Polkadot rose 16.7% on Tuesday and 42.5% over the week, leading a rotation into pre-2018 layer-1 tokens even as bitcoin and ether slipped. The move coincided with an OpenGov proposal for a native Polkadot stablecoin and a short squeeze that liquidated more than $610,000 in DOT positions, while traders raised the odds of a Fed rate hike next week.
A rotation into legacy layer-1 tokens lifted Polkadot on Tuesday, rising 16.7% on the day and 42.5% over the week, while bitcoin fell 0.83% to $78,539 and ether slipped 0.29% to $2,484.83. Cosmos Hub, Decred and Ethereum Classic gained 10.8%, 9.4% and 9.3% respectively, moving alongside Polkadot without a dated catalyst of their own.
Polkadot Pushes A Native Stablecoin
The rally tracks an OpenGov referendum submitted Monday that proposes dotUSD, a native stablecoin for the network, running 97.5% in favor as of Tuesday. According to the referendum text: "dotUSD is a decentralized, protocol-native stablecoin project". The proposal would commit $2.5 million in USDT to mint dotUSD and $2.5 million in DOT to a liquidity pool on Asset Hub.
A Short Squeeze Adds Fuel
Crypto Briefing reported that a derivatives short squeeze liquidated more than $610,000 in DOT positions, amplifying the rally through forced buying. The outlet also said daily network activity jumped by roughly 150% after the launch of a new devnet, and that a separate referendum, 1926, directed revenue from JAMKB-related DOT sales to be burned.
Old Layer-1s Move Together
None of the three produced a governance action or release in the window that would explain the move. Decred's most recent substantive update is a security patch from late August, and Ethereum Classic's core client has not shipped a release since March 28.
Traders Raise Hike Odds
Polymarket traders pushed the odds of a quarter-point Fed increase next week to 54.5%, a third consecutive session of widening. Friday's jobs report showed nonfarm payrolls rising by 162,000 with unemployment steady at 4.1%. Crypto Briefing put the odds of a hike at roughly 58% following the same data.
Sources: The Defiant, Crypto Briefing
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