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The multi-chain protocol Polkadot (DOT), witnessed a sharp increase in on-chain activities during December. According to an analysis of Token Terminal data, weekly transaction fees on the transfer chain reached an all-time high (ATH) of $2.6 million between December 18-25.
Surge in DOT’s Weekly Transaction Fees
This represented a massive increase of 1218% compared to the total fees collected the previous week. The transfer chain serves as the governance layer of the network and maintains, manages, and connects several parachains. The increase in fees came along with more than a doubling in daily active users. An average of 15.3 thousand users connected to the network daily during this period. According to a cryptocurrency analyst known as Osmo, this move, like other blockchains, stemmed from the high demand for Inscriptions.
Similar to Bitcoin‘s Ordinals, Inscriptions work by embedding images or other data directly onto the chain. They can be used to create unique cryptocurrencies such as Non-fungible tokens (NFTs) and even decentralized applications (dApps). While Bitcoin was the first to witness this frenzy, the unique concept has gradually been adopted by other L1s and L2s. Inscription was the primary factor in increasing transactions and fees across various networks in December.
Growing Interest in DOT
As is known, a portion of the total fees earned on the network goes to DOT token holders who govern the protocol. Logically, this means that the increase in fees could boost the demand for DOT. According to data from 21milyon.com, DOT saw an increase of 14.65% over the past week and approximately 57% since the beginning of December.
An analysis of CoinMarketCap data shows that mentions of the cryptocurrency on top crypto-focused social media channels have significantly increased. The upward trend has also caught the attention of speculative investors. DOT’s open interest (OI) showed a 26% increase last week, signaling a new influx of capital into the derivatives market.
