Blockchain interoperability platform Polkadot’s coin, DOT has been putting on a bit of a show at the start of February with its price shooting up 20% to $20.49.
In December Polkadot said its five year multi-stage launch was complete and that all the auction-winning parachains were producing blocks on the network. Parachain’s are essentially linked sub chains with a specific use and are a key part of the Polkadot strategy.
See more: Dot coin price prediction
On 27 January Centrifuge became the winner of Polkadot’s eighth parachain auction.
So, what is Polkadot? and what are the parachains that have been auctioned?
In this overview of the cryptocurrency network, we check out the project’s latest developments and the outlook for the DOT crypto price.
Polkadot aims for blockchain interoperability
The Polkadot network was created in 2016 by Gavin Wood, co-founder of Ethereum. The project is being developed by the Switzerland-based Web3 Foundation, which aims to facilitate a fully decentralised web. Web3 refers to the next-generation internet, where decentralised platforms give users control over their privacy and personal data, rather than large corporations.
According to the project website, “researchers from Inria Paris and ETH Zurich, developers from Parity Technologies, and capital partners from crypto-funds such as Polychain Capital are all working together to develop a superlative realisation of Web3, with Polkadot at its core.”
What is Polkadot’s coin? The DOT cryptocurrency is the digital token the network uses for staking, bonding and governance. Staking is the process of receiving cryptocurrency as a reward for holding funds in a digital wallet to support operations of the blockchain. Bonding involves locking in a certain number of tokens for a specified period. Tokens are used by the Polkadot community for governance to vote on changes to the network. Unlike networks such as Bitcoin, Polkadot can be upgraded to fix bugs or introduce new features without requiring a hard fork, making it easier to adapt.
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The first block of the project’s Relay Chain launched in May 2020 and the Polkadot coin was rolled out in a phased process.
Polkadot runs alongside the Kusama network, which was released as an initial version of the same underlying code to act as a live pre-production environment to test new features. There are also use cases for Kusama as a standalone network for early-stage startups, while Polkadot focuses on enterprise and business-to-business financial applications that require bank-level security and stability. They are based on the same multichain architecture, but the networks are expected to evolve independently.
The Polkadot development team said in a blog post that the project “was designed as an underlying infrastructure to realise the kind of scalability, interoperability, and security needed to enable the multichain future, allowing diverse layer-1 parachains to interact and communicate with each other within the ecosystem.”
Polkadot allows parachains (parallelisable chains, which are a simpler form of blockchain) and networks like Bitcoin or Ethereum to interoperate via bridges.
A bridge creates a compatible connection that allows users to securely transfer tokens or data between blockchains, whether they are public or belong to private enterprises. Several such bridges have been developed or are in development to connect Polkadot with other blockchains and the development is committed to connecting communities, aiming “to provide reusable development components that make it effortless to build and deploy bridges to other blockchains,” the post said.
Polkadot prepares for parachain auctions
In the latest Polkadot news, founders Gavin Wood and Robert Habermeier announced on 13 October that the network is ready to support its first parachains, the final stage of its multi-phase process that started on 26 May with the launch of the initial proof-of-authority version of the Polkadot Relay Chain.
Announced on 18 November, Polkadot’s first parachain auction was won by DeFi project Acala for which it received 32.5 million DOT currently valued (at the time) at $1.27bn. Moonbeam Network was announced as the second winner a week later. The third announced on 2 December was Astar Network and the fourth a week later was Parallel Finance. The fifth and final place for this round went to Clover on 16 December.
Parachains have been running on the Kusama network since the launch of Statemine – it’s first full feature parachain – on 3 June, with a series of auctions resulting in 12 live parachains.
“These parachain teams have conducted several ‘forkless’ upgrades on the network and processed several million transactions. In conjunction with Kusama parachain auctions, over 2.4 million KSM has been contributed to crowdloans by more than 49k unique addresses, demonstrating significant community participation in the parachain launch process,” according to the announcement.
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“The fact that such activity has been taking place on Kusama for over four months without significant issues is an important factor in considering parachains ready for launch on Polkadot.”
With Polkadot on its way to a full commercial launch, the DOT token price has soared. Polkadot chart analysis shows that after the cryptocurrency markets bottomed in July with DOT falling to $10.42, its lowest level since January, the price climbed to $38.68 on 14 September.
DOT slipped back to $25.56 on 21 September, but has since rallied, reaching its new high of $55 on 4 November with other coins such as ether (ETH) and solana (SOL) also hitting fresh highs. At the time of writing (2 February) it was trading at $20.4 giving it a market capitalisation of $20.2bn and a ranking of 10th among cryptocurrencies.
On 14 January Moonbeam, an Ethereum-compatible smart contract platform, became Polkadot’s first fully operation parachain.
Bearing in mind that the past price performance is no guarantee of future returns, what is the outlook for the coin? Will the price continue to rise?
Polkadot crypto price prediction: will the coin climb to new highs?
At the time of writing (2 February), Polkadot technical analysis from CoinCodex showed that sentiment was neutral, with 15 indicators giving buy signals compared with 12 bearish. However, it predicted that the DOT price could surge a further 24% to $25.34 by 7 February.
The DOT coin price prediction from Wallet Investor was bullish for the short-term, predicting that the price could reach $37.86 in a year’s time. Looking further ahead, it expects the price to rise to $118 in five years.
DigitalCoin’s Polkadot prediction estimated that the coin price could average $28.11 in 2022 and rise to $33.67 in 2023 and $42 in 2025. By 2028, DigitalCoin predicted DOT could trade at an average price of $74.
The Polkadot crypto forecast from Price Prediction put the coin at an average price of $27.6 in 2022, $38.3 in 2023 and $113 in 2025. By 2030, it expected the price to jump to an average of $528.
It’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and forecasting websites can and do get their predictions nftgamef.com recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. You should also be aware that the past price performance is no guarantee of future returns and never invest more than you can afford to lose.
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