Development within the Polkadot (DOT) ecosystem has been inching along for the past year and a half, and the work put in by developers is starting to pay off as parachain auctions end and the first chains are launched on the internet. main network.
The next phase of interoperability within the ecosystem is ready to begin now that cross-chain functionality is about to go live. This step will allow Polkadot-based parachains to communicate with each other and transfer assets between them.
After passing community vote, v0.9.19 has been enacted on Polkadot. This upgrade included a batch call upgrading Polkadot’s runtime to enable parachain-to-parachain messaging over XCM and upgrading #Statement to include minting assets (like NFTs) and teleports. pic.twitter.com/uqIB5di2Q1
— Polkadot (@Polkadot) May 4, 2022
Here’s a rundown of what the launch of the XCM messaging system means for the price of DOT, the options that are currently available to DOT holders, and how all of this increases functionality within the Polkadot ecosystem.
Polkadot breaks free
Until this time, the DOT token had limited uses and was basically isolated on its own network without much functionality. Its main functions included staking, governance, and contributing to parachain crowdloans, which helped reduce circulating supply, but did little else to really spark demand.
The introduction of cross-chain communication enabled DOT transfers to various parachain networks and number of DOT token use cases on parachains such as Moonbeam and Astar Network.
one/ $DOT is now live & usable in DeFi on Moonbeam!
Following this morning’s #XCM release to @PolkadotMoonbeam has added xcDOT, an XC-20 representation of DOT on its parachain.https://t.co/gCXIqwlXWb
— Moonbeam Network (@MoonbeamNetwork) May 4, 2022
Data from Cointelegraph Markets Pro and TradingView shows that the price of DOT has been hit hard by the prolonged downtrend in the cryptocurrency market, as its price is down 73% from its all-time high of $55 on November 4th.
With the token currently trading at a notable support/resistance level, it remains to be seen whether the ability to transfer DOT across various parachains will help lead to an increase in demand for the token.
New use cases
One notable use of DOT that has been growing in popularity in recent months is liquid staking and the minting of stablecoins using crypto assets as collateral.
DOT can now be transferred to the DeFi-focused Acala parachain and deposited into its liquid staking contract in exchange for LDOT, which can be used as collateral to mint USD, the native decentralized stablecoin of Polkadot and Kusama.
This also means it’s time to unbond $DOT desde @Polkadot for LDOT staking. Liquid DOT staking, $LDOTis about to go live on @AcalaNetwork
– Higher yield
– Keep earning DOT staking rewards but get $LDOT to use in DeFi or to mint $aUSD
instant unbonding
– Fully decentralized– Dan Reecer ï¸ âšªï¸ (@danreecer_) May 3, 2022
The DOT token can also be used in various DeFi applications such as yield farming, lending and borrowing. As the introduction of cross-chain communication spreads throughout the Polkadot ecosystem, additional uses for the network’s native token are likely to emerge, especially once parachains roll out more functionality.
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