- Polkadot’s token DOT has risen from nowhere to number seven cryptocurrency by market cap.
- DOT saw its circulating supply inflated by 10 times last month, in a process called “redenomination”.
- Redenomination isn’t the only factor behind DOT’s meteoric rise, according to experts.
Blockchain interoperability project Polkadot wasn’t even in the top 100 cryptocurrency rankings three weeks ago; now it sits at number seven, with a market capitalization of over $3.7 billion. It’s a meteoric rise, and it’s at least partly down to something called “redenomination.”
On August 21, after a community vote, DOT was redenominated—meaning that the circulating supply of the token was inflated by 10 times. The process is similar to a stock split, which can see the value of a stock rise substantially after the event, as small investors perceive it as becoming more affordable.
In the cryptocurrency space, however, it’s unheard of. Essentially, Polkadot’s redenomination saw one old DOT divided into 100 new ones. Consequently, the total supply increased from 10 million tokens at Genesis to 1 billion.
The split doesn’t change the value of investors’ total holdings of the company. However, it has led to speculation that the event was at least partly responsible for the rise in the token’s fortunes.
Token splits are the new stock splits
The primary motive of a stock split is to make shares seem more affordable to small investors, increasing liquidity in the stock. And the Polkadot community’s reasoning for redenomination has followed similar lines.
The decision to devalue DOT was taken to make the token easier to calculate and therefore buy—“more ergonomic,” in the words of the platform’s creator Gavin York. In addition, the early decision limiting Polkadot’s initial supply at 10 billion was ostensibly an arbitrary one.
The process required a community referendum, which took place in July, with 86% of the community in agreement.
The team chose an auspicious date to redenominate its token. Electric vehicle manufacturer Tesla performed a stock split on the same day and saw its share price rally 12% when trading resumed 10 days later.
DOT saw even more dramatic gains. The token rose from $2.92 prior to the devaluation, to a recent high of $6.84 on September 1. It currently stands at $4.37—having taken a pounding along with the rest of the crypto market in recent days.
But analysts told Decrypt that devaluation isn’t the only factor behind DOT’s rapid rise.
Thomas Kuhn, a Macro Analyst at research consultancy Quantum Economics, gave three reasons: the project has a decent war chest to start with, so they could fund a strong team; Polkadot is a fairly recent project—compared to Ethereum, for example, which is faced with upgrading a legacy platform, and, in addition, DOT is a relatively new asset.
“Holders have not been holding for years waiting to abandon ship on the first increase in price,” he explained.
Polkadot’s three-year journey
DOT isn’t exactly a new token, though. The project launched in 2017 and has been in development for over three years. In recent months, as well as the redenomination, there have been several major changes, not least the launch of the Polkadot mainet in May.
In fact, arguably, the most pivotal event in the project’s history was another community vote to allow holders to transfer their tokens. Prior to that, transferring tokens had been very difficult, and was only possible via so-called “over-the-counter” exchanges, and IOUs.
The transferability vote finally enabled exchanges to list DOT. Binance and Kraken swiftly did so—in fact, they acted a little too swiftly and were accused by the Polkadot community of jumping the gun, listing the token on August 18, three days before the agreed-upon redenomination.
With transferability enabled, DOT’s market capitalization leaped, catapulting it into the top ten cryptocurrencies even prior to its redenomination. After redenomination, it reached the top five, before falling back to its current position in the seventh spot.
The market capitalization of a token is determined by multiplying its price with the circulating supply. But while redenomination increases the circulating supply of a token, its market capitalization remains unchanged. Thus, a DOT investor who previously had only one token will now have 100. But while the number of their outstanding shares will have increased, the total value will be the same.
The prognosis for Polkadot
Notably, DOTs traded volumes also surged in recent weeks, topping $1.4 billion on August 27.
It’s fair to say that transformability and redenomination have caused quite a bit of confusion. But most importantly, it hasn’t dampened enthusiasm in the project.
“It’s a reflection of the superb job the Foundation has done community building around the globe,” said Corey Miller, who heads up growth at dYdX exchange and is a partner at Genesis Block Capital. “The results of that have led to increased developer awareness and adoption.”
The Polkadot community’s ambition to build an ecosystem to rival Ethereum is now firmly in the frame. Will they settle for seventh place?
Coin Metrics Report Details Surges in ETH, Doge Trading
Coin Metrics: Altcoins Are Taking Over
While bitcoin is still the world’s number one digital currency by market cap (it is currently trading for about $35,000 per unit), the asset has experienced some serious dips over the past month, while by contrast, Dogecoin and Ethereum have exhibited gains and are regularly moving up the digital ladder.
Coin Metrics garnered much of the information for its report by looking at data from Binance, arguably the largest and most popular crypto exchange on the planet in terms of daily trading volume. Additional statistics were gathered from exchanges such as Coinbase and FTX. Coin Metrics points out that thus far, 2021 has been the year for “smaller altcoins,” suggesting that a great many of them have surged heavily between the months of January and early May. From there, however, a serious crypto crash has taken precedence, with Coin Metrics unable to pinpoint what, exactly, might have been the cause.
For the most part, numerous altcoin pairs are offered on Binance, which explains why the company’s trading volume for many of the world’s smaller assets likely overtook that of bitcoin. The report says:
ETH volume surpassed BTC volume on Coinbase by a wider margin than on Binance. Coinbase did not offer Dogecoin trading in May (although they introduced it in early June), so it did not have a Doge rush similar with Binance, but it did have a relatively high amount of volume for some other altcoins, led by MATIC, ADA and Ethereum Classic (ETC)… Continuing the trend, ETH volume edged out BTC on FTX, although not by much, but comparatively, the top altcoins made up a lower percentage of total volume on FTX than on Binance and Coinbase.
Some of the world’s smaller exchanges – such as Huobi – also saw Ethereum and Dogecoin trading surge to levels beyond what people were doing with bitcoin. The report continues to say:
Similar with Binance, DOGE volume surged on Huobi, taking the spot as the third most traded currency by volume.
Bitcoin Hasn’t Been Fully Cut Out Yet
The only place – according to the document – where bitcoin trading appears to remain dominant at the time of writing is the CME in Chicago, Illinois. The company delves in bitcoin futures trading and has recently opened the door to ETH futures, though this is still in its early stages. Coin Metrics writes:
The markets continued to move mostly sideways over the last week. Bitcoin and Ethereum usage both stayed relatively flat, with daily active addresses dropping 2.5 percent and growing by 3.3 percent, respectively. Ethereum daily transaction fees dropped by over 35 percent week over week as gas prices continued to fall, and bitcoin transaction fees followed a similar pattern, dropping by 40.5 percent.
Bitcoin Taproot upgrade finally achieves activation lock-in!
The much-anticipated Bitcoin Taproot upgrade passed the Speedy Trial, which was a signaling period which gauged support for the upgrade from bitcoin’s mining sector. Since SegWit, Taproot has been touted as the next significant upgrade for Bitcoin.
Data from Taproot.watch, a webpage created by Bitcoin developer Hampus Sjöberg, released an interesting yet hilarious video to announce the completion of the lock-in stage.
— Hampus Sjöberg 🥕🟩 (@hampus_s) June 12, 2021
On the official page, it read:
“This period has reached 1815 Taproot signaling blocks, which are required for lock-in.”
Different mining pools tweeted their support for the upgrade on their respective platforms with Slush Pool being the first to do so.
TAPROOT LOCKED IN AT BLOCK 687285 BY SLUSHPOOL 🟩 pic.twitter.com/FFDdibtmGt
— pourteaux (@pourteaux) June 12, 2021
AntPool also supported the upgrade.
“As of block 687284, Taproot signalling has reached 1815 blocks this period, guaranteeing that absent very deep reorgs, it is guaranteed to lock in. Following that, it will activate at block 709632, probably around mid-November 2021.”
He also addressed that ‘there is a lot of work left of course’, which included:
a) PSBT extensions to communicate Taproot keys/scripts/signatures,
b) MuSig2 standardization so the software can cooperate in signing,
c) Output descriptors,
Why is it so important?
“With this upgrade, you’ll see Bitcoin to be the settlement network. Funds are transferred from one institution to another, say one bank to another.”
“The update would lower the data size of smart contracts, in turn lowering transaction costs. Taproot is also expected to enhance smart contract functionality and efficiency.”
Jeremy Rubin, a Bitcoin Core contributor and founder of Judica projected a similar optimistic narrative,
“With taproot, you get optimization of Bitcoin, much different from how people know Bitcoin today- little too inefficient or reveal too much information about what you’re trying to do. Taproot helps to be private and efficient.”
Subscribe to our Newsletter
Next-Gen Decentralized NFT Platform, NEFTiPEDIA Announces Launch of its ICO In 3 Days
NEFTiPEDIA, a next-generation decentralized NFT platform that operates in a way that contributes to the elevation of digital artists, creators, and investors has announced the launch of its ICO which is set to happen in 3 days.
NEFTiPEDIA has designed a commission-free platform to enable its artists to maximize income, following its aim to help them increase revenue via NFTs.
Following NEFTiPEDIA’s plans to storm the marketplace while launching its ICO, it aims to serve the marketplace with different categories of products including cosmetics, vehicles and property.
“….we believe NEFTiPEDiA will become a community-run marketplace and the industry will make our project as a kind and remarkable one in the world,” the announcement reads.
The development will see the platform provide a decentralized marketplace for Artists, where they can sell and validate their NFT links to fans and interested buyers.
NEFTiPEDIA Offers Exciting Prizes to Users
The team behind the project have allotted a total of 250,000,000 $NFT tokens for its users to enjoy in the upcoming ICO.
To further celebrate the intended development, the platform has proposed a referral scheme where winners can enjoy amazing and exciting prices.
Users who wish to participate in the program are required to sign up for the platform’s ICO panel and get a referral code.
The code can as well be shared with friends, giving users the opportunity to win exciting prizes.
A minimum of 5 referrals is required for participants to be considered for winning.
“Only those referrals ended in purchase will be added to the count. After the completion of ICO in 30 days, winners will be announced. Notably, winners will bear all the applicable tax.” The team further elaborated on the conditions for winning.
World Economic Forum Seeks to Offer Clear Policy Landscape For DeFi
The Colombian President’s Advisor to Peter Schiff: Stop Talking and Short Bitcoin
World Economic Forum Releases a DeFi Policy Toolkit for Fair and Executable Regulations
Pokemon GO: How to Get Alolan Slowpoke
1,100 people arrested by Chinese Police on crypto-related money laundering charges
Axie Infinity Price Prediction 2021-2025: AXS Token Can Hit $40 by 2025
Battlefield 2042 officially revealed
How Does Bitcoin Mining Work? Is It Profitable in 2021?
XRP lawsuit: Is the SEC ‘triply wrong’ about its latest filing?
MT5 Will Phase Out MT4, but It Will Take Time
Trouble Looms For Bitcoin As U.S Looks to Bar Holders From Converting Crypto To USD
XRP lawsuit: What’s the ‘existential threat’ Ripple is facing?
TrustDice Review: Features & Promotions
The UNICEF is investing in five crypto startups via Ethereum (ETH)
LegendsOfCrypto Performance Update
Revolut App Launches Dogecoin Trading To Its Platform
Third-Party Results of Credits’ Blockchain Speed Test
Skins of soccer superstars Marco Reus and Harry Kane to arrive in Fortnite this week, according to data miner
Leading Blockchain Game Splinterlands Completes Digital Land Sale of 150k Plots
Pokemon GO: A Very Slow Discovery Challenge Explained
News1 week ago
Norton Adds Ethereum Mining To Its Suite of Antivirus Software Services
Blockchain1 week ago
I Bought and HODLed Bitcoin Since 2012: Legendary Skateboarder Tony Hawk
Uncategorized1 week ago
Localbitcoins Adds Bitcoin Cash and Other Cryptocurrencies as Payment Methods
Blockchain1 week ago
GTA 6 may Pay Players With In-Game Cryptocurrency Rewards
Uncategorized1 week ago
Ethereum Co-Founder Has His Doubts Over Cardano’s “Scientific Method”
1 week ago
Overwatch League to host first live homestand with fans in 2021
Blockchain5 days ago
World Economic Forum Seeks to Offer Clear Policy Landscape For DeFi
Uncategorized1 week ago
Did Elon Musk Just Pump…CumRocket?