The much-anticipated auction of Poca parallel chain slots is finally coming.
On May 18, Kusama, the first parallel chain Shell was successfully deployed, which is just an empty chain with no practical utility except for upgradeability, but it is the first note for the official launch of Kusama and the whole Poca ecosystem.
According to Gavin Wood, the Kusama network will officially launch the auction of parallel chain slots after ensuring the stable operation of Statemine, and it is expected that there will be 5 auctions in 7 days interval initially, and more slots will be opened if no major problems are found.
With the banquet coming up, all parties in the eco-system have already been preparing their fists for the event. On the one hand, the project owners who are going to bid in person have recently announced their own Crowdloan incentive programs in order to attract as many external chips as possible; on the other hand, investors who have been looking forward to the auction for a long time are also watching with baited breath, trying to find the most powerful “racehorses” among the many bidding projects. “, to earn a more lucrative income.
Although the specific time of the auction has not yet been determined, but the community has begun a heated discussion on the potential ownership of the first slots, of which the most iconic first slot will eventually go to who is undoubtedly the most attention-grabbing. Looking around at all the proposed bidders, it can be said that many of the projects that have participated in the parallel chain testing of the Rococo V1 network have some competitiveness, but combined with the volume of community discussions, Karura (Acala’s proposed access to Kusama’s first network) is undoubtedly the hot candidate to win the top spot. This is not an unwarranted claim, as Acala’s test network Mandala has already won the first slot on the test network in a mock auction for the Rococo V1 network, and Karura was the 100% leader in the zeitgeist slot auction predictions.
Acala, the DeFi Center for Boca Ecology
Why is Acala so much in demand? What exactly are the advantages of the project? Before answering these two questions, we need to give a brief introduction to the basic information of the project.
For those familiar with the Poca ecosystem, Acala is positioned as the DeFi hub for the entire Poca ecosystem, and as Acala’s first network for the Kusama network, Karura and Acala use the same set of code, but serve very different assets and ecosystems. To prevent confusion, we will use Acala as the main body of the project in the following introduction.
The name Acala is derived from the Buddhist Sanskrit word “Acalanatha”, which means “the immovable king”. In Buddhist Tantric culture, the immovable king is the chief of the five great kings and the head of the eight great kings, who is able to remove obstacles in the face of any difficulties and has a strong and unshakable compassion. From the name, it is clear that the founding team of Acala has high expectations for the project, that is, they want Acala to be the leader among all the Poka eco-projects, providing safe and solid services to all users.
In terms of specific product lines, Acala will offer a diverse range of services around the theme of DeFi, covering various segments such as stablecoin, lending, trading, and liquidity release.
The first is the Hypercollateralized Stablecoin Protocol, which can be roughly understood as a cross-chain version of MakerDAO, allowing users to open a collateralized debt position (CDP), deposit their crypto assets as collateral, receive aUSD, and send and receive aUSD across any blockchain connected to Polkadot.
The second is Acala Swap, a decentralized exchange that can be roughly understood as a cross-chain version of Uniswap. acala Swap will provide the project’s native tokens (ACA, aUSD), tokens within the Polka ecosystem (DOT and homogeneous parallel-chain project tokens), and ex-chain tokens (BTC, aUSD) bridged to Polka through an AMM (automated market maker) mechanism. The project will provide a free-flowing scenario for the project’s native tokens (ACA, aUSD), tokens in the Boka ecosystem (DOT and homogeneous parallel-chain project tokens), and tokens from external chains (BTC, ETH, etc.) that bridge to Boka.
In the conventional pledge scenario, users can enjoy the value-added income while locking their positions, but they often bear the risk of market volatility due to the limited liquidity. L-token allows users to freely trade derivative tokens with underlying pledged assets plus earnings while pledge mining. Unlike other products that generate liquidity release in the form of multiple tokens, the more decentralized LDOT can also be reused in other DeFi products (e.g. over-collateralized lending) to further amplify the capital efficiency of the underlying assets and help users achieve higher returns. Acala has previously partnered with Compound Chain to integrate L-DOT into their DeFi service.
In addition, Acala has also created an on-chain decentralized sovereign fund (dSWF), which can be simply understood as the Acala network’s “foreign exchange reserve” and is meant to help the Acala network grow sustainably. Specifically, Acala will use its network revenue to purchase high-quality assets (initially DOT, KSM, and then expand to other off-chain assets once Acala & Karura can cover the cost of a parallel chain) and reserve them in the fund. Acala’s network continues to grow, the dSWF will accumulate more and more high-quality assets, which will directly improve Acala’s ability to address systemic risk and will provide greater value backing for the ACA.
If with only the first few products, Acala seems to be a cross-chain version of the DeFi portfolio of applications based on polka, this last product – the Smart Contract Module – will give Acala a very different meaning. Acala’s Smart Contract Module has good compatibility with the Ether Virtual Machine (EVM), allowing DeFi projects built on top of Ether to be easily deployed to Acala’s parallel chain without much tweaking. This feature will make Acala a great window for external DeFi projects such as Ampl to migrate to the Polka ecosystem, making Acala a true DeFi base layer for the entire Polka ecosystem. ……
From the product layout, we can see that what Acala wants to do is not just to provide stable coins, lending, trading, liquidity release and other concrete DeFi services on its own, but to empower and foster the construction of the DeFi system of the entire PoC ecosystem based on its own products, which is perhaps the original intention of Acala to “become the DeFi hub of the PoC ecosystem”.
Karura, the best solution for investors to participate in the auction?
Returning to the upcoming auction, Kusama and the subsequent Poca mainnet auctions have been designed to reduce bid sniping by using a “candle” model. The auction will be divided into two phases – a safe period and a random period, after which the random number on the chain may determine the final outcome of the auction at any time, so in order to successfully take the slot, the project needs to attract as many chips as possible before entering the second phase.
The project side’s strong demand for external chips is where the opportunity for investors to participate in the auction and gain revenue lies, and the Crowd Lending module is designed to provide a standardized window for this opportunity to materialize. Slot auctions allow project owners to leverage the crowd-lending mechanism to borrow from external sources. Typically, project owners use incentives such as distributing the project’s own tokens to attract external investors to lock in more KSM and DOT to themselves in order to build a stronger competitive position in the auction.
For KSM and DOT investors, the only stable way to earn more revenue with their chips was node pledging. Although some centralized exchanges sometimes start targeted pledging mining activities while they are online with Poka Eco-Projects, the time window often does not last long, and the launch of slot auctions gives all KSM and DOT investors another way to tap the value of their chips.
The PoS revenue mechanism of the PoC network determines that when the DOT (KSM) ratio of the participating nodes exceeds a certain threshold, the overall revenue will drop (please refer to “How to grasp the maximum revenue of PoC ecosystem in 2021?” for more details). . Therefore, it is expected that with the launch of the slot auction, many investors who are currently participating in node pledges on the chain will unlock their tokens and look for higher returns in the slot auction. This scenario is somewhat similar to the choice between ETH 2.0 mining or DeFi mining for users in the ethereum ecosystem. Considering the market capitalization of several early DeFi projects in the ethereum ecosystem today, there is obviously more room for imagination in choosing slot auctions in the early stage.
This brings us to a new question – how can ordinary investors maximize their returns in slot auctions? This may seem like a difficult question, but if you cut out some of the loose ends and look at the backbone, you can focus on two general elements.
One is to focus on the strength of the specific token incentives that the major projects come up with. Because of the differences in competitiveness of the project parties themselves, some relatively weak project parties tend to offer a higher percentage of the total supply of tokens as incentives, but again, given the varying quality of the projects, it is not advisable to use incentive strength as the only measure.
The second is to focus on the development prospects of the project itself. This is well understood, as the leading projects within the ethereum ecology have long been not of the same magnitude in terms of market capitalization as the late-developing projects.
Considering the limited number of slots released in the early stage, only a few projects can successfully take the slots. If the auction of investor-backed projects fails, the design of the crowd lending mechanism is that the KSM will be returned to investors, which will not cause any loss but will also waste the time window of the current auction round; in addition, the time cycle of slot bidding is often long, and the project side is trying to avoid In addition, the time period for slot bidding is often long, and the project owner will often design a lock-up mechanism for token release in order to avoid “digging and selling” to smash the board, so a long term view of the specific yield situation is needed. Therefore, the second element, “focus on the development prospects of the project”, is certainly more important when investors choose which project to support in the auction.
In the beginning, we mentioned two questions – why is Karura’s bidding so high? What are the advantages of this project? The answer to the first question is simple: Acala is one of the most promising projects in the Boka ecosystem, and Karura is one of the most promising projects in the Kusama ecosystem, which is the main reason why it is attracting so much attention at this stage.
As for the answer to the second question, in our opinion, Acala’s (Karura’s) strengths can be seen in the following four areas.
Capitalist advantage: Acala has one of the strongest capitalist backgrounds in the Boka Eco project. The list of investors includes Polychain, Coinbase Ventures, Pantera, ParaFi, Hypersphere, Digital Currency Group, CoinFund, 1confirmation, HashKey and many other well-known institutions in the circle.
Track advantage: Acala occupies the track with the largest capital flow, DeFi. As one of the most powerful public chain systems outside of Ether, the scale of DeFi in the PoC ecosystem is also worth looking forward to in the future. As the leading DeFi system in Poca, Acala’s product line covers almost all mainstream segments of DeFi. Imagine what would happen if MakerDAO, Uniswap, etc. were merged together and supported by more powerful smart contract development. This is not the end, Acala’s eyes are not only limited to the crypto world, but also to the broader traditional financial market – in May, Acala announced a partnership with Current, a fintech bank with over 3 million users, to build a bridge between the traditional financial system and the on-chain This also means that more traditional users will have one-click access to the Boka DeFi ecosystem through Current’s platform.
Technology advantage: Acala has long been a technology pioneer in the Polka ecosystem. To date, Acala has received numerous official grants from the Web 3 Foundation, and the NFT module has been officially integrated by Kusama, launching the cross-chain asset standard “xTokens” to provide a unified set of cross-chain messages for all Polkadot and Kusama parallel In February this year, Acala officially launched Acala EVM, which developers can deploy through Solidity contracts; since then, Acala has been testing cross-chain communication (XCMP) with a number of projects in the Polkadot ecosystem, including Plasm, Phala, Moonbeam, etc. Acala has since tested cross-chain communication (XCMP) transactions with Plasm, Phala, Moonbeam and other projects in the Polka ecosystem, opening up combinability between different flatline chains, and has recently executed the first heterogeneous cross-chain transaction from the Kovan network to Acala. In a previous Electric capital report, Acala was one of the largest developers in the Polka ecosystem, with the largest increase in the number of developers of any new DeFi ecosystem, according to comprehensive public statistics for the 2020 DeFi ecosystem.
First-mover advantage: Acala started earlier than most projects in the ecosystem, and its main products are already taking shape and are just waiting for the official launch, which will be further amplified if it succeeds in taking the first slot. Considering the current trend of homogenization in the DeFi track and the limited number of slots in the initial stage, the speed of landing will become a key factor in the competition of projects.
Combining the above four points, it is not surprising that Acala’s first network Karura will be particularly competitive in the upcoming auction for parallel chain slots in the Kusama network, and it is not surprising that there are such high expectations within the community. If we use a long-term mindset to measure the eventual returns that investors may receive in the slot auction, Karura may be one of the best solutions for investors to participate in the auction.
What is the return on investment for backing Karura’s bid?
As mentioned earlier, Acala wants to be the DeFi hub for the entire boca ecosystem, and by contrast, Karura wants to be the DeFi hub for the Kusama network.
Last week, Karura has officially disclosed its crowd-lending incentive program for the Kusama network parallel chain slot auction. Under the program, Karura has chosen a 48-week lease period, and all investors who wish to support Karura’s auction will be required to lock in their KSMs with Karura for 48 weeks in the Crowd Lending module, and all KSMs will be automatically returned to backers in full at the end of the lease period.
In return, Karura will contribute 11% of the total supply of native tokens, KAR, as an incentive. Each KSM token backed by Karura will be rewarded with a minimum of 12 KARs (out of a total supply of 100 million), and this number may increase further depending on the intensity of the auction.
If a slot is successfully auctioned, 30% of the KAR incentive available to investors will be released immediately upon Karura’s launch and can be freely traded and used for Karura’s DeFi product and ecosystem, while the remaining 70% of the incentive will be released linearly over a 48-week lease period.
In addition, Karura is introducing a referral incentive to this auction, so if you successfully refer someone to support a Karura auction, both parties will receive an additional 5% KAR bonus.
Currently, Karura has already started the pre-auction warm-up, the specific participation method will not be detailed here, interested parties can read about it in “Parallel chain auction is coming, Karura crowd loan pre-registration officially opened”.
Sailing to Web 3.0 era
As the pioneer network of Polka, Kusama has similar code logic and more flexible operation environment. With the accumulation of consensus, the Kusama network is no longer a test field for testing only, but has formed an ecological value system independent of Polka, and the multi-billion dollar circulation market value is the best proof.
Now, the launch of the Kusama Network parallel chain auction means that the huge ship towards the era of Web 3.0 has officially opened the door for the project owners who have been working in the ecology for a long time.
The launch of Karura (Acala) will announce that the DeFi story of the Ether era is still sustainable in the Web 3.0 era. Positioned as the “DeFi hub” of the new ecosystem, Karura (Acala)’s components and smart contract onboarding capabilities will serve as the infrastructure for the entire ecosystem and help the Kusama (Poka) ecosystem rise.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/kusama-parallel-chain-will-start-shooting-soon-who-will-come-out-on-top/
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