Do stablecoins need a rebrand?Stablecoin-stigma deepens as Polkadot’s aUSD suffers a major security breach.
- Polkadot’s aUSD stablecoin has detached from its Dollar peg after the Acala network suffered a security breach on Sunday. Acala is the ‘DeFi hub’ of the Polkadot blockchain and the exploit allowed the hacker to mint aUSD at will –Binance’s CEO Changpeng Zhao said it was possible that over $1bn worth of aUSD was stolen. Oof.
- The attack caused aUSD to plunge to as little as $0.58 as millions of tokens were erroneously minted. Since then the token has somewhat recovered to around $0.90, but it’s still pretty far removed from its price-peg.
- People are worried this could be another Terra/Luna disaster, but there’s still some hope. The attacker’s stolen funds are still on the Acala network so a community vote could allow the tokens to be forcefully retrieved from the attacker’s wallet. For the time being tho, Acala has indefinitely paused all network activity while they investigate.
Quantitatives / Unsplash
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Does Gavin Wood dream of Technocratic Polkadots?Polkadot is getting a new governance system designed to boost the network’s decentralization and improve democracy in the community.
- ‘Governance version 2’ (Gov2) will lead the transformation, changing the decision-making process on the network into that of a technocracy. CEO Gavin Wood announced that under Gov2, preferential “first-class citizens” (basically VIPs of the blockchain) will have far less power and instead, the new system will have only one first-class decision-making mechanism via referendums.
- A new body called the Polkadot Fellowship will also launch to oversee some of this, with some of those “first-class citizens” at the helm – you know, just in case. Those peeps will have the power to prioritize referendums that deal with sensitive and technical issues. These referendums need 50% of the vote from stakeholders to be reviewed.
- Gov2 will first launch on Kusama – a sister chain of Polkadot’s. If things go smoothly, though, Polkadot fans can expect to see the governance upgrade going live on the main network – though Wood gave no indication how long that might take.
Connecting the dotsPolkadot launches cross-chain messenger (XCM) in an effort to bridge communication and assets between its parachains.
- Polkadot’s multi-chain ecosystem is gonna be more connected after its launch of XCM. The upgrade will mean over 500 parachains and dApps running on Polkadot have the ability to communicate with one another without having to be stored on Polkadot’s Relay Chain.
- No trolls allowed under this bridge, either. Polkadot hopes this bridge will avoid the pitfalls that have seen bridges like Ronin’s lose millions of dollars to hacks. It plans to snub out these costly attacks through its lack of weak links and reliance on a centralized multi-signature scheme.
- DOT made an impressive 10% upwards move on Wednesday, but is still way off from where investors want it to be price-wise. Currently at $16, it’s a hair-raising 70% below its November ATH of $56. Altcoins bleed particularly badly in bear markets, but geez – DOT is really not having fun down there.
Javier Miranda / Unsplash
Power to the PolkadotPolkadot is the popular kid in crypto class this week, with Tether and Terra using its blockchain to house their stablecoins.
- Where do we start? On Wednesday, Tether announced it will be launching on Kusama – a ‘canary’ network to pre-test and develop dApps and blockchains before running them on the Polkadot network full time. USDT – the #1 stablecoin – will help transactions on Kusama’s Statemine, which is a parachain used to deploy assets and NFTs.
- Terra followed Tether’s lead, launching its popular De-Fi protocol, Anchor, to Polkadot’s other canary network – Acala (how many do they have?). Terra’s stablecoin UST will bridge its ecosystem over to Polkadot’s, setting up liquidity pools and creating some more collateral options for UST.
- The Polkadot token lifted 2.3% on Wednesday, a somewhat modest reaction to the news, we must admit. More price action could be on the way though – stablecoins are the talk of the town atm, with big asset managers and governments alike wanting a piece of the action.
On the dotted lineDecentralized dark horse Polkadot gets some love from investment firm WisdomTree, which is launching a new set of crypto exchange traded products (ETPs).
🔍 Key points:
- Polkadot is getting its very own shiny new ETP listing from WisdomTree, which will see DOT listed on major European digital exchanges like Deutsche Boerse’s Xetra and the Swiss Stock Exchange, giving the token a ton more exposure.
- DOT isn’t the only one getting listed though, it’ll be joined by Cardano’s native ADA token and Solana’s SOL. However, Polkadot is way below them in the crypto market cap rankings (they’re outside the top 10), so this could be a big opportunity to get some European lovin’.
- Speaking of which, DOT finished Tuesday up a (very) modest 2%, politely nudging a resistance spot of $23. It might be a while before investors can put pen to paper, but hey, slow and steady can win races too. After all, WisdomTree is still trying to get its first Bitcoin ETF over the line in the US.
Henry & Co./ Unsplash
Polkadot parachains try to lure in developersPolkadot parachains are heating up, but its token hasn’t got the memo yet.
- Astar Network (a parachain on the Polkadot blockchain) has raised $100m to offer liquidity and financial support for smart contract developers on the blockchain, following on from the parachains' $22m funding round last month.
- The new development fund will ultimately increase the utility of Polkadot, which is now focusing on pulling ahead of the De-Fi pack after launching a bridge between Ethereum and Polkadot in December.
- Polkadot ended last week down 14% despite the new fund, getting dragged down by a bearish crypto market that is feeling anxious over inflation.
Illustration by TradingView
Polkadot popsPolkadot leads the altcoin troop out from behind the barracks to take a peek at some greenery.
- Its native token was up 9% in intraday trading on Tuesday before getting shy and closing up 2%. Other altcoins including Solana (SOLUSD), Elrond (EGLDUSD), Avalanche (AVAXUSD) and Sandbox (SANDUSD) saw their prices climb into the green.
- The $1.7tn crypto market climbed 5% in 24 hours amid the rebound, but it still has a long way to go before making it back to its $3tn peak.
- Are institutional investors getting their groove back? Institutional inflows for Polkadot topped $1.4m towards the end of last week, as did other leading altcoins, breaking a five-week streak of out outflows.
Illustration by TradingView
Altcoins are in upheavalAltcoins are in need of some attention after Bitcoin (BTCUSD) loses a key support level thanks to the hawkish Fed.
- Altcoins are among this week's biggest losers. Polkadot is down 12% so far, Solana (SOLUSD) has sunk 15%, Avalanche (AVAXUSD) has tumbled nearly 18%, and Terra (LUNAUSD) tanked 15%.
- Over $812m in crypto futures were liquidated on Wednesday after Bitcoin broke its $46k support level following aggressive minutes from the Fed, and crypto rising stars lost their shine in response.
- However, there may be light at the end of the tunnel. It seems smaller cryptos like Polkadot and Solana are developing their networks much quicker than Ethereum was at similar stages of its lifecycle.
Polkadot parachains go liveFive new parachains kickstarted over the weekend, pushing the platform to new heights (If you don't know what a Polkadot parachain is, best Google it, as it'd take much more than our allocated 20 seconds reading-time to explain).
- Acala, Astar, Clover, Moonbeam, and Parallel Finance were chosen by auction, raising nearly DOT99m, worth about $2.4bn.
- The parachain slots last 96 weeks, and cover a variety of functions including DeFi and lending. The idea is that each network can support different use profiles, all linked to Polkadot's Relay Chain.
- There are more live parachain auctions ongoing, so we can expect a bunch more activity over the coming weeks.
Illustration by TradingView
Polkadot pokes at EthereumPolkadot’s CEO is feeling good after the network's first para-chain auctions, poking at Ethereum for “economic enslavement”.
- Polkadot completes its first para-chain auction, seeing Acala fend off 10 other hopefuls after raising $1.3bn in DOT tokens.
- A parachain is basically an individual blockchain that’s runs in parallel within the Polkadot ecosystem – its ability to handle huge volumes of transactions in a cost effective way meant competition was heavy.
- Its creator thinks they can take on Ethereum (ETHUSD) (which he also co-founded). Gavin Wood says users using Ethereum (ETHUSD) are “enslaved to economic sense” and Polkadot can free them.
Polkadot’s Para-chuteAfter popping its $50 cherry, Polkadot continues to dance through the week as it gets ready for its parachain auctions.
⚪️ Everyone wants a piece of the Polka, and DOT has gained 25% in four sessions to a new high as the network waits for news on its parachain auctions.
⛓ A parachain is basically an individual blockchain that’s run exclusively by the owner but relies on Polkadot’s network. Polkadot is waiting for approval for the auction.
⭐️ Polkadot is a rising star for its ability to handle a much heavier load than Ethereum at a cheaper cost, so there’s a massive market to take over those parachains.
Renzo D'souza / Unsplash
Gearing up for growthRising crypto star Polkadot is up 30% this week, making up roughly half of last week's crypto crash losses as it prepares for its parachain rollout.
The crypto market saw some seriously choppy waters last week, and over $1 trillion was wiped off its total value as the big cryptos took hit after hit. Polkadot was no exception, losing just under 60% in the week, but it has already begun to make up the loss and has seen gains of just under 40% this week so far.
Founded in 2016 by Ethereum co-founder Gavin Wood, Polkadot is a rising star in the crypto space, and is due to go fully live later in the year. It was designed to carry a heavier transaction load than Ethereum – which has itself seen an explosion in transactions on the back of the DeFi movement. Its popularity has led to clogging on the network, and has left people seeking out feaster, cheaper alternatives.
Ethereum is essentially a single-thread blockchain, which worked fine until people started having to compete for synchronous execution times, which has led to high transaction fees. Polkadot, on the other hand, is a multi-thread blockchain, which basically “spreads out” the transactions, so it can handle a heavier load. Polkadot has one of the biggest and most active ecosystems in the market, and a rapidly growing list of projects wanting to launch on its upcoming parachain auctions. Once the parachain auctions are complete and those projects go live on Polkadot, the network will officially be launched.
In less than a year, Polkadot has raced ahead to become one of the top ten largest cryptocurrencies by market cap, with a valuation of $22 billion. Before the crypto carnage, Polkadot had been on an upwards journey -–at its high of almost $50 on May 15, investors had seen a return of nearly 530% in 2021. It looks like it’s onwards and upwards.