About Poca’s slot auction, crowd lending, read this one

The latest, most comprehensive and easy-to-understand introduction to Poca’s parallel chain slot auctions and crowd lending.

At the Polka Community Conference Polkadot Decoded on May 19, Shawn Tabrizi, a core Parity developer and one of the developers of the Auction and Crowdloan systems, presented on the Polka Parallel Chain’s Auction, Crowloan and Slot. This article is a compilation of dry content from that presentation by PolkaWorld.

About Poca's slot auction, crowd lending, read this one

I think this article this is probably the most up-to-date, comprehensive and easy-to-understand introduction to boca parallel chain slot auctions and crowdfunding to date. Although the article is rather long, I recommend everyone who cares about Boka and Kusama auctions to read it carefully.

1、Background introduction

Before I start, I will introduce some background knowledge about what Boca is and what it can offer.

Boca: Creating the Future of Multi-Chain

The first thing to understand is that Poca’s vision is to create a multi-chain future.

About Poca's slot auction, crowd lending, read this one

What exactly does that mean?
If we think back 10 years ago, Bitcoin was invented. It was the first public chain, and the only one that made sense at that time.

This remained the case for 6 years, until Ether came online. Ether provides a platform that allows multiple different teams to build their own products on the blockchain. Ether was the beginning of a move towards a “multi-currency future” where people could launch their own tokens, create smart contracts, and make it possible for smart contracts to interact with each other.

But as we’ve seen firsthand, this architecture doesn’t really scale well. If we look at the current blockchain landscape, we see that there are now a lot of teams building Layer 1 blockchains that have specific functions and want to go after specific problems.

This is where Poca enters the picture. Boca is actually a Layer 0 blockchain that can connect many Layer 1 solutions together, which is an unprecedented innovation. We believe there will be many blockchains in the future of Web3, and Poca is a platform that can facilitate and realize this vision.

Cold Start Issues
But the goal of “creating a multi-chain future” is not easy to achieve and there is a cold start problem.

About Poca's slot auction, crowd lending, read this one

The current blockchain community isn’t that big yet, and every Layer 1 blockchain is actually gleaning people from the same pool to build a support system and get backers for itself.

Each project needs to recruit node operators to secure its blockchain. And the chains themselves must struggle to interact with existing, or even future, blockchain systems that will emerge. These problems are hard to solve.

Shared Security
And Poca solves this resource problem by providing shared security to all parallel chains. That is, Poca itself incentivizes and collects verifier nodes, which are assigned to different parallel chains to verify their state transitions.

About Poca's slot auction, crowd lending, read this one

This means that when you join the Polka network, we can provide your chain with Bitcoin-level security at essentially no additional cost.

Cross-chain communication
And Poca also solves the problem of cross-chain communication and blockchain interoperability. The current blockchain is like the Wild West, with everyone designing their blockchain protocols on the back of a paper towel. And Poca provides clear, scalable, and extensible parallel chain standards.

About Poca's slot auction, crowd lending, read this one

So, with tools like XCM and XCMP, each parallel chain on Polka can immediately communicate and interoperate with other parallel chains.

With Bridges, which connect Bitcoin and Ether, etc., Polka will act as a gateway to all information on the decentralized network.

Limited Number of Parallel Chains
Of course, we all know that nothing is perfect. Unfortunately, even Polka has its own resource limits. The very process of adding new parallel chains to a polka is a problem of exponential scaling. So we can only give a limited number of parallel chain slots and run these parallel chains on relay chains.

About Poca's slot auction, crowd lending, read this one

We do have a long-term plan to solve this scalability problem by using a “Nested Relaychain”. You can imagine having a relay chain that’s similar to a polka, but it’s also connected to the polka as a parallel chain, so you can nest and you can continue to go and scale this decentralized network.

But these are all future plans. In today’s talk, let’s talk about how to pick those lucky parallel chains that can connect to the PoC network.

  1. Slots

A slot is a term we use to describe the chances that a parallel chain can connect to a polka.

Slot allocation
Optimistically, we think that the wave card can support up to 100 parallel chains at a time, so we need 100 slots. Each slot is equal to each other.

About Poca's slot auction, crowd lending, read this one

There are roughly 10-30 slots for “public interest parallel chains”, these are chains for use by the entire polka ecology. Bridges that connect to Bitcoin or Ether, for example. There are also utility chains, such as Statemint, which will serve as multi-asset parallel chains for the entire ecosystem. There are also system-level parallel chains that will strip some logic out of the relay chain, such as balance, staking, governance, and other logic that we can strip out of the relay chain and move to the parallel chain to free up resources on the relay chain so that the relay chain can focus all of its efforts on serving the parallel chain ecosystem.

There will also be 40-90 slots for leasing, which will be auctioned off. This part is the focus of this talk, so I will expand on it later.

Slot launch process
We’re not going to have 100 slots overnight; instead, what we’re going to do is gradually expand the network, introducing new slots and new parallel chains over time. Once we see the network stabilize, we can go ahead and open and expand new slots. But you need to know that this process is not going to happen overnight.

About Poca's slot auction, crowd lending, read this one

So the question becomes, how do we open new slots? This will require the use of auctions.

  1. Auctions

When we talk about auctions on Boca, we mean auctions for parallel chain slots.

About Poca's slot auction, crowd lending, read this one

On Polka, each slot is two years long and is divided into 8 lease periods of 3 months each. This means that in each auction you can have up to 8 auction winners, each of which gets a different period of time over that two-year period. Or there could be a parallel chain that pays a very high price and rents the entire two-year period. All in all, each auction offers the right to two years of access to Boca, and you can go ahead and bid on it.

About Poca's slot auction, crowd lending, read this one

The rental period is shorter on Kusama. Each slot is 48 weeks long, which is almost 1 year, and each lease is only 6 weeks long. Of course, we made the slot cycle on Kusama a little faster because it’s Boca’s canary network, so we wanted all these parallel chain state transitions to happen faster to make sure everything goes smoothly.

Candle Auction
We actually had a number of ways to approach the auction system, but we actually chose the candle auction system.

About Poca's slot auction, crowd lending, read this one

Candle auctions were prevalent in the 17th century as an alternative to English auctions. You may be familiar with English auctions, which means that everyone can bid higher until finally no one wants to bid any more.

Candle auctions, on the other hand, add some randomness to the process. You can imagine that the auctioneer lights a candle and starts the English auction process, everyone starts bidding, but if at some point the candle goes out, the auction ends immediately and even if someone still wants to bid, it doesn’t count.

This approach means that no one knows exactly when the auction will end, so it encourages bidders to treat every bid as if it were their last. Of course this would also encourage early discovery of healthy prices, and discourage last-minute sniping. Because if people suddenly bid a very high price at the last minute, it would actually ruin this whole auction economics.

How to end the bidding
If you know anything about blockchain systems, you’ll know that anything involving randomness isn’t really simple. This is how we implement candle auctions on the blockchain.

We divide the auction into two parts.

About Poca's slot auction, crowd lending, read this one

In the first part, we have an Opening Period, which is the period right after the auction starts, where the team can get in shape, build an initial strategy, make initial bids, and see what the competition is.

In the second part, we quickly transition to the Ending Period, where the auction may end at any time and the winner is determined.

We manage the randomness of the random endings in this way. We traverse the entire random ending period and take a snapshot of each block in the random ending period to find the current winner of each block. We keep these snapshots until the end, and when the entire random end period has gone, we use a verifiable random function to backtrack and pick which snapshot is actually the auction end time, thus deciding who the real winner is.

While it is true that there may be higher bids than our selected snapshot throughout the auction, it is the one we selected that will determine who the real winner is.

The cost of an auction is only an opportunity cost
There is one more thing to remember. That is, when you participate in an auction, you are bidding with DOT, but you are not actually spending those DOTs, but just locking them up for that period of time in the rental slot.

About Poca's slot auction, crowd lending, read this one

It means that when the lease of the slot ends, you can get all your locked tokens back, regardless of whether your parallel chain is going to be withdrawn or you want to continue bidding afterwards.

While the tokens are locked, you can’t do things like Staking, voting, or transferring money. This means that the only cost of becoming a parallel chain is really just the opportunity cost.

So when you bid on a parallel chain, you’re saying that you can bring more value to yourself and to the network than if you take the coins and do operations like Staking. So the great thing about that is that it doesn’t actually cost you a penny.

Auction Winners
The bidding process can be a little more complicated than you might think. Here we look at a snapshot of a hypothetical random ending period.

About Poca's slot auction, crowd lending, read this one

You will see the result is not only one bidder and one winner, but multiple bids for each time period. Remember that the slots are divided into 8 leases, so when bidding, each bidder can choose which lease they want from those leases.

For example, here Alice is bidding on all 8 leases and is willing to lock in 200 DOTs for each lease.

Bob, on the other hand, only wants the first and second lease periods and is bidding 100 DOT per lease period.

When we evaluate each person’s bid, we don’t really care what they bid for book value, but rather add up all the bids for the locked-in periods.

So let’s say Alice bids for the full 8 leases and bids 200 DOT for each lease, so those 200 DOTs are locked in for the entire 8 lease periods. So her locked-in value is 1600 DOT.

Bob, on the other hand, is only renting two lease terms at 100 DOT each, so his locked-in value is 200 DOT.

On top of that, we actually compare side-by-side to make the rentals as saturated as possible. So you’ll see that Alice fills 8 leases by herself, but Bob and Charlie need to “carpool” to fill the full 8 leases. So we’ll look at Bob and Charlie together in the final evaluation.

In this auction, Bob and Charlie will be the final winners. You’ll notice that neither of these two are the highest bidder, but their combined bids have the highest overall lock-in value, allowing them to win the auction.

  1. Crowd Lending

Here is the most exciting part, which is the Crowdloan (Crowd Lending).

What is Crowdloan? Crowdloan is a fundraising system that allows parallel chains to win slot auctions. Simply put, DOT holders can lend tokens to a parallel chain team, and the team can use those coins to bid in a parallel chain auction.

In order to encourage users to lend their tokens to themselves, teams can create incentives, a more common example being to distribute their tokens to crowd-lending participants.

Of course, this is just a loan. As with the auction process, all crowd-lending participants, all DOT holders, get all their coins back at the end of the slot lease period. We use on-chain logic to secure this process. So again, the cost of crowlending is just an opportunity cost, so it’s definitely a good deal.

Make your ideas happen with crowdfunding
What does this mean?

It means that you don’t need to be super rich to be a parallel chain in the boca ecosystem, you just need to have a great idea. If you have a great idea, a solid development team, and some effort, then Boca will provide you with everything you need to put it into production.

About Poca's slot auction, crowd lending, read this one

Previously we talked about Polka sharing security for different teams. And now we find that the Polka Protocol even offers a way to raise money to win slots, and that is through crowd lending.

Support your favorite team through crowdfunding
As a DOT holder, crowd lending is a great way for you to shape the future of the Polka network. You can go out and support the teams that you think provide the most value, while you get some parallel chain tokens or other rewards. Remember, the tokens you lend through crowdfunding will eventually be returned to you.

About Poca's slot auction, crowd lending, read this one

And as a parallel chain team, doing crowd lending is an easy way to make your token distribution decentralized from the start. So crowd lending is actually a multi-win.

5、Future plans

Here is a timeline of the auction that will give you an idea of how far we are now and what you can expect in the near future.

About Poca's slot auction, crowd lending, read this one

Last Thursday, we went live with Shell Chain (empty shell chain) on the Westen beta site. Last Friday, we upgraded Kusama to support parallel chain registration, auctions, and crowdfunding processes, so all of these features are actually already on Kusama. This Monday, we brought the Shell chain online to Kusama.

The next things that will happen soon include upgrading the Shell chain to Statemine, which is Kusama’s asset chain, which is similar to Statemint, but on Kusama.

We’ll announce the official auction schedule when Statemine is running smoothly. Of course we will give you up to 7 days in advance so you can go ahead and unbundle your Staking KSM.

Kusama’s auction length
Kusama’s auctions will last 7 days, with two open bidding days and 5 random ending days. This should give the team enough time to bid and crowd-lend, and participants enough time to participate in Kusama crowd-lending.

Auction Plan

About Poca's slot auction, crowd lending, read this one

5 auctions are held first

1 auction at a time, with a new auction every week (since each auction is exactly 1 week long, it’s like back-to-back auctions)

Each auction is for the current lease period (once an auction has a winner, you’ll see that chain immediately connected and you’ll see it start to produce blocks that day)

So it’s actually kind of exciting to think that we’re this close to the parallel chain team actually going live to Kusama.

Polkadot {.js} Crowdlending interface
For crowdlending participants, we have the Polkadot.js APP that will provide you with all the tools you need to participate in crowdlending. We hope you are already familiar with the use of Polkadot.js.

About Poca's slot auction, crowd lending, read this one

Polkadot.js address: https://polkadot.js.org/

You can select “Network – Parachain – Crowdloan” tab and then you will see all ongoing Parallel Chain Crowdloan campaigns and you will see some different options and configurations for different Crowdloans. Of course these listed are not all the information, you may be able to find more information from the Parallel Chain team about incentives, participation and reward variation curves, etc. Combining this information with the information on the Crowd Lending screen should give you enough information to make an informed decision.

Let’s take a quick glance at the screen and you’ll see that there are 4 crowdsourced loans here.

Bob’s crowlending has ended, he has raised the maximum amount of money he wanted to raise in his crowlending, so he can’t accept any new contributors.

And Charlie, David and Alice have crowlending in progress, each bidding on a different lease term and each with a different end time.

The end time is very important and well worth paying attention to. When you participate in a crowdfunding campaign, you are saying that your funds will be locked into that crowdfunding process. If you participate in a crowlending that wins a bid, then your funds will be locked in until the end of that parallel chain lease. If you do not win this bid, then your funds will be locked until the end of this crowlending campaign. So that means you need to consider when the crowlending ends.

Of course you can also see how many DOTs each crowlending is trying to raise and how many have been raised so far. This information will let you know how many tokens you will receive for the amount you contribute when the tokens are distributed.

When you have made an informed decision, you can very easily go to the “Contribute” button on the right side, fill in the DOT or KSM you want to contribute, and you have successfully participated in the crowd lending.

Auction Winners
Depending on the stage of the auction, there are different definitions of current “winners”, so if you are following the auction process, you will definitely need to know what each “winner” refers to as well.

About Poca's slot auction, crowd lending, read this one

During the open bidding period, it’s simple: for each specific lease period, the winner is whoever has the highest bid. If someone makes a higher bid, or if a particular crowd loan raises more money, you will see this list of winners changing, with the old winner’s name disappearing and the new winner showing up.

About Poca's slot auction, crowd lending, read this one

Then we go to the random end period, when there are a lot of different snapshots for different bid changes. So you’ll see multiple sets of snapshots of the winners, along with the corresponding block numbers. Each time there’s a new bid, a new snapshot appears, and then you get a list of all the possible winners. Each of these snapshots could be the eventual winner of the entire auction. By the time the random end period has gone, we’ll know who the final winner is.

About Poca's slot auction, crowd lending, read this one

Finally, when the auction ends and a random number seed is generated to select the winner, we actually select a snapshot, which also determines the winner. We run an algorithm to decide who is the best candidate in this snapshot. Then you’ll be assigned a lease period.

In this example, Bob and Charlie won the auction and their lease period has been assigned. If this lease term is the current lease term, then the parallel chain is ready to go live straight away.

What you should do vs. what you should not do when crowdfunding
There are some points to keep in mind when participating in the crowd lending process.

About Poca's slot auction, crowd lending, read this one

What to do.

Be sure to follow the announcement of the start of the auction (note: PolkaWorld public and community will be the first to synchronize the announcement) to unbind the KSM in Staking in time to participate in the auction.

Be sure to investigate and research the Parallel Chain team properly. Because crowdfunding is an open and permissionless process, be aware that there may be teams with malicious intent that may not be worth the effort to lock down KSMs for. we have previously conducted several rounds of parallel chain and crowdfunding tests on Rococo, so you can research which teams are doing what on the Rococo test network.

What not to do.

Never transfer money to another person to participate in the crowlending process for you. The entire crowlending process should be done by you on the chain.

Don’t lock in all your funds in the first crowlending. Remember that many teams will be crowlending and may start at different times. So if you lock in all your funds in the first crowlending, then you won’t have the funds for the next crowlending. You should think ahead about the features offered by these parallel chains to make a reasonable allocation of funds.

  1. Summary
About Poca's slot auction, crowd lending, read this one

To recap what we talked about.

Parallel chain slots give Layer 1 blockchains access to the polka ecology.

Auctions are the mechanism that determines which parallel chains have access to these limited slots.

The crowd-lending mechanism allows DOT holders to not only shape the future of the polka network, but also to get a piece of the fast-growing polka ecosystem.

So it’s clear why Polka is the best platform for the future of Web 3.0. Poca is designed to attract the best and most innovative development teams. We’ve minimized the barriers required to enter the production environment, and we’ve built an active and diverse community that allows everyone to directly participate and shape the ecosystem.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/about-pocas-slot-auction-crowd-lending-read-this-one/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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