The recent 256% recovery recorded by Polkadot (DOT) over the past 56 days has been nothing short of spectacular. Although the price is 23% lower than the all-time high of $ 49.80 set four months ago, the altcoin’s $ 39 billion market cap has outperformed Ether (ETH) over the past thirty days. 66%.
Polkadot is a network designed to support several parallel and interconnected bespoke blockchains, known as parachains. This scalability-focused project splits transactions into multiple fragments and processes them in parallel, a process similar to what ETH 2.0 aims to implement.
Polkadot refers to the entire ecosystem of parachains that connect to a single basic platform known as a relay chain. This basic layer provides network security and manages consent, purpose and voting logic.
To support parachain launches, users vote for projects by blocking DOT tokens. At the moment, only Kusama (Polkadot’s “canary” network, an early and crude version of the latter) is running auctions for these slots. Polkadot will initiate the same process in the coming months.
Polkadot’s integration into DeFi is growing
The Polkadot ecosystem is witnessing constant growth. On September 8, the decentralized data aggregator SubQuery raised $ 9 million to develop Polkadot’s first level of data aggregation.
Additionally, the Moonbeam parachain has tokens created using Polkadot’s development tool (Substrate). These tokens can be sent directly to Ethereum wallets and smart contracts. On September 9, Moonbeam announced a partnership with Lido, a decentralized liquid staking protocol currently implemented on Ethereum, Terra and Solana.
The most recent update comes from the decentralized exchange (DEX) dTrade. After raising $ 6.4 million in a seed funding round in May 2021, DEX established a $ 22.8 million market making fund designed to provide “deep liquidity” and backed by some of the world’s leading market makers. known in the crypto sector.
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Derivatives suggest potential for a new all-time high
Technical analysts are quick to make price predictions, but investors should analyze the derivatives data on Polkadot. For example, a non-existent premium on futures contracts means that investors are not confident in creating bullish positions using leverage.
Over the past 30 days, the total open interest of DOT futures has increased from $ 360 to $ 685 million. This is a positive factor as it reflects traders’ intention to keep their long positions open despite the rally.
In futures trading, long (buyer) and short (seller) positions are always the same, but their leverage varies. Any imbalances are visible in the funding rate, which derivatives exchanges apply to the side that is using the most leverage to balance risk.
The constant development of the protocol is decisive for the price of DOT
In the first week of September, a healthy dose of optimism emerged as the eight-hour funding rate hit 0.10%, equivalent to a weekly rate of 2.1%. However, on 7 September the situation reversed after a 35% drop in the price of DOT.
The local low of $ 22.70 hit a week ago may seem irrelevant as DOT stands at around $ 36, but trader interest in leveraged long positions has not yet recovered from this correction.
The most likely scenario is rather optimistic and sees investors regain confidence as the project continues to move forward.
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