Popular Science: What is Polkadot Parachain Slot Auction?

The long-awaited Polkadot Parachain Slot auction will be officially launched this week.

Polkadot blockchain architecture

The reason why Polkadot has become a cross-chain star project that has received much attention today is mainly related to its technical team led by its founder, Dr. Gavin Wood, and its grand Web3.0 vision.

2015, Gavin Wood left Ethernet Square created after the company Parity Technologies, and put forward the idea on “Web3.0” is.

In 2016, with the publication of the Polkadot white paper “Polkadot: A Scalable Heterogeneous Multi-chain Framework” and the emergence of the concept of parachain, it marked the launch and birth of the Polkadot project. In 2018, Gavin launched a scalable, modular, and universal blockchain technology framework Substrate for Polkadot.

Polkadot has three main parts in its architecture, namely, parachain, relay chain, and transit bridge. Relaychain is a blockchain based on substrate. As the center of the Polkadot network, it is responsible for the verification of information interaction, protection and coordination of parachains, and the security of the entire network; Parachains are connected through slots. The incoming relay chain runs and interacts with the relay chain, and is responsible for handling various “trivial matters”. At present, this parachain can be either a smart contract platform, a DeFi center, or any agreement that focuses on different businesses.

The transfer bridge is mainly used to help the Polkadot system link to the external blockchain system, allowing the Polkadot network to communicate with the independent blockchain network. These independent blockchain networks do not use the Polkadot relay chain for security verification, but instead use their own security mechanisms, such as Bitcoin and Ethereum networks. And there is another key component related to the auction-Parachain Slots, which is the interface between the relay chain and the parachain. If you want to share the security of the Polkadot network and conduct business interactions with other parachains, it must be implemented through slots.

Slots are divided into community beta slots (community beta slots) and commercial slots (commercial slots), 20% of the slots are reserved for the Web3 Foundation for deployment and support, as a community beta parachain to promote the entire Polkadot ecosystem The remaining 80% of the slots will be used as commercial slots and will be opened through auctions.

Based on these, Polkadot is a scalable heterogeneous multi-chain blockchain. One of the main functions of Polkadot is to provide operability for the blockchain, and the other is to provide security for the blockchain.

There are four main roles in the governance of Polkadot: Nominator, Validator, Collator, and Fisherman.

Users holding DOT can participate in governance in the role of nominator, by staking tokens and voting to support the verifier; while the verifier is responsible for encapsulating new blocks on the Polkadot network. To become a verifier, you need to pledge a certain amount of DOT tokens. It can also be elected by the nominator; the verifier mainly helps the verifier to produce effective parachain blocks, is responsible for fully synchronizing the database, and operating the full node (the verifier can be understood as a PoW mining pool, and the verifier is understood as a miner) ; Phishers are a bit similar to light nodes, and get rich rewards mainly by discovering misbehaving verifiers.

In general, Polkadot follows the principle of decentralization and mainly relies on on-chain voting.

In addition to the above important roles, Polkadot has also established a board of directors. The members of the board are elected and can vote first and have the right to directly veto proposals.

Slot auction mechanism and method

As can be seen from Polkadot’s architecture, blockchain projects can be connected to Polkadot for interaction through a parallel chain or a transit bridge. To become a parallel chain of Polkadot, it must be accessed through a slot. However, the number of parachains is only about 100, and only one is released at a time. Therefore, Polkadot designed an auction mechanism to allow project parties to obtain the right to use the slot through bidding.

Polkadot’s parachain auction adopts the mechanism of “candle auction + random parameters”. In the process of simulating “candle auction” on the blockchain, it also combines the idea of ​​“second-order sealed price auction”. So how does it work?

The “candle auction” originated in the 16th century when ships were sold, and it was named after the “one-inch candle” that decided the auction open period. When the candle flame goes out, the auction ends suddenly, and the bidders at this moment will win. When candle auctions are used online, a random number is usually required to determine the termination time.

But the parachain slot auction is slightly different from the ordinary candle auction because it does not use random numbers to determine the duration of its opening phase. Rather, there is a known open phase, “At the end of normal, it is determined retrospectively to end at some time in the past.”

Polkadot will use a random VRF-based beacon to retrospectively determine the “end time” of the auction. In other words, everyone knows the status of the auction during the candle auction, including the bidding of other parachains, but no one knows the end of the auction in advance. This can effectively prevent “auction sniper” and encourage the project party to participate in bidding as soon as possible.

The entire auction process is divided into two stages: a security period and a random period. DOT can be pledged freely in both stages. During the security period, the project parties are more likely to compete for bids. After entering the random period, the auction will follow the chain The random number is dropped at any time to end the auction. At that time, whoever pledges more DOT can rent this slot.

The maximum slot duration is 2 years, and each lease period is 6 months. Project parties participating in the bid must bid for a single or multiple adjacent lease periods, which means that they can extend their lease to a 2-year slot period by leasing a continuous slot. The winning bidder needs to lock (stake) its DOT within the corresponding period.

About Polkadot Crowdloan (Crowdloan)

When Parachain is bidding on slots, project parties can raise DOT from their respective communities through Crowdloan, and DOT holders can choose to contribute their DOT to any bidding project they like.

List of crowd-lending projects and incentive mechanisms

Acala

Acala is the world’s first decentralized open financial alliance and Polkadot Ecological Financial Center. It aims to create an open financial framework in conjunction with the Polkadot Ecosystem to bring financial stability, liquidity and accessibility to global crypto assets .

bonus system

Total auction reward: 17% of the total ACA (170 million ACA, 15% basic reward + 2% other rewards)

Astar Network

Astar Network was renamed from Plasm and developed and supported by Staked Technologies, allowing developers to easily and seamlessly add Plasma features to Substrate.

bonus system

Total auction reward: 20% of the total supply of ASTR (1.4 billion ASTR tokens)

Clover Finance

Clover Finance is a cross-chain smart contract platform that is committed to providing an easy-to-use blockchain infrastructure and creating a one-stop compatible EVM framework for Substrate-based applications to reduce the barriers and costs for developers.

bonus system

Total auction reward: 20% of the total supply of Clover (200 million CLV tokens)

Crust Network

The goal of Crust Network is to establish a decentralized cloud ecosystem, implement an incentive layer protocol for distributed storage, apply to a variety of storage layer protocols (such as IPFS), and provide support for the application layer. The Crust architecture also has the ability to support a decentralized computing layer and build a decentralized cloud ecosystem.

bonus system

Total auction reward: 5% of the total supply of Crust (1 million CRU tokens)

Darwinia Network

Darwin Network is a cross-chain bridging network developed based on Substrate, focusing on building a future asset interconnection network, including non-standard asset auction markets, stable currency cross-chain, asset exchange and other fields.

bonus system

Total auction reward: 10% of the total supply of RING (200 million RING), 8000 KTON

Equilibrium

Equilibrium is an all-in-one interoperable DeFi collection, the first cross-chain digital asset market that combines credit lending, synthetic asset generation and trading.

bonus system

Total auction reward: 10% of the total EQ supply (12 million EQ tokens)

Litentry

Litentry is a privacy-protected DID aggregator that plays a unique function in the Polkadot ecosystem, providing Liquidity, interoperability and consistency for multi-chain identity data.

bonus system

Total auction reward: 20% of Litentry’s total supply (20 million LIT tokens)

Moonbeam

Moonbeam Network builds a cross-chain connected DApp, provides a smart contract platform compatible with Ethereum, and can easily build local interoperable applications. It is supported by the Polkadot network and developed by PureStake.

bonus system

Total auction reward: 10% of the total supply of GLMR (100 million GLMR tokens)

Manta Network

Manta’s first product, MantaPay, is able to privateize the entire relay chain and parachain of Polkadot, such as the stablecoin on Acala, and the EVM digital assets on Moonbeam, to maximize Polkadot’s interoperability. Manta will eventually establish a privacy smart contract platform based on zkSNARK, which can build and deploy various decentralized applications, such as the privacy trading platform MantaSwap and the privacy NFT platform.

bonus system

Total auction reward: 15.6% of the total supply of MANTA (156 million MANTA tokens)

Parallel Finance

Parallel Finance is a decentralized loan agreement built on the Polkadot ecosystem. Its unique method will enable users to obtain double rewards by collateralizing and borrowing at the same time.

bonus system

Total auction reward: 15% of the total supply of PARA (1.5 billion PARA tokens)

SubDAO

SubDAO is a DAO platform that focuses on solving the diverse governance of the Substrate chain. Based on Substrate, it is committed to creating a platform that allows any organization to create and manage cross-chain DAO organizations. It is also the first project incubated by the PAKA Labs accelerator.

bonus system

Total auction reward: 10% of the total supply of GOV (300 million GOV tokens)

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