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Will Polkadot (DOT) worth reverse course now that cross-chain messaging is reside?

Will Polkadot (DOT) worth reverse course now that cross-chain messaging is reside? thumbnail
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Development inside the Polkadot (DOT) ecosystem has been slowly unfolding over the previous 12 months and a half, and the work put in by builders is lastly beginning to bear fruit as parachain auctions end and the primary chains launch on the mainnet. 

The subsequent section of interoperability inside the ecosystem is ready to kick off now that cross-chain performance is about to go reside. This subsequent step will permit Polkadot-based parachains to speak with one another and switch property between chains.

Here’s a have a look at what the launch of the XCM messaging system means for the worth of DOT, the choices that at the moment are out there to DOT holders and the way this improvement will increase its performance inside the Polkadot ecosystem.

Polkadot is unshackled

Up thus far, DOT had restricted makes use of and was principally remoted by itself community with out a lot performance. Its foremost capabilities included staking, governance and contribution in parachain crowdloans, which helped scale back the circulating provide however did little else to essentially spark demand.

The introduction of cross-chain communication enabled DOT transfers to varied parachain networks and the variety of use circumstances for the DOT token on parachains like Moonbeam and Astar Network.

Data from Cointelegraph Markets Pro and TradingView exhibits that the worth of DOT has been exhausting hit by the six-month downtrend within the crypto market as its worth has declined 73% from its all-time excessive at $55 on Nov. 4. 

DOT/USDT 1-day chart. Source: TradingView

With the token now buying and selling at a notable assist/resistance degree, it stays to be seen if the flexibility to switch DOT throughout varied parachains will assist result in a rise in demand for DOT.

Related: Polkadot launches cross-chain messaging system to unravel blockchain’s bridge drawback

New use circumstances

One notable use for DOT that has been rising in reputation in latest months is liquid staking and minting stablecoins by utilizing crypto property as collateral.

DOT can now be transferred to the DeFi-focused Acala parachain and deposited in its liquid staking contract in trade for LDOT, which might then be used as collateral to mint aUSD, the native decentralized stablecoin of Polkadot and Kusama.

DOT may also be utilized in varied DeFi functions together with yield farming, lending and borrowing. As the introduction of cross-chain communication spreads all through the Polkadot ecosystem, extra makes use of for DOT are prone to emerge, particularly as parachains roll out elevated performance.

The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Cryptonomie.eu. Every funding and buying and selling transfer entails danger, it’s best to conduct your individual analysis when making a call.

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