Everyone has been concerned about Polkadot and Kusama's parachain slot auctions. This time, we found some frequently asked questions about slot auctions from the community, and focused on answering them. If you also have these questions, just take a look~
What is Polkadot Parachain Slot Auction? What is the auction process like?
PolkaWorld: Polkadot is composed of a relay chain + a bunch of parallel chains. Parallel chains can enjoy Polkadot's shared security and can interact with other parallel chains, so they are very valuable.
However, the positions of parachains on Polkadot are limited, and these positions are called "slots". Projects that want to become paralinks into Polkadot need to compete for these seats. How to compete? It is through the auction of slots that each project can lock DOT to participate in the auction.
Does that mean whoever locks the most DOTs will be able to take pictures? not necessarily. Because the slot auction has a set of special game rules, the project party that can understand and use the rules reasonably will have an advantage. Therefore, many project parties will formulate a series of bidding plans before bidding to improve the chance of successful bidding.
The Kusama slots auction works the same way.
If you want to know more about Polkadot/Kusama slot auction mechanism, you can read this article"How to allocate Polkadot parachain card slots, how to bid, and what is the cost?" "。
When will Polkadot and Kusama parachain slot auctions start?
PolkaWorld: The official slot auction time has not yet been announced.
The following is some information related to the slot auction that has been officially announced:
Parachain functionality is currently being tested on the testnet Rococo
The parachain function can be launched after the development and testing are completed
Slot auctions will start shortly after the parachain feature goes live
Parachain slot auctions on Kusama will take place before Polkadot
PolkaWorld guesses that if all goes well, the Kusama slot auction will be held around March this year, and the Polka slot auction will be around April. Once again, this is just our guess based on some existing information and experience, and does not represent official opinions. Don't take it too seriously, and don't hit us if you don't go online by then.
How can ordinary users participate in the parachain slot auction?
As mentioned earlier, slot auctions need to lock DOTs. These DOTs can be borrowed from many ordinary users in addition to the project party itself. Generally speaking, the project party will reward its own tokens to encourage these users.
So, if you are optimistic about a certain project, you can lock your DOT to help them bid to get the tokens of the project.
It should be noted that these DOTs are locked on the Polkadot relay chain, rather than directly given to the project party, and will be returned to you later. If the auction is successful, these DOTs will be returned after a lock-up period (maybe half a year to two years), and if the auction fails, they will be returned shortly after the auction ends.
"The latest deception big exposure! Some Polkadot fans have already been fooled...》"The latest deception big exposure! Some Polkadot fans have already been fooled...》。
If there are only a few slots (about 10?) to bid for next year, and then there are more than 50 projects (Gavin always mentioned in the year-end summary) to bid for slots, is it foreseeable that there will be many projects because there are no bids for slots? Slot becomes meaningless?
PolkaWorld: We don't think these projects will become meaningless.
First of all, the principle of slot auction is to guarantee the maximum number of DOT locked in the slot within 2 years. This means that it doesn't have to be a single item that ends up bidding for the slot, it could be a combination of 1 to 4 items. For example, Acala bids for the first year, ChainX bids for the first 6 months of the second year, and Plasm bids for the last 6 months of the second year. Acala, ChainX and Plasm are the three projects that have the right to use this slot for 2 years.
Second, even if there is no slot bid, Polkadot also provides other solutions. You can choose parathread access, or use the smart contract chain that bids for the slot, or the system parachain officially provided by Polkadot itself.
Third, even if these dapps or projects become meaningless at some point, the design of the Polkadot parachain slot itself will ensure that those meaningless, abandoned or obsolete parachains are deactivated so that they do not Continue to occupy resources using Polkadot, so that new more "efficient" parachains can replace them.
So we don't think these projects will become meaningless.
Someone pointed out that parachain auctions are a better way to crowdfund than ICO token offerings, but it doesn't seem to have anything to do with equity crowdfunding?
PolkaWorld: Parachain auctions are called Parachain Lease Offerings, or PLO for short. Gavin also calls it a crowdload method. In short, you lend your DOTs to projects that want to bid on parachains, and you receive their native tokens.
Unlike 1co, when you do PLO, you don't give up your ownership of DOT, you just lend it to others and lock it in the Polkadot relay chain, which is very safe. So if this parachain goes bankrupt, you can get your DOT back, which is different from most ICOs in the past, where the developer can take all the funds without delivering anything.
Why do developers/projects spend money to bid for slots in parachains to maintain the security of their chains? Now many projects can also design their own incentive mechanism to find nodes to maintain network security.
PolkaWorld: If you bid for Polkadot's parachain, you can share Polkadot's security. Why share the security of Polkadot?
One is professionalism. Not every team can develop the consensus of the chain. Professional things are left to Polkadot. Each team only needs to focus on its own business logic design;
Second, the development of highly specialized programs with general-purpose smart contracts is very complex and vulnerable to attacks, and the chain method will be safer and more flexible;
Third, connecting to Polkadot can also achieve interoperability.
Why would anyone lend out their DOTs in a parachain slot auction for a negligible gain over two years?
PolkaWorld: First of all, it doesn’t have to be 2 years, it can be at least 6 months, or the time set by the parachain project itself, it also depends on how long you want to borrow.
Second, please note that if you don’t go to PLO, you can get an annualized staking income of about 14%. Participating in PLO means that you have to pay the opportunity cost of using DOT for staking. It is true that each parachain project cannot guarantee the benefits of the participants, but each project that bids for the parachain will design the token scenario and launch its own bidding plan. Participants can conduct DOT loans after careful research.
Third, you can adjust and determine your income by yourself with the help of products that release liquidity.
Fourth, as mentioned earlier, PLO will be more secure than the ICO method of taking users' funds before delivering anything.
You can already issue smart contracts on Ethereum for free, why deploy smart contracts on Polkadot?
PolkaWorld: Smart contracts are not the holy grail of distributed blockchains. Currently we do have chains like Ethereum where developers can deploy smart contracts, each of which fulfills a specific need. But they don't have great performance, don't scale, and don't have real computing power. In fact, smart contracts can become bloated and difficult to upgrade later, and they are not free. Just look at how much it costs to deploy and upgrade a product like Maker (it currently requires tens of thousands of dollars of eth as gas).
If you want your application to be more specialized, better tuned, better performance and resources, then you will need to create your own blockchain. In Polkadot, we also have a smart contract environment, which is mainly used to expand functions, while the blockchain itself provides the real logic for fast lending, decentralized transactions, transfer funds, and governance voting functions . Currently people like Compound, Flow (creator of Cryptokitties) and many others are moving to Polkadot and creating their own chains.
So, did the above answers answer your questions? If you have other questions, you can ask them in the comment section below, and we will try our best to answer them.
