Polkadot (DOT )’s most recent 256% rebound over the past 56 days has been nothing short of spectacular. Although the price is 23% off its all-time high of $ 49.80 four months ago, the altcoin’s $ 39 billion ether (ETH) market cap has surpassed 66% in the past thirty days.
Polkadot / USDT. Source: Bybt.com
Polkadot is a blockchain network that supports various interconnected, application-specific parallel chains known as parachains. This scalability-focused project splits transactions into many shards and processes them in parallel, similar to what ETH 2.0 wants to achieve.
Polkadot refers to the entire ecosystem of parachains connected to a single base platform known as a relay chain. This base layer provides security for the network and handles the consensus, finality and voting logic.
To support parachain launches, users vote for projects by locking DOT tokens. Currently, only Kusama – Polkadot’s “canary” network and an early, unrefined release of Polkadot – is running its own auctions for these slots. Polkadot is expected to initiate the same process over the next few months.
The integration of Polkadot into DeFi is increasing
The Polkadot ecosystem has grown steadily. On September 8, SubQuery, a decentralized data aggregator, raised $ 9 million to build Polkadot’s first data aggregation layer.
As an example of this integration, the Moonbeam Parachain has tokens based on the Polkadot (substrate) development tool. These tokens can be sent seamlessly to Ethereum wallets and smart contract addresses. On September 9, Moonbeam announced a partnership with Lido, a decentralized liquid staking derivatives protocol currently in use with Ethereum and Terra.
The latest update came from dTrade, a decentralized exchange (DEX). After DEX successfully launched 6.4 million euros in a seed financing round in May 2021.
Relative:Governance proposals and Layer 2 launches give Altcoins a boost
Derivative dates show potential for a new all-time high
Technical analysts are quick to forecast prices, but investors should analyze Polkadot’s derivatives data. For example, a non-existent futures contract premium means that investors are not comfortable building bullish positions with leverage.
Polkadot Futures aggregated open interest. Source: Bybt.com
DOT’s total open interest in futures rose from $ 360 million to $ 685 million in 30 days. This is a positive indicator as it reflects the willingness of leverage traders to keep their long positions open despite the rally.
When trading futures contracts, both long (buyer) and short (seller) positions are matched at all times, but their leverage varies. Any imbalances will be reflected in the funding rate, and the derivatives exchanges will charge whichever side is using more leverage to offset their risk.
Continuous protocol development will be the ultimate driver of the DOT price
Polkadot Perpetual Futures 8 Hour Financing Rate. Source: Bybt.com
In the first week of September there was a healthy dose of optimism, because the 8-hour delivery rate reached 0.10%, which corresponds to 2.1% per week. Nevertheless, the situation was reversed after the 35% price drop on the morning of September 7th.
That intraday low of $ 22.70 a week ago may seem irrelevant as DOT is above $ 36.00, but traders’ appetites for leveraged long positions have yet to recover.
The most likely scenario is a “glass half full” where investors regain confidence while the project continues to deliver.
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