Polkadot Top 10 Redenomination Shot: Is the Token Now Bigger Than Chainlink?
The Polkadot token, which recently underwent a redenomination, has seen its value more than double in less than seven days. Now with a reported (but unverified) circulating supply of 897,657,920 tokens, the Dot token claims its place as the fifth-ranked token.
At the time of writing, the token traded at $6.23, which translates to a market capitalisation of $5.63 billion. This market capitalisation is just about enough for Dot to displace the Link token from its current position.
Coinmarketcap officially ranks the token at number 2172. The market capitalisation of a token or coin is determined by multiplying the price of a token with the circulating supply. Information on the Coinmarketcap website suggests “the organisation has not sufficiently verified the circulating supply and resulting market cap yet.”
Still, there is another metric which seemingly supports Dot’s status as a top tier token–the traded volumes. According to Coinmarketcap data, the Dot token’s traded volumes on August 27 surged to $1,4 billion, a figure higher than Chainlink’s volumes of $1.28 billion on the same day.
In fact, Dot’s 24 hour traded volumes have been exceeding $480 million since August 22. Yet, before this spike, the token’s previous traded volumes did not exceed $50 million. According to the data, on August 20 and 21 the token’s traded volumes were $48.8 million and $49.3 million respectively.
These are the only known trades to occur just before the redenomination event.
Meanwhile, in a public notice explaining the process of redenomination on August 17, the team at Polkadot Network said: “the redenomination of the token (was) scheduled to occur on 21 August 2020 at 16:40 UTC block number 1,248,328.”
The Dot token is used for governance, staking and bonding on the Polkadot network. The community had voted for the redenomination to take place on August 21. The notice adds that after redenomination, the “New Dot is 100 times smaller than DOT (OLD).”
Similar to a Share Split
Similar to a share split, a redenomination ordinarily increases the circulating supply of a token while market capitalisation remains unchanged. The notice also attempts to clarify this point.
However, immediately after redenomination, the price of the token went up from the closing price of $2.88 on August 21 to $4.48 the following day. The token has since peaked at $6.79, which was recorded on August 27.
In the meantime, Dot’s price surge comes after the Polkadot Network team previously warned that “some unscrupulous exchanges may choose to enact the redenomination prior to the date agreed by the Polkadot community.”
At the time, the Polkadot team said such an act would result in the token trading “at approximately 100 times lower than the actual market price.” The statement, which does not provide the names of exchanges behind this plot, also adds:
“We believe such action is irresponsible, possibly constituting fraud through deceptive advertising and certainly puts Polkadot stakeholders at risk.”
Binance and Kraken are reportedly the two exchanges accused of listing the token on August 18, three days before the agreed-upon redenomination.
Although the notice explained the redenomination process, some supporters of the token were still not unsure of the circulating supply before August 21. For instance, one Reddit user, SalesFromTheCrypt asked:
I know tomorrow is redenomination day, so the total supply goes from 10M to 1B and I read on their website at least 20% (is) withheld for infrastructure. That means as of tomorrow it should be no more than 800M, could be less. But, it is also an inflationary token. Let’s hope someone more knowledgeable replies because I made sure to scoop up a bag.
However, other users (possibly holders of the token) expressed confidence it would be worth billions and that it would immediately feature in top ten of the best ranked digital assets.
Polkadot is the flagship project of Web3 Foundation, a Swiss Foundation founded to facilitate a fully functional and user-friendly decentralized web.
What do you think of Polkadot’s price pump? Share your thoughts in the comments section below.
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