and are secured by the Polkadot Relay Chain” and they can “also connect with external networks via bridges.”
And here is what Binance Academy says about Polkadot’s parachains and Relay Chain:
“An individual blockchain in the Polkadot ecosystem is called a parachain (parallel blockchain), while the main chain is called the Relay Chain. The idea is that parachains and the Relay Chain can easily exchange information at all times. You could think of parachains as being similar 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.“
As for the use cases for the $DOT token, Binance Academy has this to say:
“Similar to most other blockchain infrastructure projects, Polkadot has its own native token. Known as DOT, it serves as the network token, just like ETH is the token for Ethereum and BTC is the token of Bitcoin.
“Several use cases exist for this token. First of all, it grants token holders with governance rights of the entire Polkadot platform. This includes determining network fees, voting on overall network upgrades, and the deployment or removal of parachains.
“DOT is also designed to facilitate network consensus through staking. Similar to other networks that involve staking, all DOT holders are incentivized to play by the rules at all times. How come? Well, if they don’t, they could lose their stake.
“The third option is to use DOT 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.“
What Coin Bureau Is Saying About Polkadot?
Speaking in a recent YouTube video, Coin Bureau’s host “Guy” told viewers that Polkadot’s launch of parachain slot auctions could lead to DOT reaching a new all-time high in price.
As reported by The Daily Hodl, Guy said,
Now the silver lining here is that DOT has held up quite well in recent dips compared with other major cryptocurrencies. And there’s also one major milestone that could easily take DOT to new all-time highs, and that is Polkadot’s own parachain slot auctions.
Parachains serve as L1 blockchains operating on the Polkadot network. According to the report, parachain auctions will determine which auxiliary blockchains can integrate with Polkadot, thereby accessing the network’s robust features and growing user base. Investors will be able to use their $DOT in order to vote on which projects have access to a parachain slot.
Guy said the new feature was originally slated to launch at the end Q3 2021, but was delayed due to an incomplete audit. He mentioned that the delay was likely responsible for $DOT’s sub-par price performance over the last several months.
He also explained why he expects Polkadot’s parachain slot auctions to launch soon:
“Now, we’re in October. The crypto market is up, Gavin is back on Twitter, and although Bitcoin is in the spotlight at the moment, as I mentioned in the introduction, that rotation into altcoins is coming. When that happens, it will be the perfect time for Polkadot’s parachain slot auctions, and I won’t be surprised in the slightest if that’s when the first round begins.“
Disclaimer
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
Image Credit
Image by Gerd Altmann from Pixabay
