The Polkadot price has risen by more than 20% in the last 24 hours. This is partly due to the announcement of a new blockchain project.
Polkadot announces ‘parachains’
Earlier this fall, Cardano and Solana caught the eye, but now it’s Polkadot’s DOT coin that is taking a big hit.
The DOT price has increased by more than 20% in the last 24 hours, making 1 token now worth more than $41. Today’s increase is part of a gain of more than 30% in the past week.
The launch of the parachains
It is probably no coincidence that, exactly five years after the development of the project, the Polkadot team announced the launch of the ‘parachains’ yesterday. Polkadot’s development group then voted to begin “auctions” for parachain slots starting Nov. 11.
Parachains are their own blockchains that run alongside the main network. They are used for security and to validate transactions. So Polkadot is all about blockchain interoperability, with a view to increasing the number of transactions a network can process.
5 years after the vision of a heterogeneous multichain framework was first outlined in the Polkadot Whitepaper, parachains are now ready to launch on Polkadot. Motion 118, to schedule the first auctions, has passed council & now gone to public referendum.https://t.co/8pt3aT4vO3
— Polkadot (@Polkadot) October 13, 2021
DOT is a governance token that gives the investors voting rights. Also, users can stake DOT tokens to make the network more secure. Crucially, investors need DOT to create new parachains. That, of course, increases the demand for DOT tokens and drives the price up.
“Today’s council motion to begin the rollout of parachains on Polkadot is a huge step forward for the industry.” This said Peter Mauric, head of public affairs for Parity Technologies. “As the only layer 0 protocol in blockchain, Polkadot is designed to disrupt the entire layer 1 landscape for years to come by dramatically reducing the overhead required to secure and connect the layers in the form of parachains.”
What are layers?
Layers, in crypto jargon, usually refer to the levels built on top of a blockchain. Layer 2 technologies help to process transactions faster by removing some of the burden from the (layer 1) blockchain. Examples include Lightning for Bitcoin or Polygon for Ethereum. “Layer 0”, on the other hand, increases efficiency by linking different blockchains.
In May, Polkadot made the parachains available on his experimental Kusama network. This is a kind of testnet for Polkadot functions with its own token, called ‘KSM’. Polkadot investors are now naturally hoping that the new features will push the DOT price much higher.
