Polkadot will likely bid higher based on upcoming Parachain auctions

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Peas (CCC:DOT-USD) is now the 8th largest cryptocurrency, according to Coinmarketcap. Its market cap was $ 52.8 billion to $ 53.37 just after the U.S. market closed on November 3. This means that DOT crypto has seen a meteoric rise in recent months. There is every reason to believe that this recovery will continue.

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For example, the last time I wrote about DOT crypto it was at $ 37.73 as of September 14th. Since then, the crypto has grown 41.5% in less than 2 months.

In fact, since September 28, when the DOT crypto hit a low of $ 26.84, the crypto has climbed 99% in less than a month and a half.

What is happening here? What makes the market so excited about the Polkadot blockchain platform?

Recent developments with Polkadot Crypto

The essential utility of Polkadot is its ability to act as a bridge between all other blockchains. This includes private, public and unauthorized networks. It’s like the way HTML allows sites, browsers, and servers to interact with each other.

Recent news is a big part of the gains that DOT crypto has seen. Polkadot’s ruling council passed a resolution that will allow “developers to register parachaines and explore equity loan financing for projects,” according to Cryptoslate online journal.

As a result, the online parachain auctions are scheduled to begin on November 4. This will allow developers to register and fund developer loans on the Polkadot platform.

This is important for the following reason: Polkadot does not support smart contracts on its main blockchain. But it can support small smart contract apps on its parachain system, often written above the Ethereum (CCC:ETH-USD) blockchain platform.

Auctions Help DOT Crypto Prices Rise

The Binance The exchange has also extended its support for the parachain Polkadot with auctions set to launch next week.

Parachains are very specific blockchains that run on top of Polkadot’s main blockchain. They can be customized for any number of use cases and feed into the main blockchain, called the relay chain.

The auctions will allow specific clients to lend money and invest in parachain developers to develop their blockchains for the specific client.

This is probably a big chunk of the gains with the DOT crypto over the past month and a half.

Also, as long as the auction continues in earnest, expect the crypto to continue to rise. I expect that to be the case at least until the end of the year. This is based on other analyst comments on the success of similar auctions for Polkadot’s sister blockchain, Kusama.

Investors in Polkadot auctions

This auction system will be similar to the loan programs for the various blockchain parachaines. The entire process is described on the Polkdot auction site.

The process of obtaining loans from investors allows developers to afford to “rent” space on the Polkadot mainnet to highlight the particular utility of their parachain.

The loans are essentially equity loans. But it could also be specific loans from clients of a particular branch. The loans will fund DOT crypto purchases that parachain developers must “stake” for up to 2 years to lease space on Polkadot’s mainnet.

This helps to develop the demand for DOT crypto as parachains use these loans to buy Polkadot crypto. It also gives investors another chance to earn interest or rewards paid in DOT crypto by the various parachaines.

The net effect will be to strengthen the demand for DOT crypto in the long run, especially if this proves to be an effective way to develop specific parachain blockchain utilities. For example, Defi contracts (decentralized finance) are very popular at the moment. As some of the parachaines may find uses in the Defi arena, they are likely to be quite popular.

The bottom line is that DOT crypto investors are likely to profit from a bumpy but significantly higher ride over the next few months.

As of the publication date, Mark R. Hake held a LONG position on ETH-USD. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and run the Total Value of Return Guide that you can consult here.


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