Polkadot’s native currency DOT has experienced an upward swing in the past few days. The token’s listing on publicly traded exchange Coinbase Pro coupled with the impending auction of parachain slots on Polkadot’s testbed version of Kusama has captivated traders looking for their best bets in the crypto market. Polkadot has been steadily climbing in the crypto ranks for some time now.
On June 14, the DOT/USD exchange rate surged by 37% to reach $26.44. The rate remained generally positive and little changed as it entered Asia-Pacific and European trading hours with a minor correction of nearly 4.5%.
The initial spike in DOT prices was caused by a Bitcoin rally on 13 June. BTC received a major boost when Tesla CEO, Elon Musk, announced that the electric vehicle maker may roll back its ban on Bitcoin payments if the flagship cryptocurrency is mined using 50% renewable energy.
The statement from Musk had a direct impact on BTC/USD exchange rate as well, which increased from $34,780 to more than $40,000. In the meantime, several altcoins -- which depend heavily on BTC trends -- also appreciated, taking DOT prices to the upside.
But, what sets apart Polkadot’s latest rally from its crypto counterparts is the scale at which the currency rose. DOT’s gains coincided with Coinbase Pro’s announcement that it would open the token for trading in American markets.
Parallel Finance has also encouraged bullish sentiments on Polkadot with its recent fundraising. The startup has raised $2 million to offer compound staking and zero-collateral, fixed-rate loans to DOT and KSM holders.
For projects aspiring to launch a parachain on the Polkadot network, Kusama works as an ideal platform. The testbed blockchain enables other projects to launch with forkless blockchain upgrades, scalability, and governance structure. These projects also have the opportunity to communicate with other blockchains and apps on Kusama’s interparachain network.
But parachain slots are in limited supply, making them highly coveted. Companies like Parallel Finance have to participate in auctions to obtain a slot for a specified duration(normally 6 to 24 months). This process results in limiting the number of DOT and KSM tokens in circulation. Observers believe that the highly competitive auction process will make these tokens even more desirable in the future.
Alex Siman, founder of Polkadot-based decentralized social network, Subsocial explains:
While Polkadot is yet to announce the auction of its parachain slots, the active supply of its DIT tokens is already on the decline. According to Mira Christanto, a researcher at crypto data analytics firm Messari, 65% of DOT’s active supply has already been staked, leaving only 30% in circulation. This amount could reduce further in the upcoming auctions.