Will Polkadot (DOT) price reverse course now that cross-chain messaging is live?

Improvement inside the Polkadot (DOT) ecosystem has been slowly unfolding over the previous 12 months and a half, and the work put in by builders is lastly beginning to bear fruit as parachain auctions end and the primary chains launch on the mainnet. 

The following section of interoperability inside the ecosystem is ready to kick off now that cross-chain performance is about to go reside. This subsequent step will permit Polkadot-based parachains to speak with one another and switch belongings between chains.

Right here’s a take a look at what the launch of the XCM messaging system means for the worth of DOT, the choices that at the moment are obtainable to DOT holders and the way this improvement will increase its performance inside the Polkadot ecosystem.

Polkadot is unshackled

Up thus far, DOT had restricted makes use of and was principally remoted by itself community with out a lot performance. Its foremost capabilities included staking, governance and contribution in parachain crowdloans, which helped cut back the circulating provide however did little else to essentially spark demand.

The introduction of cross-chain communication enabled DOT transfers to varied parachain networks and the variety of use instances for the DOT token on parachains like Moonbeam and Astar Community.

Information from Cointelegraph Markets Professional and TradingView exhibits that the worth of DOT has been onerous hit by the six-month downtrend within the crypto market as its value has declined 73% from its all-time excessive at $55 on Nov. 4. 

DOT/USDT 1-day chart. Supply: TradingView

With the token now buying and selling at a notable help/resistance degree, it stays to be seen if the power to switch DOT throughout numerous parachains will assist result in a rise in demand for DOT.

Associated: Polkadot launches cross-chain messaging system to unravel blockchain’s bridge downside

New use instances

One notable use for DOT that has been rising in recognition in latest months is liquid staking and minting stablecoins through the use of crypto belongings as collateral.

DOT can now be transferred to the DeFi-focused Acala parachain and deposited in its liquid staking contract in change for LDOT, which may then be used as collateral to mint aUSD, the native decentralized stablecoin of Polkadot and Kusama.

DOT can be utilized in numerous DeFi functions together with yield farming, lending and borrowing. Because the introduction of cross-chain communication spreads all through the Polkadot ecosystem, extra makes use of for DOT are more likely to emerge, particularly as parachains roll out elevated performance.

The views and opinions expressed listed below are solely these of the creator and don’t essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer includes threat, you need to conduct your personal analysis when making a call.