Cryptocurrency exchanges were accused of jumping the gun by redonominating DOT tokens ahead of agenda, complicated traders within the process. In their eagerness to proper extra procuring and selling costs and attract extra users, several leading exchanges catch lowered the dimensions of DOT tokens by 100x, 72 hours sooner than they were because of be redenominated.
The choice might presumably additionally sound benign nevertheless it has had predominant ramifications for traders who were procuring DOT below the impression that they were procuring a $300 token – now no longer a $3 one. The confusion might presumably additionally additionally be viewed within the worth spike upon DOT’s itemizing on Binance, followed by a immediate tumble to the newly denominated label of 100x less, despite the alternate having but to be formally ratified. Polkadot founder Gavin Picket has known as the exchanges “irresponsible” for placing the neighborhood at danger.
What’s in a DOT?
Denomination Day, space for Friday, August 21, is when Polkadot’s native token is meant to be adjusted, decreasing its different of decimal areas from 12 to 10 and decreasing the worth per token by 100x. When the alternate happens at block quantity 1,248,328, token-holders will discover the different of DOTs in their pockets expand by 100x to counteract the worth per token losing by the identical amount. With exchanges prematurely redenominating DOTs, alternatively, it dangers traders depositing their newly unlocked tokens and market selling them, handiest to admire that they’ve got a fraction of their noble worth.
The Exchanges That Redenominated Early
Binance and Kraken each listed New DOT on August 28, 72 hours sooner than the denomination became once formally space to happen. From the angle of the exchanges, this became once a exact deal, as it allowed them to cater to retail question for getting and selling DOTs, which has been three years within the making. For DOT holders, alternatively, who were patiently waiting to catch their tokens unlocked, the early transition to New DOT became once a recipe for catastrophe and source of misunderstanding.
Holders who catch retained their tokens, and who don’t catch any design of marketing and marketing any of them till after the legitimate denomination date, will doubtless be gorgeous. Somebody who offered early on an alternate this week, alternatively, might presumably additionally catch lost out because of misunderstanding over which DOTs they were procuring and selling: New DOT or DOT (worn).
Denomination Day Hasn’t Changed
The date chosen by Polkadot for redenomination became once fastidiously selected, occurring 72 hours after DOT transfers were enabled, giving the neighborhood time to alter. Instead, traditional traders were danger by the adjustment, after the worth of DOT went 10x straight after itemizing on CEXs, handiest to rapidly retreat. The total affair is a multitude that few contributors will emerge from unscathed, assign for Polkadot themselves.
Had exchanges heeded the venture’s invocation now no longer to denominate early, the confusion might presumably additionally were avoided. Instead, DOT has gotten off to an inauspicious launch because of conditions beyond Polkadot’s management. Fortunately, there are loads of sure developments within the works from Substrate-essentially essentially based initiatives that might presumably catch to still instill some cheer within the neighborhood within the weeks to near attend. First, though, there’s the cramped matter of Denomination Day to entire, which is able to formally pass on Friday, August 21, exact as it became once repeatedly intended.
Image: Gavin Picket on TED Talks