DOT price jumped by 17% to nearly reach its all-time high yesterday. DOT, the native coin of Polkadot, has seen a steady development since it was launched in 2020. This comes before Polkadot made a long-awaited announcement regarding a new network feature. In a statement yesterday, Polkadot announced that it was ready to launch parachains after five years in the works.
What is a Parachain?
A parachain is a data structure designed to be application-specific and run parallel to a sidechain or Relay chain on a blockchain. Parachains are globally coherent and authenticated by validators hosted on the Relay chain so that they can function similarly to blockchains without being blockchains themselves. Parachains can thus run parallel transactions, making it easier to scale a blockchain while sharing communication between one another and sharing the entire security architecture of the network. Communication between parachains is achieved through the XCM Format.
Parachains are maintained by collator nodes. A collator node is a network maintainer responsible for keeping necessary information, maintaining the node status, and the production of new blocks on the parachains for validations by the Relay validators.
Polkadot’s parachain, although incentivized, does not require a native token or proof-of-stake protocol unless the parachain itself implements it. In that case, collators may be incentivized through inflation of transaction fees. Polkadot has now announced that its first parachain auction will be held on November 11, and will then go live. Previous auctions for network testing and developmental processes were carried out on Polkadot’s Kusama network.
Polkadot Has Worked For Five Years to Develop Parachains
Polkadot announced that its network is now ready to deploy parachains five years after the idea was first conceived and work began. In Polkadot’s network developmental roadmap, parachains are the final milestone in the project whitepaper. According to Polkadot founders, Robert Habermeier and Gavin Wood, the final launch will be preceded by a “full-code audit” which has now been completed. To prepare for the launch, Polkadot opened an early parachain auction in June, ending with 12 parachains going live on the network. For four months now, the live parachains have performed without hitches; an important factor, according to the creators.
When the parachains go live, the public will be able to build and deploy projects on Polkadot that run seamlessly using the Polkadot 3.0 network that replaced the previous version in 2020. The launch phase has been scheduled to hold in two trenches; the first trench will begin on November 11, holding one auction per week and the second trench will begin on December 23, with one auction holding every two weeks. Auction participants will be required to stake a certain amount of DOT to participate.
Impact on DOT Price
DOT has pumped beyond previous support levels to trade above $41 as of the time of writing. It gained 50% over the last two weeks and gained 17% yesterday. Further market moves will see the price move up, possibly gaining at another 17% to go beyond its all-time high when auction participants stake DOT to purchase parachains.