The ongoing deployment of the Polkadot parachain represents the final launch phase of its multi-chain partitioned architecture, after rigorous testing, optimization and audit, initially carried out on test networks like Rococo and the Kusama Canary Network.
The first indication that the Polkadot parachaines were in place came in September when Gavin Wood hinted that they were “technologically ready for launch.” Sure enough, this was followed in October by a motion asking the Polkadot Council to open the network’s first parachain slot machine auctions, later approved by on-chain governance, creating buying pressure for the DOT at the approach of launches.
The auctions are divided into lots, with the first lot of five taking place every week from November 11. The winning projects will then be integrated on December 17 for the rental period until October 20, 2023.
Anatomy of a parachain
Parachains are custom blockchains anchored to Polkadot’s relay chain for up to 96 weeks at a time, with an option to renew. Each slot is allocated through a chain candle auction mechanism, with successful projects locking in an obligation in DOT for the duration of the lease.
Parachain teams can fund their auction bids using a community crowdloan campaign, allowing them to accept contributions from DOT holders and demonstrating demand for the project idea. Crowdloan participants receive their DOT at the end of the lease, and parachain teams can choose to reward them with their project’s native token.
Auctions and equity loans differ significantly from initial coin (ICO), exchange (IEO), or DEX (IDO) offerings, as holders are not required to transfer control of their DOT in exchange for the tokens. of the project. In fact, the DOT is in fact returned if projects lose a bid; slot holders, for their part, reimburse supporters when their lease expires.
And there is another key difference: Project teams cannot use DOT at their discretion or sell it on the market. Instead, they get access to rare network locations, fee generation opportunities, and parachain token launches.
Implications for the coming year
Acala got Parachain Polkadot’s first slot, after raising a bond of 32.5 million DOT (worth about $ 1.27 billion at the time) from a community of over 81 000 users.
The success of the inaugural parachain auction clearly demonstrates the power and strength of the Polkadot community, who have come together to engage DOT in their chosen ventures. Moonbeam, who lost to Acala, is currently the best of the rest with 35.8 million DOT for the second location.
The number of blocked tokens highlights the number of participants invested in the success of projects, compared to the more speculative structure of other offers. This should lead to more accountability for projects, which have to deliver their requests quickly due to the strict 96 week rental period.
This healthier balance of incentives between participants and projects has seen over 205,000 contributors participate so far, with more contributions through exchanges like Kraken and Binance.
Assuming the trend continues, by the end of the first auction batch, between $ 4 billion and $ 4.5 billion worth of DOT is expected to be stuck for almost two years, reducing potential selling pressure and circulating the market. offer in the market.
Not only does this demonstrate confidence in Polkadot and DOT during this time, but it inspires hundreds of thousands of supporters to become active users of the ecosystem because it is in their best interest.
With the increase in contributors expected to continue, the Polkadot community and its thriving ecosystem will certainly be one to watch over the next 96 weeks.
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