Polkadot (DOT) has been surprising everyone in recent months, as interoperability-focused altcoins have gained 625% in the last three months.
The promise that blockchain interoperability will be a viable solution to Ethereum’s high gas commissions plaguing the cryptocurrency market has made the development of Polkadot parachains is attractive and the number of projects choosing to build on DOT continues to grow along with its popularity as a staking platform.
Polkadot parachains work in a similar way to the Ethereum 2.0 sharding proposal, which creates independent blockchains built for a particular purpose. Many Polkadot-based projects, such as Moonbeam, Equilibrium and Acala, they develop their own parachains where the project’s tokens would act as the native currency used to pay for transactions.
According to data from Staking Rewards, more than 63% of DOT coins in circulation are locked in staking mechanisms. Meanwhile, Polkadot’s development progress appears to be ahead of its competitors. De according to PolkaProject, a site that tracks development activity, There are currently more than 370 projects that are actively building on the platform.
The rapid pace of development of Polkadot and the imminent expectation of the official launch of the parachain mainnet in 2021, the DOT price has seen immense growth in its futures contracts.
During the last two months, $ 73 million aggregate open interest of DOT futures grew 690% to $ 575 million, making it the fourth largest crypto derivatives market behind Bitcoin (BTC), Ether (ETH) and Cardano (ADA).
Surprisingly, Litecoin (LTC), ranked third since the birth of cryptocurrency futures contracts, lost its position as holder. Furthermore, data indicates that this was not purely a technical adjustment, as Polkadot’s trading and on-chain metrics far outperform Litecoin’s.
It is worth noting that DOT’s open interest faced a 23% cut between February 21-27, after its price plunged 27% to $ 28.
Strengthening trade volume and DOT on-chain metrics
Regardless of the price movement, low trading activity reflects a lack of interest from traders and a reduced entry of new entrants.
Although he started from a much lower base three months ago, DOT trading volume soared in January, while Litecoin fell 50% after hitting a daily average of $ 13 billion. In the meantime, DOT’s aggregate spot trading volume on exchanges has grown to $ 4.3 billion, an increase of 660%.
Polkadot’s on-chain metrics also provide insight into its growing usage, going from 1,600 daily active addresses to 6,000. The 275% growth for a network whose main launch was less than eight months ago is impressive.
It may take some time for Polkadot’s on-chain metrics to approach the hundreds of thousands of active Litcoin and Cardano addresses, but this is not problematic considering how new their technology is.
The VORTECS ™ score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market, trade volume, recent price movements and activity on Tiwtter.
In addition to increasing open interest in major derivatives exchanges, the VORTECS ™ score was raised to 80 on February 26 and February 27. In the next five days, DOT’s price managed to rise another 13%.
The “flippening” of Polkadot’s open interest in futures to Litecoin opens up signals that investors are far more interested in its scalability and interoperability potential, as opposed to Litecoin’s pursuit of privacy through the integration of the MimbleWimble protocol.
As for the relatively small number of active addresses of the DOT, this should be monitored in the future, but currently it should not slow the rise in the price of the token.
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