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Polkadot (CCC:DOT-USD) is a $38 billion market cap cryptocurrency that is ranked as the eight largest, according to CoinMarketCap.
I previously wrote about the parachain auctions on the Polkadot network as well as their deflationary effect on the supply of DOT crypto. Now, a large auction is now complete and the mainnet on Polkadot will be leased out to the winning parachain.
As a result, DOT crypto has a chance of moving higher over the next year. It peaked earlier this month on Nov. 4 at $55. But now it’s just over $35. While DOT crypto is well off of its highs this month, it’s possible that as the parachain begins operating on the Polkadot mainnet, the value of the crypto could begin to rise again.
Where Things Stand With Polkadot
Acala (CCC:ACA-USD) network, a decentralized finance (DeFi) protocol, announced it won the first auction on the Polkadot platform. It raised 32.5 million DOT, worth roughly $1.28 billion, from 24,934 contributors via an initial coin offering (ICO).
The ICO was actually structured as a crowd loan to the Acala network, which locks up investors’ capital for two years and pays them the interest in ACA tokens.
At the end of two years, Acala has to pay back the principal. It could do a sale of ACA tokens then. combined with its own cash reserves earned from its DeFi protocol on Polkadot.
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Acala won the auction slot by outbidding Moonbeam (CCC:GLMR-USD). Moonbeam actually raised $1.36 billion, according to Coindesk, or more than Acala’s $1.3 billion. But Acala accessed 81,000 digital wallets that subscribed to their crowd loans, and their bids “were in the lead 63% of the time.”
That is apparently how the winner of the auction was chosen. The article in Coindesk indicated that the two parachains were neck and neck numerous times. The “candle auction” process however prevents last-minute peaking and gaming.
Later, Polkadot announced on Nov. 18 on that the first six auction winners, including Acala, will be “onboarded” onto the mainnet on Dec. 18. That implies that up to and including Dec. 18, DOT crypto could begin to make a rebound.
What To Do With DOT Crypto
Analysts now think that Polkadot is at a crucial inflection point. For example, Crypto Briefing magazine wrote several days ago that DOT crypto price was at an important technical level.
Moreover, the second set of auctions will begin on Dec. 23 and run every two weeks through early 2022, according to Crypto Briefing.
As a result of winning the first Polkadot parachain auction, the Acala network has big plans, according to Crypto Briefing. It hopes to become the premier DeFi app on the blockchain/Internet. It has plans to introduce an automated market maker, liquid DOT crypto staking and a decentralized stablecoin called “aUSD.”
DOT crypto staking will allow people to offer up their Polkadot tokens in order to gain interest, but also have the ability to liquidate them out of the smart contract.
Since there was fierce competition for the Polkadot mainnet lease, this is a good sign. It means there is strong demand for its blockchain platform. Moreover, the fact that so much money was raised for the project also is a good sign. Lastly, with so many DOT crypto tokens tied up for two years, the DOT crypto price could rise.
On the date of publication, Mark R. Hake did not own a position in any security mentioned in the article, either directly or indirectly. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide, which you can review here.
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