Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.
Recently DOT We have witnessed a sharp and voluminous rise in the price of the coin. The reason for this was a new development within the DOT ecosystem. polkadotWith a post from ‘s own Twitter account, there was an excessive demand for DOT coin. So, today I’m going to explain to you this development, this great opportunity.
What is Polkadot?
First of all, let’s get to know the Polkadot ecosystem, as the basis of development is related to Blockchain. This Blockchain network basically allows some other projects to develop under its own infrastructure. So, a new cryptocurrency If you want to develop a project, you can use Polkadot’s Blockchain infrastructure. In this way, the Polkadot network can host many projects.
The picture above represents the structure of Polkadot. You can see many modules coming together around the circle. These are actually other projects. The networks in the middle of the circle also connect these projects. The whole of this painting represents Polkadot. That is, it brings together the projects there, gathers them under the same roof and allows them to use Polkadot’s infrastructure. So basically what we call Polkadot is not a single project, but a large network that contains many projects.
Now that we’ve gotten through the software part without using any software terms, we can dig a little deeper.
Parachain Opportunities
First, we call these projects using the Polkadot infrastructure parachain. This is where this new development takes place. There is a method called Auction for these parachains (i.e. new projects) to take place on the Polkadot network. According to this method, projects that lock (stack) the most Polkadot (DOT) tokens get ahead of other projects. In this way, they can implement their own projects.
Generally, if the project team is rich, they can lock this Dot token themselves. If the team does not have enough DOT, those who want to support the project (usually the project’s own community) can also lock the DOT.
First of all, I will talk about what this “token locking” is for those who do not know. These projects are listed on the “Parachains” page. You go to a project you like and lock the DOTs you have or bought from the market. We call this process “staking”. You or someone else cannot use the coins you have locked for a certain period of time. So you can’t sell those coins for a while. Well, if no one can use these coins, why is there such a thing? What panacea is it?
Here, the Polkadot ecosystem is asking projects to be listed to lock DOT to protect the value of its token, the DOT coin. The value of the DOT coin is preserved as no one can sell the DOT coins locked in this way for a certain period of time. Selling pressure is easing. In fact, many people buy DOT from the market to support projects. So why do people lock DOT to support projects?
Auction System
If you’ve ever bought a coin during a “pre-sale”, you’ll understand why. If you buy the coin of a project before it comes to life, you actually get it quite cheaply. If you lock DOT for a project, they give you their own tokens in return.
For example, you DOT-locked a project. The project also gives you 15 of its own coins per DOT you lock. This is just an example, it could be more or less. However, what you need to know here is that you don’t give DOT and get that project’s coin in return. Because, these DOT coins are unlocked after a certain period of time. After unlocking, that coin is given to you again. That is, you are given one of your own project coins as a reward for locking that coin for a certain period of time. And because you lock them, those projects come to the fore. Thus, the probability of winning and the realization of the project increases.
Now the same thing I described about this Polkadot has been tried before in Kusama. You can think of the Kusama network as the sister of the Polkadot network. This locking thing I mentioned has been tried before in Kusama and it was successful. Now the Polkadot ecosystem will try it on its own network. This was the news that the team announced and then caused the sharp rise in the DOT price. Now, I’m going to tell you how profitable this business is, through what happened in Kusama.
Tried and Successful in KUSAMA
Kusama has the same things I described about Polkadot. It also allows other projects to use their own infrastructure. Likewise, projects that want to use the Kusama infrastructure are listed and some of them are selected. Projects that lock the most Kusama (KSM) coins win.
You see the projects listed above. How much KSM these projects have locked is shown in the box I marked in red. The amount of KSM that the top project (Karura) wants (targets) to lock is 500,000.
In the section that says “Reward”, it is written how much reward coins are given per locked KSM (marked in blue).
On the far right it says “WINNER” in green text. This means that these projects have locked enough KSM and won.
Other projects, that is, those that did not win, are written “Refunded”. That means “returned”. So, you went and locked KSM on a project. However, the project you locked KSM failed to win. In this case, the KSMs you locked are returned to you.
Well, you have locked the KSMs and your chosen project has won. How much reward do you get in this case?
How Big Are the Prizes?
The top list shows the 4 winning projects. If you had locked KSM on the first of these projects, Moonriver, you would have received 14 MOVR coins per KSM you locked. The value of these 14 MOVR coins is $3,500. So, when you lock a KSM (current value of $ 350), you gain 14 MOVR (current value of $ 3,500). This is a pretty big win. You can see how many awards other projects have given above.
To support these projects, you need to click on the “join” section on the right. In this way, you are directed to the project’s site and you can connect your wallet and stake KSM. It’s pretty simple. However, it is important that you research the projects well, as always said before doing these procedures. Here, the KSM lock period is 48 weeks. You cannot sell your KSMs for 48 weeks. Of course, this way the Kusama network is able to maintain the coin’s value as it reduces the selling pressure on the KSM coin.
In fact, there may be an increase in price as many people buy KSM to lock it. The amount of KSM locked to date is available in the section marked in blue. In total, 1 million 324 thousand KSMs were locked. Its total value is $462 million.
Well, now the same will happen on the DOT network. Tried and succeeded in Kusama network. The first auction will begin on November 11, according to the project team. You can try these projects if you want. You can also buy DOT coins directly if you want. Because the DOT coins that will be locked here may trigger increases in the DOT price in the future. Finally,
If you want to DOT lock projects, you also need to know these projects well. Things like how many awards they give, what the project is, who the team is are important. But more importantly, the projects that stake (lock) the most DOT, not the best project, will win. So it’s also important to look at which projects are ahead. In the future, I can make special content about projects for you. I’m Furkan Bozkurt. Thank you for your patience.
$DOT There was a strong and voluminous rise on the side. Because there are important developments. I will address the reason for this and whether it will continue in my new analysis. Stay tuned. #DOT
— Furkan Bozkurt (@BzkrtFrkn) October 14, 2021
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.