The reality of the current status of the Ethereum network is that it is being weighed down by its own success. Most of the cryptocurrency tokens currently in circulation these days are ERC20 compliant, which means that they run on blockchain layers powered by the Ethereum network. A number of improvements have been rolled out by the ETH core development team, but they have not been sufficient in terms of addressing issues such as slow transactions and high fees.
Thankfully, the field of decentralized finance technology has arrived to alleviate and augment the operations of the Ethereum blockchain. Layer-two chains that connect to the ETH main network make it possible for many ERC20 token transactions, including trading, to complete. Each of these DeFi projects have their own tokens for facilitation, and one of them happens to be Polkadot, which trades under the DOT symbol, and which has been experiencing sharp value appreciation in recent weeks.
DOT enables a user to build bridges between any two blockchains on the Polkadot network. Polkadot’s main aim is to create interconnections among different blockchain ecosystems to ease inter-chain data exchange and transaction. As a protocol, the system works in a similar way to IP addresses and port numbers in different systems, by creating custom routes to a destination address on another blockchain.
Polkadot Network Mainnets were launched by Kadena, a blockchain consortium in 2018. The protocol has the potential to enable interoperability among Ethereum, EOS, and Tezos network without any technical barriers to doing so.
The DOT token (DOT) is an ERC-20 token and the currency for use on the Polkadot protocol. Since July 20, DOT has climbed by more than 200% to an exchange price higher than $31. This has had a greater effect on the pricing of other altcoins, especially ETH and EOS, to which the protocol gives access. Polkadot also has a staking mechanism for the DOT. Staking allows users to lock their DOT tokens while getting rewards in DOT for being active on the protocol and in supporting other nodes. Traders have been bullish on DOT and other DeFi tokens, and this trend is bound to continue for a few more weeks.