Polkadot a new all-time high at a price level of $53 as November began. However, a period of prolonged bearish followed after the ATH as the cryptocurrency began declining steadily. The downtrend has been going strong ever since November with no indication of a trend reversal any time soon. Despite the fact that the short-term outlook of DOT token is bearish, the long-term outlook is completely different – thanks to the network’s strong fundamentals and the growth in its multi-chain model through the parachain auction. At the time of writing, the cryptocurrency stands at a price level of $24.75. The price is continuing its downtrend with a decline of more than 3% during the past twenty-hour hours while the trading volume has gone down by nearly 20%.
What is Polkadot?
Polkadot is a sharding multichain protocol which is geared towards solving the problem of interoperability in the blockchain space. Each blockchain is a universe of its own, which makes them difficult to interact with each other and the true potential of the crypto market lies in a synergetic web of interconnected blockchains. For this purpose, various cross-chain protocols have been launched but DOT’s ecosystem facilitates the cross-chain transfers of not just tokens but any kind of assets as well as data.
The bullish future outlook for Polkadot is fueled by the value proposition it has in the market along with the parachain auction.
How does parachain benefit DOT’s ecosystem?
Parachains are independent chains connected to the heart of Polkadot’s ecosystem which have their native tokens ad are designed to serve a specific purpose. The parachain model is regarded to be the foundation for the internet of blockchains as it enables interoperability between different types and kinds of specialized blockchains. Moreover, the model offers parachains independence, flexibility, scalability among many more advantages. In short, to tackle the problem of interoperability, the parachain model appears to be near perfect.
Parachain slots are auctioned off for a particular period of time. Aspiring parachains lock their DOT holdings into a bond and a winner is selected with the highest DOT holdings. DOT holders can, this way, help their favourite chains get a chance to secure a slot by locking in their tokens temporarily into the bond. The parachain model is regarded to be the next generation of the blockchain technology. It enables a truly cohesive ecosystem which will play a vital role in the Web 3.0 ecosystem. This gives Polkadot a particularly important place in the future of blockchains.
