Polkadot (DOT) is a blockchain project designed to interconnect sub-chains called parallel chains or parachains. Each application-specific chain built within Polkadot uses the Substrate modular framework, and this is meant to ease the development procedure.

The projection has been at the middle of developers' and investors' attention for most of 2021, just the sharp marketplace-wide correction on May 19 dealt a heavy blow to the DOT cost, and the team has been relatively quiet for the past two months.

On July 22, Karura Swap, the offset decentralized commutation (DEX) in the Polkadot ecosystem, was launched. The project was created past Acala, a decentralized finance (DeFi) projection backed past Coinbase Ventures.

Polkadot (DOT) performance in USD at Coinbase. Source: TradingView

In the by 24 days, DOT rallied past 100% to reclaim the $20 support, even though the price is still 58% below the $50 high. Presently, investors seem unsure of the direction afterwards the $22 level served as resistance.

What'southward the departure between Polkadot and Kusama?

Polkadot refers to the unabridged ecosystem of parachains that plug into a unmarried base platform known every bit the relay chain. This baselayer provides security to the network and handles the consensus, finality and voting logic.

On the other paw, Kusama is an early and unrefined release of Polkadot that is designed to serve every bit a "canary" network to test governance, staking and sharding under real economic conditions.

Therefore, even if the recently-launched Karura Bandy DEX is not running directly on the Polkadot blockchain, it proves its capabilities.

Derivatives data shed low-cal on investor sentiment

Technical analysis charts may be projecting a bullish betoken-of-view for DOT but what is the derivatives information saying?

For example, if the futures contracts premium is nonexistent, it means that investors are not comfortable creating long positions using leverage. A reduction of regular spot substitution volume shows footling involvement in the price at current levels. This is especially worrisome after a rally like the 1 seen from DOT.

Polkadot (DOT) aggregated futures open involvement. Source: Bybt

Assay of the open involvement on futures contracts measures the notional currently in play. Instead of measuring how many trades per day, information technology only takes into account open up positions.

After peaking at $i.ii billion on April 17, this metric retraced to $340 million. Admitting much smaller, it currently holds the same levels seen in early February, when DOT was also trading at $20.

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Leverage utilize has been balanced

Longs (buyers) and shorts (sellers) are matched at all times in futures contracts, but their leverage varies. Eventual imbalances are defenseless past the funding rate indicator and derivatives exchanges volition accuse whichever side is using more leverage to balance their risk.

Polkadot (DOT) perpetual funding rate. Source: Coinalyze.net

Every bit shown above, from mid-July to Aug. 1, the funding rate was mostly negative, indicating that shorts were the ones enervating more leverage. A negative 0.05% charge per unit every viii-hours is equivalent to 1% per week. All the same, the situation reversed over the past ii weeks after the indicator ranged between 0% and 0.04%, a level which is usually deemed neutral.

The open up interest and funding rate show no sign of bullishness from a derivatives trading perspective. There are too no signs of excessive leverage or excitement after the recent rally, which is also positive.

With both indicators currently presenting a neutral stance, DOT's performance will likely depend on its ecosystem evolution.

The views and opinions expressed hither are solely those of the author and practice not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You should conduct your own inquiry when making a decision.