Key Takeaways:
- Polkadot announced the schedule to debut parachain auctions
- Polkadot’s native token, DOT, jumped 18.53% intraday in response to the announcement.
NEW DELHI (CoinChapter.com) — Ethereum rival Polkadot announced the debut of parachain auctions on Nov 11 after the blockchain’s governance council approved the proposal unanimously. The development marks an achievement for Polkadot as the network fulfills its vision of a heterogeneous multichain framework outlined in its whitepaper.
Parachains are unique layer-1 blockchains that operate parallel to the main Polkadot network. The main network provides the parachain with security and transaction validation services. Parachains would help improve Polkadot’s blockchain interoperability while increasing the number of transactions.
Meanwhile, DOT, Polkadot’s native token, saw its prices jump 31% from Wednesday’s low of $33.23 to reach $43.56 on Wednesday. Notable, DOT is trading above the $40 price level for the first time since May 19’s crypto market crash.
Polkadot Pumped Up On Parachain
Polkadot’s parachains are a part of a vision that the network’s white paper proposed five years back. Speaking at the Sub0 conference, Polkadot founders Gavin Wood and Robert Habermeier stated that Polygon is ready to implement parachains for the first time.
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As such, Polkassembly, Polkadot’s governance platform, tabled proposal # 118 for parachain auctions on the network. The motion passed with a whopping 99.99% in favor, with the auctions slated to begin on Nov 11. The auction would continue for five consecutive weeks, with one auction every week.
The proposal also suggested limiting the number of parachain slots on Polkadot to 75% of Kusama’s. In hindsight, Kusama, Polkadot’s canary network, launched parachains for its network in May. As a result, the Kusama network saw 2.4 million KSM contributed by 49,000 active addresses during its parachain auctions.
DOT, Polkadot’s native cryptocurrency, also serves as the network’s governance token. As such, users would need DOT to create new parachains, which is likely to increase the demand for DOT. Holders of the Polkadot token would hope that the price boost holds, as it did for Kusama’s KSM token.
Similar to Kusama, Polkadot’s parachain auctions would have a starting period of one day and 21 hours with a 5-Day ending period. In addition, the auction prevents last-minute “auction sniping” by retroactively determining the precise moment of auction close using a verifiable random function.
DOT Price Charts
Polkadot prices bounced off the token’s 26-day exponential moving average trendline to start its rally on Oct 13. The boost brought prices to levels last seen nearly five months ago. Although DOT reached $43.56 on Wednesday, prices pared before the close of the day.
However, the jump was enough to ensure DOT closed the day at a 5-month high of $41.68. DOT’s rally slumped a little on Thursday, likely due to profit-seeking by traders. Bulls would now try to push the price above resistance at $43.69. If they succeed, the next target for DOT would likely be $45.34.
Also Read: Ethereum eyes “break and explode” moment towards $4.5K as ETH jumps 20% QTD.
In addition, DOT is bullish across all time horizons, as it trades above the short-term (50-day) and long-term (200-day) moving average trendlines. After Oct 13’s rally, DOT prices slumped a little on Thursday.
If the downtrend continues, DOT can find support at $38.70, a price level that capped any upside movement since May. If bears bring the Polkadot token further down, prices could reach $36.40. DOT also has support near its 26-day EMA at $34.11.
Meanwhile, Polkadot’s MACD histogram bars rose to higher levels following DOT’s jump. The histogram plots the difference between the MACD line (12-day and 26-day EMA difference) and its signal line (9-day EMA of MACD) to highlight the bullish or bearish nature of an asset’s momentum.
As such, the bars indicate that bullish momentum for DOT is getting stronger. On the other hand, the relative strength index for the Polkadot token did a 180 near the overbought regions and is currently neutral with a value of 65.90.
At the time of writing, DOT was trading at $40.5, down 2.7% on the day.
