As part of its multi-chain sharded design, Polkadot’s continuing parachain deployment constitutes the last stage of the project’s launch after extensive testing, optimization, and auditing on testnets like Rococo and the canary network Kusama.
In September, Gavin Wood suggested that Polkadot parachains were “technologically ready for launch,” which was the first sign of their existence. Following this in October, the Polkadot Council voted in favor of opening the network’s first parachain slot auctions, which was then authorized by the network’s on-chain governance, increasing purchase pressure for DOT in advance of the launch.
The auctions will be conducted in five-week swaths, the first of which will begin on November 11 and continue through December 10. December 17th is the day when the winning projects will be officially onboarded and the lease will last until October 20, 2023.
How a Chain Reaction Works
With a subscription option to renew, Parachains are bespoke blockchains that are tethered to Polkadot’s Relay Chain for as long as 96 weeks. Successful projects get a bond in DOT for the term of the lease by bidding in an on-chain candle auction.
By using a community crowd loan campaign, Parachain teams may raise funds for their auction bids and demonstrate demand for their project’s concept. Participants in Crowdloan receive their DOT back at the conclusion of the lease, and para chain teams have the option of rewarding them with their project’s tokens.
In contrast to an ICO, exchange, or DEX (IDO), holders are not required to cede ownership of their DOT via return for the project’s tokens in auctions and crowd loans. When projects are unsuccessful at an auction, DOT is refunded to backers, who are then reimbursed by slot holders when their leases expire.
For one thing, project teams cannot use or sell DOT at their own discretion or on the open market. Instead, they get access to limited network slots, fee-generating possibilities, and the creation of para chain tokens on the platform.
After raising a bond of 32.5 million DOT (worth about $1.27 billion at the time), Acala was able to obtain the first Polkadot para chain spot from a community of over 81,000 people.
In the first para chain auction, the Polkadot community demonstrated its power and might by pledging DOT to the projects of its members. Moonbeam, the runner-up to Acala, has garnered 35.8 million DOT for the runner-up spot, making it the best of the rest.
There are a lot more participants in this offering than in others because of the more speculative nature of previous token sales. Due to the tight 96-week lease duration, this should lead to more responsibility on the part of projects.
Over 205,000 contributors have contributed thus far, with many more doing so through exchanges like Kraken and Binance, thanks to this more equitable distribution of rewards across participants and projects.
First batch auctions are expected to lock up anywhere between $4 and $4.5 billion worth of DOT, which will reduce possible selling pressure and circulate supplies on the market.
Polkadot and DOT’s long-term success is shown by the fact that hundreds of thousands of supporters have become active participants in the ecosystem.