Polkadot slot auction is about to bid to attract crowd loans

After a long time in the market, the cross-chain network Polkadot (Polkadot) has once again returned to the encryption center. The project plans to launch the first parachain slot auction at 9 pm on November 11.

Polkadot’s network architecture is divided into three parts: relay chain, parachain, and transfer bridge. Parachain slot auctions have started, marking the beginning of the development of Polkadot’s application ecology. From November 11th to December 16th, there will be 5 rounds of auctions, and finally 5 projects will obtain the first-phase slot usage rights.

The project competition on the eve of the auction has already begun. In order to increase the odds of winning the auction, the project parties have widely adopted the form of crowd lending to raise the Polkadot native token DOT from the market . At present, trading platforms such as OKEx and Binance have jointly opened an early bird voting channel with the project party. After users vote for the project, they can get token rewards and other additional rewards.

It should be noted that the DOT pledged by users will have a longer lock-up period. If the final bid of the voting project fails, the user can get back the DOT after the bidding ends; if the project is successfully bid, the DOT pledged in the project will be locked for 96 weeks (672 days), and will not be refunded until the end of the card slot rental period.

Recently, stimulated by market demand, DOT rose from US$33 to US$53 within a month, an increase of more than 60%. After the slot auction is over, DOT may fluctuate greatly due to the decline in demand, so investors should be alert to the downside risk of DOT price before participating in voting; in addition, since many third-party platforms have opened voting channels, investors should also pay attention to these The reliability of the centralized platform to prevent falling into the trap of fraud.

Polkadot’s first slot auction locks in “Double Eleven”

In the past few months, the crypto market has witnessed the rise of emerging public chains such as Solana, Avalanche, and Fantom, while Polkadot, which focuses on the cross-chain concept, has been in its own development rhythm in an orderly manner. When the market hotspot has rotated several times, this cross-chain star attracted the spotlight again.

Recently, Polkadot founder Gavin Wood announced that Polkadot has been able to support the first parachain. Subsequently, the Polkadot Council voted and approved the proposal for the Parachain Slot Auction. It is expected that at 9pm Beijing time on November 11, this cross-chain network will start the first phase of Parachain Slot Auction.

The insertion of the parachain into the “slot” of the relay chain is a sign of Polkadot’s official expansion of the application ecology on the chain.

According to the white paper, the Polkadot architecture is mainly composed of parachains, relay chains, and transit bridges. The relay chain is the center of the Polkadot network and is responsible for the verification of information interaction, protecting and coordinating parachains, and maintaining the security of the entire network; chain through the slot access relay chain run, it may be similar to an Ethernet Square intelligence platform contract, it can be a DeFi application or protocol focused on different segments of the business; and switching network bridge is to help Boca Establish communication bridges with other independent blockchain networks.

Polkadot slot auction is about to bid to attract crowd loans

Polkadot network architecture diagram

Prior to this, Polkadot testnet Kusama has completed more than ten slots auctions, which is a sufficient demonstration of Polkadot’s slot auctions. Before Polkadot officially opens the slot auction, participants need to have a more comprehensive understanding of it.

The reason for setting up the slot auction mechanism is that the parachain that the relay chain can carry at this stage is limited. According to Polkadot’s official data, Polkadot can only support up to 100 parachains for cross-chain communication. According to the auction rules, each slot is only rented but not sold, and only one will be released at a time. The auction can bid for four lease periods, and each lease period is 6 months in length. The project party may bid for a single lease or multiple adjacent lease periods. After the lease period ends, Polkadot will return the original token DOT pledged by the project.

The Polkadot slot auction uses the “candle auction + random parameters” mechanism. The candle auction originated from the ship auction in the 16th century. During the auction, the auctioneer would light a one-inch candle. When the candle is extinguished, the auction will abruptly terminate, and the highest bidder at this time wins. When candle auctions are conducted on the Internet, a random number is usually required to determine the termination time. After the Polkadot slot auction is opened, there will be two stages: a security period and a random period. After entering the second stage, the auction will drop hammers at any time according to the random number on the chain. In order to successfully win the slot, the projects need to pledge as many chips as possible before entering the second stage.

Under the attention of everyone, who can win the first slot seat of the Polkadot relay chain has become the biggest attraction. Previously, Acala (Karura), Moonbeam (Moonriver), Aatar (Shiden), Phala (Khala), Bifrost and many other well-known projects have obtained the right to use the slot of the Kusama network through bidding. These projects are also regarded as Polkadot sockets. A strong competitor of the slot.

Of course, this does not mean that there will be no dark horses. Some project parties with potential but lack of financial strength are raising DOT through crowd loans to get a chance to win in the auction. Therefore, who can attract more DOT votes before the auction will determine the ownership of the first slot.

Slot competitors crowd loan DOT users need to pay attention to the risk of lock-up

The so-called crowd loans can be regarded as a way for the projects participating in the auction to borrow DOT from the market. In order to attract more users to vote for DOT, the project party usually provides project token rewards to voters, and some also provide some additional rewards. For market participants, choosing the project party is also a betting process. Once the winner of the bid is bet, the token rewards will be even more impressive.

Before the official auction begins, many third-party platforms have already started the early bird voting stage with project parties, and crypto asset trading platforms including Binance and OKEx are the main positions.

On November 3, OKEx launched the “DOT Slot Auction” functional section, which supports users on the site to pledge DOT for early bird voting for Acala, Astar, Moonbeam and other projects. The page shows that each project has its own parachain number. At the same time, the project provides a token prize pool for voters. Participating in the vote can “mine” token rewards in proportion. At the same time, OKEx also provided DOT worth 100,000 USDT as an additional reward.

In order to catch up with this wave, Binance launched a similar service on November 4th. It opened voting support channels for nine projects including Moonbeam, Clover, Astar, and Acala, except for the token provided by the project party. In addition to the rewards, Binance will distribute an additional $30 million worth of rewards to participating users.

Polkadot slot auction is about to bid to attract crowd loans

 There is a platform to open slot auction voting in advance

Participating in early bird voting on a third-party platform is equivalent to an “advance agreement” between the voter and the project party, that is, after the auction is opened, the project party has the right to control the DOT pledged by the voter. Since these activities take place on a centralized platform rather than on a chain, in extreme cases, voters risk losing assets and failing to obtain voting rewards. In a more secure but relatively complicated way, participants can go to official channels to vote on-chain using their wallets after the auction is opened.

It should be noted that no matter which way participants vote, the pledged DOT has a longer lock-up period, which may bring asset impairment risks.

According to the auction process, this slot auction will start from November 11th to December 16th, during which there will be 5 rounds of auctions. Participants need to wait for the auction results to be released after voting. If the voting project successfully obtains a slot, the DOT pledged to the project will be locked for 96 weeks (672 days), and it will not be returned until the end of the card slot rental period; if you vote If the project fails to bid, the DOT pledged by the participants will be unlocked after the bidding ends.

The lock-up period, which can be as short as one month or as long as nearly two years, is a factor that investors must consider before voting. Especially in the recent past, stimulated by demand from slot auctions, DOT rose from US$33 to US$53 within a month, an increase of more than 60%. After the first slot auction ends, DOT may fluctuate greatly due to the decline in market demand, so investors need to be wary of asset losses caused by the fall in DOT prices during the lock-up period.

Since participants may lock up DOT for a long time, platforms such as Binance intend to provide users with liquidity solutions by issuing BDOT assets that anchor DOT 1:1. After obtaining BDOT, users can freely trade in the secondary market. And can be exchanged for DOT with BDOT after the slot lease expires.

It should be noted that the current BDOT has not yet been issued and launched, and there are few liquidity solutions on the market. Investors should pay attention to assessing the reliability of the centralized platform when choosing a relevant platform. Another professional pointed out that Polkadot Network is in the early stage of development, and its development prospects are not clear. Users need to be extra cautious when participating in it. If you want to participate in lock-up voting, you should also configure a corresponding risk hedging plan.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/polkadot-slot-auction-is-about-to-bid-to-attract-crowd-loans/
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