Private and public blockchains use a protocol called Polkadot (DOT), which allows them to connect with each other and trade information. But now, it has reached a pivotal stage as parachain auctions take shape.
The use case of DOT is all the more concrete now and the community around the cryptocurrency has become more empowered. The Shell parachain is one empty parachain that’s become a part of Polkadot. This parachain will be upgraded to Statemint later to allow the deployment of various crypto tokens, such as central bank digital currencies, stablecoins, and nonfungible tokens (NFTs).
Over a hundred projects are looking to earn the parachain status on Polkadot’s blockchain. However, the demand is bullish as it indicates that blockchain projects wish to use the cryptocurrency’s network to connect to other chains and widen their adoption. Currently, the price of DOT is up by about 2.5 percent, reaching $53.75 in a day. The price has shown a rise of nearly 70 percent since October.
Parachain auctions give blockchain projects a chance to initiate their crowd-funding or crowd-loan process using DOT token. Moonbeam (Ethereum-based), Acla (DeFi hub), and Astar are three projects leading the parachain auction. Crowd-loans allow people to extend their support towards various projects that seek to secure a parachain on DOT. They can start by locking in their DOT tokens for the parachain lease period in exchange for a reward, which is typically the project’s main token.
If a project fails, contributors towards the crowd-loan can reclaim their money. However, it’s worth noting that the DOT community expects parachains to be bullish for blockchains. If that’s the case, then the DOT has a lot of untapped potential to unleash.