Polkadot price rises as parachain auctions reduce circulating supply of DOT. to reduce

Several candidates will be competing in Polkadot‘s first Parachain auctions this week, and the process tends to put pressure to buy on DOT while creating opportunities for ambitious blockchain projects to exist in the crypto space.

The ongoing Polkadot Parachain auctions follow the success of similar auctions on its sister network Kusama, where projects such as Moonriver (MOVR) and Karura have successfully secured a parachain spot next year.

The Kusama Parachain Auctions began during the broader downturn in the crypto market and helped KSM recover from the low of $ 148.85 on July 19 to the current price level of nearly $ 457 when the tokens were withdrawn from circulation .

Below are some of the Parachain auctions currently running on the Polkadot network, and similar to the Kusama auctions, DOT could get a boost as an increasing number of tokens drop from circulating supply.

Acala

Acala (ACA) is a first-level smart contract platform that is billed as the center of decentralized finance (DeF) and liquidity from Polkadot. The protocol is Ethereum (ETH) compatible and has built-in liquidity and ready-made financial applications, including trusted exchanges, decentralized stablecoins (aUSD) and DOT liquid staking (LDOT).

Acala is a sister network to the DeFi Karura (KAR) protocol that operates on the Kusama network and offers many of the same features.

Given that DeFi has become one of the fundamental areas of the crypto ecosystem, a large, established DeFi protocol can attract liquidity and provide token holders with winning numbers that are a must for any network.

Moonlight

Moonbeam (GLMR) is a fully Ethereum compatible smart contract platform designed to simplify the process for multi-chain projects to get started on the Polkadot network.

Moonbeam’s sister network on Kusama is Moonriver, which has the highest reward rating of any parachains issued on the Kusama network.

Simplifying the process of cross-chain migration to Polkadot is an important issue to be resolved in the current market, as high fees for Ethereum are one of the main reasons why investors and developers are switching to other platforms, cheaper alternatives like Polygon, Fantom and Avalanche.

If Moonbeam can help make this process easier for interesting projects, then Moonbeam has the potential to increase overall performance and activity on Polkadot.

A star

Astar (ASTR) is a protocol that focuses on creating an extensible and interoperable infrastructure for Web3.0 by creating a platform that supports multiple virtual machines connecting interoperable Layer 1 protocols, such as the Polkadot -Network.

Astar can also act as a scalable smart contract platform making it impossible for the Polkadot relay chain to support smart contracts.

Parallel funding

Parallel Finance (PARA) is a DeFi credit protocol and automated money market (AMM) that supports both Polkadot and Kusama-based assets and allows token holders to use their assets.

The protocol aims to bring greater liquidity, return and capital efficiency to the Polkadot ecosystem, and end users will be able to lend, invest and borrow assets from any supported network.

Related: DeFi Protocol Acala raises $ 400 million for crowdfunding at first Parachain Polkadot auction

DOT and KSM raise prices before auctions

The ongoing Parachain auctions for Polkadot are likely to put positive pressure on the price of DOT as users buy tokens to help crowd-fund, effectively withdrawing tokens for two years.

As can be seen in the graphic below, the introduction of crowdfunding on Kusama in June 2021 resulted in a spike in token prices, while price movement for DOT was more subdued.

Now the opposite is happening as it is believed that the price of DOT will be higher than the price of KSM from mid-September and the excitement for the Polkadot Parachain auctions is starting to grow.

With 11 parachain auction pools set to run weekly from November 11, 2021 to March 10, 2022, there is a high chance that DOT’s price will continue to rise as long as the demand for parachain access continues.

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