In-depth analysis of Poca parallel chain slot auction, what does it mean for DOT and ecology?

What does the parallel chain slot auction mean for Poca, project owners, and investors?

On December 23, 2020, Polka co-founder Robert announced in an official PolkaWorld post that Rococo V1, a Polka-specific parallel chain test network, is up and running, allowing community parallel chains to connect to relay chains via cumulus. on January 12, Web3 Foundation technical education member Bruno Skvorc tweeted the documentation site (Polkadot wiki) about the Rococo V1 parallel chain test registration, which is expected to open for parallel chain test qualification registration in the near future.

In-depth analysis of Poca parallel chain slot auction, what does it mean for DOT and ecology?

Note: Rococo is a public test network designed for testing parallel chain functionality, launched by Polka in August 2020 and maintained by Parity Technologies and the Polkadot developer community.

With the release of the Rococo V1 test network, it means that the Kusama and Polkadot parallel chain slot auctions and go-live will gradually kick off. As of January 10, Polkadot token DOT rose 97% in one month, and its market value surpassed BCH and ADA to rank sixth.

So, what does the parallel chain slot auction mean for Boca? How can project parties and ordinary users participate in the PoC ecology? What impact will it have on the future DOT?

1、What is parallel chain slot auction?
Before understanding the parallel chain slot auction, we need to understand the architecture of Polka.

Polka is a scalable heterogeneous multi-chain blockchain, and cross-chain is its core vision. To achieve this goal, Polka consists of Relaychain, Parallelchain and Transfer Bridge. Relaychain (Relaychain) is a blockchain created based on substrate, as the center of Poca network, responsible for the verification of information interaction, protecting and coordinating parallel chains, and maintaining the security of the whole network; Parachain (Parallel chain) runs through slots to access the relay chain and interacts with it, responsible for handling various ” Parachains are connected to relay chains through slots and interact with them to handle various “chores”, and different parallel chains can focus on different services and serve different needs.

The Parachain Slots, on the other hand, are the interface between the relay chains and the parallel chains. To share the security of Poca network and interact with other parallel chains for business, it must be realized through slots. The slots are divided into community beta slots and commercial slots. 20% of the slots are reserved for Web3 Foundation to deploy and support as community beta parallel chains to promote the development of the whole Poca ecology, and the remaining 80% of the slots are opened as commercial slots by auction.

Since the operation of parallel chains needs to consume certain network computing resources, the number of parallel chains is limited initially to ensure network efficiency and security. Gavin Wood, the founder of Poca, said at the Poca China Tour event in July 2020 that the maximum number of parallel chains will be around 100, which means the maximum number of slots running at the same time is also around 100.

To ensure fair distribution, Poca has designed an auction to allow project parties to bid for the right to use the slots. The right to use means that the slots are only rented, not sold, and the project owner needs to bid for the right to use by locking in a certain time and a certain number of DOTs. At the end of the lease period, the locked DOT can be unlocked and returned. (Note: DOTs that have already participated in pledge mining cannot be used to participate in the auction at the same time)

About the specific time of the slot auction, no fixed date has been announced yet, according to the previous Gavin Wood revealed that it will be at the beginning of this year. From the current development progress, Rococo parallel chain test network needs at least a period of stable operation before it will consider to start online slot auction. According to Gavin Wood’s presentation on December 8 last year, once the Rococo V1 test network is stable, the parallel chain slot auction will be launched on Kusama, the main Boca test network, and the winning parallel chain will be put online in Kusama. After that this process will be replicated on the main Poca network. So in terms of process, the parallel chain slot auction is one step closer to us. (It should be noted that Boca requires DOT and Kusama requires KSM to participate.)

  1. How does the slot auction work and how do I participate?
In-depth analysis of Poca parallel chain slot auction, what does it mean for DOT and ecology?

Poca’s slot auction is relatively new and relatively fair.

In order to reduce sniping, Poca’s parallel-chain slots will be auctioned using a “candle auction”, with some improvements on the traditional candle auction and the use of a retraceable closing mechanism.

The “candle auction” originated in the 16th century when ships were sold, and was named after the “one inch candle” that determined the opening period of the auction. When the candle flame goes out, the auction is abruptly terminated and the bidder at that moment wins. When candle auctions are applied on the web, a random number is needed to determine the termination time. Parallel chain slot auctions are a slight improvement on regular candle auctions in that they have a known open phase, and at the final end, then a random count of a past block, which is the time when the real auction closes. But the retroactive past block is done after the whole process has gone through, so no one knows when the auction will end.

In summary, the candle auction approach means that everyone knows the status of the bids, but not when the auction ends, which helps ensure that bidders are more willing to bid early. There are two phases in the Poca Parallel Chain slot auction process: a safe period, and a random period. DOTs can be freely pledged during both phases, and the auction will suddenly stop at an unpredictable point in time during the random period, and the highest bidder will win the bid prior to this point in time. Therefore bidders need to bid early and pledge as many chips as possible before the second phase.

Auctions for parallel chain slots are held every six months, with only one slot released at a time. Slots are leased for 6 months, divided into 6, 12, 18, and 24 month periods, and participating projects are free to bid on a single or multiple adjacent leases to the highest bidder. The winning bidder is required to lock (pledge) its DOT for the corresponding period, and the deposit will be refunded at the end of the parallel chain lease period.

In case the project owner is short of funds, it can also become a parallel chain through PLO (Parachain Lease Offerings, which Gavin calls crowdloan), and applying for Web3 Foundation funding. For example, through a series of incentives to attract investors to lock their DOT to themselves, and in turn, investors can lock their DOT to support their preferred projects in the bidding module. If they fail to auction to become a parallel chain, they can subsequently access the relay chain by means of parallel threads.

This gives ordinary investors the opportunity to participate. If you are interested in a project, or support a project, you can lock your DOT to help them bid. Note that these DOTs are locked in Polkadot’s relay chain, not given directly to the project owner, and will be returned in full. If the project you support is successful in the auction, the DOTs will be returned after a lock-in period (maybe six months to two years), and if the auction fails, they will be returned shortly after the auction ends.

3、The significance of parallel chain slot auction
So, why people are so concerned about the slot auction, project parties are actively preparing for it, what does the parallel chain slot auction mean to Boca, project parties and investors?

1) To Poca

As a representative of cross-chain projects, Poca is known as a blockchain project that can be compared to Ether. The parallel-chain slot auction is an important milestone in Poca’s roadmap and also the “big show” of Poca this year, which means its cross-chain vision will start to take shape.

Gavin Wood has said that one of the biggest goals of Poca in the future is to build chain bridges with other blockchains. The current blockchain world is more like a data island. If Poca can bridge to mainstream blockchains such as ethereum and bitcoin through an adapter bridge, then in the future it will realize the communication and interoperability of data and assets between different blockchains. This will be of great significance to the Poka ecology, and the blockchain ecology as a whole.

At the same time, for the Poca token DOT, the slot auction can enrich the usage scenario of DOT. As the parallel chain slot auction and investors’ support for the desired projects require pledging DOT, it will affect the total locking rate and locking structure of DOT network.

When the parallel chain slot auction is launched, a large number of DOTs are needed to participate in the auction, and some pledged DOTs will be unlocked. As more parallel chains are released, it is expected that the total DOT locking rate (node pledge + auction locking) of the whole network will rise. From this level, the increase of total locking rate is expected to have a positive impact on the secondary market performance of DOT (the same applies to KSM), but the exact price of the coin needs to be judged in the context of the current market environment.

2) To the project side

If you succeed in winning the slot and become a Poka parallel chain, you will be able to share the consensus and security of the Poka network, and you will be able to share and interact with different business lines at the same time, which is a great advantage for project parties. Bidding for the first batch of slots will give the project a certain first-mover advantage to advance the planned development work as early as possible, which will be beneficial to its later ecological construction. At the same time, it is also a high-profile publicity for the project to build momentum

Parallel thread development still takes some time, and many projects interested in building within the polka ecology will try slot bidding first before parallel threads are landed. (Some lightweight projects that don’t need to process transactions in every block are better suited to the more cost-effective option of pay-as-you-go parallel threading.)

According to PolkaProject, there are currently 333 Polka Eco projects, with 106 built on Substrate. The parallel chain slot auction has not yet started, and there are many well-known and representative projects that are already poised to publicly declare that they will participate in the parallel chain slot auction, such as Acala, Phala, ChainX, Darwinia, Bifrost, Stafi, Litentry, etc.

In-depth analysis of Poca parallel chain slot auction, what does it mean for DOT and ecology?

3) For investors

The PLO scheme designed by Parallel Chain Slot Auction gives market investors a way and opportunity to participate in the boca ecology. Investors can help the project to participate in the auction by choosing the pledged DOT of the supported project in the bidding module. At the same time, they can also get some token rewards or other incentives from the project, which is perhaps more imaginative than the pledged revenue of NPoS.

Currently exchanges, investment institutions, and secondary market investors are extremely concerned about the development process of Poca, supporting and optimistic about its ecological development and seeing it as an opportunity worthy of attention. Many investment institutions that have laid out the ecology of PoC have expressed interest in participating in the auction, which will help the already invested projects to shoot the slot, and can indirectly obtain greater benefits.

And each mainstream trading platform also takes boca as one of the key layout, have set up boca ecological fund, and give investors to participate in boca ecology to provide convenient access. Undoubtedly, these important participating players represented by trading platforms and investment institutions will help the construction and development of Poca ecology.

In 2021, the auction of boca and parallel chain slots stepped into the public eye, and the prices of DOT and KSM continued to rise. According to the OEI OKEx quotation, DOT is now quoted at 39.77USD and KSM is now quoted at 589.60USD.

In terms of Poca’s macro vision, the landing of the parallel chain is only one of the key points in its development process, the future development is still a long way to go, let’s wait and see.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/in-depth-analysis-of-poca-parallel-chain-slot-auction-what-does-it-mean-for-dot-and-ecology/
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