Can StellaSwap Help Polkadot Grow? — Aziz Zainuddin Gives Insights

Key Takeaways

• StellaSwap is Polkadot’s leading decentralized exchange.
• The Polkadot (DOT) price is trading in a long-term channel.
• Can DOT finally break out and begin a delayed recovery?

Polkadot has underperformed heavily in the current bullish market cycle. While the price began to increase near the end of 2023 and the start of 2024, the upward movement did not last. In August 2024, DOT fell below its 2023 lows and nearly broke below its final horizontal support area.

However, the price has bounced since then and aims to break out of its long-term corrective pattern. Let’s analyze the DOT price action and the activity on StellaSwap, its biggest Decentralized Exchange (DEX), to see if there is any hope of a recovery.

StellaSwap and Polkadot

StellaSwap is Polkadot’s leading decentralized exchange, built on Moonbeam, a Polkadot Parachain. In an interview with CCN, Aziz Zainuddin, the Co-Founder at StellaSwap explained what makes the decentralized exchange unique and sets it apart from UniSwap. He stated

“The core difference that sets us apart from Uniswap is that StellaSwap is an integrated AMM with 3 kinds of models – V2, Stable & Concentrated liquidity (V3). This allows us to utilize dynamic pricing instead of separate fee structures like Uniswap.”

StellaSwap also has its own liquid staking product, stDOT, with a market cap of over $5 million and over 1.05 million DOT staked. He stated that Polkadot’s scalability and throughput allow StellaSwap to offer a finality of six seconds.

StellaSwap also offers cross-chain swaps on Polkadot, a feature boosted by the recent $1 million DOT liquidity incentive campaign. This allows for swaps with low slippage. Shortly after the campaign started, several pairs reached all-time highs in TVL.

However, it is worth mentioning that the Total Value Locked (TVL) and volume in StellaSwap have fallen considerably over the past two years and are now minuscule compared to some other DEXes.

Zainuddin states that this is because of the Nomad bridge exploit in August 2022 , which affected Moonbeam, the parachain where Stellaswap was built. This wiped out the liquidity of many users and affected the TVL. Since then, Stellaswap has been focusing on native assets to secure the ecosystem to ensure this will not happen again.

Finally, Zainuddin believes that StellaSwap can help Polkadot by giving it more exposure since it is the only DEX on it with more than $1 billion in cumulative trade volume. Additionally, cross-chain swaps allow users to easily enter Polkadot, and the liquid staking solution has already brought more than $5 million in staked DOT.

Can DOT Price Break Out?

The weekly time frame DOT chart shows a decrease inside a descending parallel channel ongoing since March. During the decline, DOT reached a low of $3.59, validating the channel’s support trend line and the $3.80 horizontal support area. This is the final support area before a new all-time low.

However, DOT bounced, creating a long lower wick (white icon). This saved the possible breakdown and started the ongoing upward movement, leading to two higher lows. This week, the Polkadot price attempts to break out from the long-term channel.

Even though DOT has moved outside of the channel, the Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are still below their bearish thresholds at 50 and 0, respectively.

Even though both have started to increase and the MACD even made a bullish cross (black icon), they need to cross the aforementioned levels to confirm a bullish trend reversal.

So, the price action and technical indicator readings do not match. While the price action is bullish, indicator readings are still bearish.

The daily time frame shows similar indecision. Since the Aug. 5 bounce, DOT has traded inside a symmetrical triangle, known as a neutral pattern. Moreover, the RSI and MACD are inside their key levels at 50 and 0, respectively.

The short-term triangle’s resistance trend line is very close to the long-term channel’s. So, until the DOT price breaks out from both, the trend cannot be considered bullish.

Future Trend Unclear

The Polkadot price shows mixed signs in different time frames. DOT has bounced at a long-term support area but needs to break out from a shorter-term pattern to confirm its bullish trend reversal. It remains to be seen if interest in StellaSwap and its liquid staking solution can bring any growth to Polkadot.