Polkadot prices rise as parachain auctions decrease DOT’s circulating supply

The DOT price is on track to reach new highs. Investors expect the ongoing Polkadot Parachain Auctions to propel the price along a trajectory that will mirror Kusama’s 2020 breakout.
A number of potential participants will be participating in Polkadot’s first parachain auctions this week. This process puts buy pressure on DOT while also giving aspiring crypto projects a chance show why they are the best in the sector. Projects like Moonriver and Karura have each secured a parachain slot for next year. Top 5 Crowdloans on Kusama based on reward rating. Source: ParachainsThe Kusama parchain auctions started during a downturn of the wider crypto market. They helped KSM recover from $148.85 on Jul 19 to its current price of $457. Similar to the Kusama auctions and similar to the Kusama auctions. DOT could see a boost in token supply as more tokens are taken from circulation. The top four parachain auctions currently taking place on Polkadot. Source: ParachainsAcalaAcala is a layer-one smart contracts platform that is billed as the Decentralized Finance (DeF) and Liquidity Hub of Polkadot. The protocol is compatible with Ethereum (ETH), and includes liquidity and ready-made applications. This includes a trustless exchange (aUSD), and DOT Liquidstaking (LDOT). Acala, the sister network to the Karura (KAR), DeFi protocol, operates on the Kusama networks and offers many of these functions. DeFi is now a key sector of the cryptocurrency ecosystem. Therefore, it is essential that every network has a well-established DeFi protocol that can attract liquidity as well as offer token holders some yield. Moonbeam Moonbeam is an Ethereum compatible smart contract platform that simplifies the process of multi-chain projects being launched on the Polkadot Network. Moonriver, Moonbeam’s sister network in Kusama, offered the highest reward rating among all parachains launched on Kusama. Because developers and investors are still reluctant to pay high fees for Ethereum, it is important to simplify the process of cross-chain migration to Polkadot. Moonbeam has the potential to simplify the process for interested projects and increase the overall strength and activity of Polkadot. AstarAstar (ASTR), a protocol that aims to create a scalable, interoperable infrastructure for Web3.0 by creating a multi-virtual machine support platform that connects compatible layer one protocols with the Polkadot Network. Astar can also be used to act as a scalable smart-contract platform, which helps the Polkadot network that is not capable of supporting smart contracts. Parallel FinanceParallel Finance is a DeFi lending protocol that also offers an automated money market (AMM). It supports both Polkadot-based assets as well as Kusama-based assets. Token holders can also put their assets to use by earning interest. The protocol is designed to provide greater liquidity, yield, and capital efficiency for Polkadot’s ecosystem. Users will eventually be able lend, stake, and borrow assets from any of its supported networks. Related: DeFi protocol Acala raises $400M through crowdloans in the first Polkadot Parachain AuctionDOT and KSM turn bullish ahead the auctions. The ongoing parachain auctions for Polkadot will likely put positive pressure on DOT’s price because users are buying tokens for crowdloans. This effectively takes the tokens out of circulation for two years. The chart below shows that the introduction of crowdloans to Kusama in June 2021 caused a spike in token prices, while the price action for the DOT tokens was more muted. 4-hour chart of KSM/USDT and DOT/USDT Source: TradingViewNow. The opposite is happening as the price for DOT is outperforming the price for KSM. This process began in mid-September, just as excitement for the Polkadot Parachain Auctions started to grow. There are eleven sets of weekly parachain auctions scheduled between November 11, 2021, and March 10, 2022. It is possible that the price for DOT will rise as long as there is demand for parachain access. These views and opinions are solely the author’s and do not necessarily reflect those of Cointelegraph.com. You should do your own research before making any investment or trading decision.

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