Layer-1 smart contract platforms increased their market share throughout August after London’s Ethereum network hard fork did little to solve major problems of high transaction fees and network congestion. .
A top 10 protocol that has been gaining momentum but has yet to experience a significant price break to new highs like some of its competitors is Polkadot (DOT), a multi-chain protocol focused on facilitating bridging between chains between separate blockchains. networks.
Cointelegraph Markets Pro data and TradingView shows that after bottoming out at $ 10.36 on July 20, the DOT price rose 205% to an intraday high of $ 31.70 on August 31 as talk of an impending alt season begins to rise.
Three reasons for the increasingly optimistic outlook for the DOT are its upcoming parachain auctions, a rapidly growing ecosystem of projects interested in going online, and a steady increase in daily trading volume.
Parachain auctions excite the community
One of the biggest drivers of momentum for the Polkadot ecosystem is the upcoming parachain auctions where projects compete for community votes to get one of the limited spaces available to launch on the network.
The next $ DOT Parachain auctions should boost demand for Polkadot.
– CRYPT0SM0G (@ Crypt0Sm0g) August 27, 2021
Polkadot’s “wild cousin” Kusama has been in the process of holding his auctions, with the first lot chosen at the end of July and the second auction lot scheduled to begin on September 1.
As part of the parachain crowdfunding process, users vote for projects by locking DOT tokens for a designated period as a way to raise funds for projects that are chosen to fill one of the limited slots.
This has the effect of reducing the circulating supply of available tokens, which adds pressure on the price of the DOT. The Polkadot network will undergo its own parachain auctions once all auctions on the Kusama network are completed. The process has been fully audited and to date the Kusama-bas parachutes are running smoothly.
An entire ecosystem of projects competes for a para-chain slot
Another reason for the recent strength of the DOT is the large number of projects interested in obtaining a parachain slot and launching on the network.
As the graph above demonstrates, the Polkadot ecosystem has seen tremendous growth in terms of protocols and supporting infrastructure over the past year and this is surpassed by only a small number of competing networks in the space.
With the Polkadot parachain auctions expected, the ecosystem is likely to continue to expand and welcome new projects and the proof of this comes from the fact that the Kusama parachain process so far has been relatively smooth.
Related: Will Polkadot Save Decentralized Finance From Ethereum’s Scale Issues?
Increase in trading volume in 24 hours
A third reason for the bullish outlook for the DOT has been its rising 24-hour trading volume, which is now back at levels not seen since the market-wide sell-off in late May.
– Traderhank (@Traderhankhill) August 31, 2021
According to data from CoinMarketCap, the DOT’s 24-hour trading volume increased more than 300% on Aug. 31 to a high of $ 5.41 billion, as anticipation of the upcoming Kusama parachain auctions excited fans. Polkadot investors who see KSM’s success as a proxy for what may happen. with DOT price.
If the Kusama network can continue the smooth rollout of its auction process and clear the way for the process to begin on the Polkadot network, the demand for DOT could increase and this could translate into higher prices for the asset.
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