In 2016, when Dr. Gavin first proposed the concept of Polkadot, people still disagreed and thought it was just an interesting “experimental” project. Until 4 years later, Polkadot’s early investors had already After a complete round of bulls and bears, we finally waited for the launch of Polkadot’s mainnet in the midsummer of 2020, and then we really started the story of Polkadot…
The time is approaching midsummer again, and we finally ushered in the Polkadot test network Kusama’s slot auction. As Polkadot’s “pre-test network”, the success of Kusama’s slots is related to Polkadot and Polkadot’s ecology. Whether it can enter the real development period, therefore, the degree of attention is no less than the launch of the Polkadot mainnet last year.
As early as in the previous news, we have seen plans for Kusama slot auctions. At present, the Kusama network is expected to conduct 5 auctions, each with an interval of 7 days. If no major problems are found, further auctions will be carried out thereafter.
As a member of the Polkadot Ecological Research Institute, we (Polkadot Ecological Research Institute) are very happy to see the arrival of this day. At such a historic moment, combined with the needs and aspirations of the community, we have compiled a list of 10 Kusama slots auctions. Here is a question, so that everyone can more intuitively understand the full picture of the slot auction and how to participate in this feast, please enjoy the following:
1. What is a slot auction?
We know that Polkadot is essentially a scalable heterogeneous multi-chain blockchain consisting of a collaborative decentralized blockchain network, which can also be called a relay chain. The relay chain interacts with the parallel running shard chains (that is, parachains). These parachains can be regarded as clients of the relay chain. The purpose of the relay chain is to protect the smooth operation of the parachain.
Polkadot allows multiple dedicated blockchains to communicate with each other in a secure and trustless environment, thereby realizing the scalability of the blockchain. The parachain is connected to the relay chain, which requires a parachain slot. Only by obtaining a slot can it become a “Polkadot parachain” in the true sense, because the slot can provide the security of Polkadot sharing, cross-chain interoperability, on-chain governance, no-fork on-chain upgrades, scalability, Advantages such as low handling fees.
However, the parachain that a relay chain can carry is limited, and the parachain slot naturally becomes a scarce resource (based on theoretical calculations, the current goal and expectation is that there will be about 100 parachain slots available on Kusama ), so many projects want to connect to Polkadot. Naturally, there are too many porridges, but how can the slots be allocated fairly? The most suitable solution for this situation is to auction.
So Polkadot officially designed the parachain slot auction mechanism.
2. What are the benefits of slot auctions for Polkadot’s ecological development?
First of all, slot auctions can screen out those relatively high-quality projects through higher entry barriers. Because slot auctions require higher costs, not all projects can meet the requirements, so there is a high probability that they can be selected to a certain extent that are more in line with the ecology. Development projects, of course, not all Polkadot ecological projects need slots, only for projects that intend to become parachains.
Secondly, the slot auction can bring real vitality to the Polkadot ecology. When the slot auction is normalized, some well-known projects participate in the slot auction, which will bring their own popularity and their users into the Polkadot ecology, whether it is from The degree of attention is still from the perspective of funding, which will bring a wave of enthusiasm to Polkadot.
Finally, for the development of Polkadot, the slot auction is the beginning of Polkadot’s real “cross-chain era”, and it is also the “touchstone” for testing its best development in the past few years. Therefore, if Polkadot was in the past Staying at the moment of military training, then the official start of the slot auction can be regarded as the real opening of the historical moment, and it deserves our focus.
3. What is the approach adopted for slot auctions? How is it implemented?
Both the Kusama slot auction and the Polkadot slot auction use candle auctions. The candle auction law originated in parts of England from the 17th to the 18th century, and was widely used to sell goods and lease rights. At the beginning of the auction, light a candle. When the one-inch candle burns, the auction mallet falls, and the tender sale ends.
The candle auction is a form of public auction, where bidders submit higher and higher bids, and the bidder with the highest bid at the end of a randomly determined auction time is considered the winner.
The Polkadot and Kusama Parachain Slot Auction Rules are an improved version of the candle auction.
The specific rules are the “2+5” two-stage auction method. The first two days are ordinary auctions, that is, the higher the bid, the more dominant. But after these 2 days, it enters an indeterminate “Ending period”. The end period will last for 5 days, but the system will select a random block height during these 5 days as the real The end time of the auction.
In other words, even if you pay a higher price after the end of the block height, the person with the highest bid at the end will win, even if the person’s bid is actually lower than yours. For example, if the system ends randomly at the 10000th block height, A’s bid at the 9999th block height is the highest 100 DOT before, and B’s bid at the 10001st block height is the highest 200 DOT, then The successful bid is still A (the value in this example is for reference only).
Kusama Parachain Slot Auctions are conducted on the blockchain, which is also decentralized in nature. Once the auction starts, all participating data will be publicly available and traceable on the chain.
If anyone (individual or smart contract) wins the auction, they can deploy their parachain without any permission. Teams that have not won the slots can participate in the next round of slot auctions.
It must be noted that Gavin said that the auction plan is not completely determined, and it is not the final version.
4. What is Kusama Slot Auction Crowd Loan (PLO)?
Since anyone can participate in the slot auction, two things need to be paid special attention to if you want to win a Parachain slot: the number of tokens participating in the auction and the time slot for the auction.
However, not all project parties have enough KSM to participate in the auction, and in order to better implement the blockchain spirit of community building ecology, many project parties will give up their own KSM wallets to participate in the auction and use crowdloan (PLO). Funds, which is what we call slot auction crowd loans.
Community users lock KSM on Kusama to help them bid for projects they are optimistic about. The KSM that users lock for the project becomes the bargaining chip for the project party to participate in the auction, increasing the number of KSMs for the project party to participate in the auction.
The team that wants to obtain the Kusama Parachain slot initiates a PLO to conduct decentralized, undifferentiated crowd loans to the market, and use the raised KSM to participate in the auction. If the auction is successful, the KSM in the PLO will be locked during the parachain slot leasing period, and the PLO initiator will therefore reward the investors participating in the crowd loan with the Token of the ecological project. After the lease period ends, KSM will be returned to investors and can be circulated. Unlike crowdfunding, which invests money in a project, crowdfunding is locked in a smart contract and lent to the project party. It will not lose its principal, but will get the Token of the project party as interest on the funds.
(It is worth noting that the lease time of Kusama Parachain Slots is different from Polkadot. Kusama has a maximum of 1 year and Polkadot has a maximum of 2 years)
5. How can ordinary users participate in the Kusama Parachain Slot Auction?
By participating in the PLO of a promising project, users can have the opportunity to obtain the reward Token provided by the project party.
The specific operation is roughly as follows: the user locks the KSM on Kusama, lends the locked KSM to the project party who wants to bid for the parachain slot, and the project party will give the user some original tokens and other incentive strategies to encourage the user to lend the KSM to themselves.
Note that this is not to say that participating in the PLO will definitely get the Token reward of the project party, it depends on whether the project party successfully bid for the slot.
If the user participates in the KSM of PLO, if the project party succeeds in bidding for the parachain slot, then this part of the KSM will be locked in the smart contract. The lock-up period is the slot lease time selected by the project party, which also means that this part of the KSM There will be no loss, only liquidity will be lost during the lease.
However, if the PLO of a project that the user participates in, the project does not successfully bid for the Parachain slot, then the user’s KSM will be returned after the auction ends.
6. What projects are currently planning to participate in KSM’s slot auction (as of May)
We have checked the projects that plan to bid for the Kusam parachain. Some of the projects have announced their own parachain bidding plans. The details of some of the projects are as follows:
(1) Karura Network
Karura is Acala’s pioneer network, positioned as a decentralized financial hub and stable currency on Kusama. If Karura successfully bid for the slot, Karura plans to lock KSM to help Karura bid for the slot to give KAR token airdrop rewards.
(2) KILT Protocol
The KILT protocol provides a new credential management method that allows users to maintain complete control over their data, and is used to issue self-sovereign, verifiable, and revocable anonymous credentials.
(3) Shiden Network
Shiden Network is the canary network of Plasm Network. It aims to become a multi-virtual machine and multi-chain DApps hub on Kusama. It also supports Ethereum Virtual Machine (EVM) and WebAssembly, and will allow these two virtual machines to interact with each other.
Basilisk is a cross-chain liquidity protocol based on Substrate. Test protocol for HydraDX.
(5) Khala Network
Khala Network is the pioneer network of Phala Network. As a bridge connecting computing power and users, it is committed to building an open and transparent cloud computing network, providing privacy protection for regulated programs, and maintaining the security and decentralization properties of the blockchain.
Bifrost is the DeFi protocol at the bottom of the Polkadot ecosystem. With the help of the SALP protocol, it generates a more liquid derivative vsToken. Users get liquidity through Bifrost Casting vsKSM. Bifrost used the KSM that participated in the casting of vsKSM to participate in the parachain slot auction.
zCloak is committed to turning zero-knowledge proof into a parachain that provides services to the ecosystem. This makes the process of generating proofs based on business logic simpler and faster, and helps users complete proofs and verifications.
(8) Manta Network
Manta Network is based on the Substrate framework and uses zk-SNARK to provide an end-to-end completely anonymous protocol. It has high-speed throughput, high cross-chain interoperability, and is safe and easy to use.
(9) Moonriver Network
Moonriver Network is the pioneer network of Moonbeam, a smart contract platform compatible with Ethereum, making it easy to build native interoperable applications.
SherpaX is the pioneer network of ChainX, but it is also an independent test network. Committed to becoming a digital asset cross-chain hub, cross-chain asset transfer through a completely decentralized way, so that BTC, ETH, etc. can be circulated to other chain systems by themselves. SherpaX expects to use 5 million KSX tokens as incentives for the Kusama slot auction.
Sakura is Clover’s pioneer network, a DeFi service platform based on Substrate, and provides an easy-to-use and interoperable blockchain infrastructure.
Genshiro is the pioneer network of Equilibrium, providing one-stop service for DeFi users, providing a comprehensive lending platform and a professional-level cross-chain DEX. The main functions include integrated loans, decentralized stablecoins, synthetic asset generation, decentralized margin trading and perpetual trading.
(13) Darwinia Crab
Darwinia Crab is Darwinia’s pioneer network. It supports functional upgrades of DVM and Ethereum smart contracts, and provides DApp migration and entry into the Polkadot ecosystem. Mainly provide simulation and test environment for Darwinia’s upgrade and application deployment, and perform various basic experiments.
Subsocial is a decentralized social network open platform built using IPFS technology, dedicated to building a decentralized social network.
SubDAO is Polkadot’s DAO infrastructure, which allows any decentralized organization to quickly create and manage DAOs. SubDAO can not only link DAO and DApp, realize the cross-chain management of DAO, but also provide an entrance for Web2.0 to connect to the Web3.0 world.
Bit.Country allows users to start their own meta-universe with token economy and non-functional currency, and brings community interaction to a new dimension of Web3.0.
Robonomics is a secure, cost-effective and futuristic IoT platform that can connect robots under the control of Polkadot and Ethereum. Robonomics plans to reward corresponding financial XRT tokens for users who lock KSM to support bidding.
Is the KSM locked in the auction safe and how long can it be redeemed?
The KSM locked in the auction is safe. The KSM locked by the user is not transferred to the project party, but locked in the smart contract of the relay chain. Therefore, if a project party (or individual) asks you to transfer KSM directly, saying that it can help you participate in PLO or get some incentives, 99.99% are liars.
The KSM that participates in the auction lock will be locked on the Kusama relay chain, and the ownership will still belong to the individual. If the auction is successful, these KSMs will be redeemed after the expiration of the slot lease period (usually half a year as the minimum time unit, with two lease terms from six months to one year), if the auction fails. It will be returned shortly after the auction ends.
What additional benefits can I get from participating in the slot auction?
In addition to the Token rewards for PLO crowd loans that regularly participate in slot auctions, some project parties have also set up many incentive mechanisms to allow more people to participate.
The more representative ones are Zenlink and Bifrost (here is just an introduction, not a project recommendation).
Zenlink shared at a Polkadot event this month that they will launch a product to provide support for more parachain project bidding slots. All those who pledge KSM/DOT to support parachain project bidding slots through this product pledge Users will receive some token airdrops from ZLK and other supporters as additional incentives to encourage more users to participate in parachain project crowd lending and increase the success rate of parachain project bidding slots.
As a protocol layer project, Zenlink does not need to obtain slots, but its product can use slot auctions to provide project parties with more traffic and bring additional benefits to users participating in PLO. PLO is mining, you can pay more attention to it.
Bifrost is considering KSM, which is locked in slot auctions, to release its liquidity by casting derivatives. In this Bifrost Kusama slot auction, the casting of vsKSM will be launched for the first time, and the KSM that participates in the casting of vsKSM will be used for the Bifrost Kusama parachain slot auction, and users will receive vsKSM that releases liquidity and generous BNC slot auction rewards .
This process can be understood as mortgage the real estate to the bank, and the bank lends funds in the form of mortgage loans, which releases the liquidity of the real estate.
What is the first Kusama parachain and what does it do?
The first Kusama parachain has been determined, which is a public interest parachain called Statemine.
But it is not in place in one step. Instead, Polkadot officials will deploy a parachain called Shell on Kusama. The bill was approved by governance a few days ago. Shell Parachain, as the name implies, Shell means shell in English. Here it also means that it is an “empty” parachain. It generates blocks, but it has no other functions besides being upgradeable.
After that, this Shell parachain will receive a message that the governance of the relay chain authorizes its upgrade, and it will be upgraded to a Statemine parachain. Statemine is actually an instance of Statemint, a universal asset chain specifically used to issue assets, mentioned by Polkadot on the Kusama network. The relationship between Kusama and Polkadot is the relationship between Statemine and Statemint.
Statemine and Statemint can issue arbitrary assets, including homogenized tokens, which is what we generally understand, and non-homogeneous tokens, or NFTs. It is also a low-cost chain for storing and transferring local encrypted currency (KSM/DOT) in the relay chain.
Therefore, the first Statemine parachain has two main functions. The first function is to issue assets on Kusama. In the past, assets can only be issued through the issuance of ERC20 tokens on Ethereum, but now digital assets can also be issued on Kusama instead of on Ethereum. . In addition, other types of assets can be issued on this chain, including NFT, CBDC, etc.
The second major role is to store and transfer the local encrypted currency of the relay chain, which is equivalent to the KSM that was stored and transferred on the Kusama relay chain in the past. This part of the work will be handed over to Statemine for processing in the future, which relieves Kusama. The transfer burden of the relay chain can improve the operation efficiency of the relay chain and free up more performance for cross-chain transfers.
In the future, such functions will also be implemented on the public interest parachain Statemint on Polkadot.
According to the plan, after the KSM slot auction, how soon will Polkadot’s slot auction start?
According to Dr. Gavin’s sharing at the Polkadot Decoded conference, he said that they will observe how Kusama performs. If the first 5 parachains look good, after a week or two, they will suggest to open another 5 Kusama parallels. The chain slot (of course this is not decided by them, but by the council, they are just suggestions), basically it is to expand steadily (the network) when they feel that the network can be managed well.
Once Kusama looks stable after linking several parachains or even some parachains, then we will start the same process on Polkadot.
Extra small Tips
1. When will the first Kusama Parachain go online?
Shell, the predecessor of Statemine, the first Kusama parachain, will probably go online next Monday. When Shell runs stably for 24 hours, Shell will be upgraded to Statemine.
2. When will the Kusama slot auction start?
According to the process, it should be started after Statemine goes online. Gavin said that if Statemine works well, they will start auctions. (There is not a very clear point in time)
3. Gavin’s Warm Risk Reminder
Gavin said that this is the first time they have come to do such a thing. Before (in the blockchain field) there has been no relay chain or parachain, so Kusama is to a large extent the canary in the coal mine (in the coal mine). The canary is generally used to detect the air safety in the mine. The canary has an early warning function. Here it means that Kusama is the pioneer in trying this unknown function, so there may be various possible problems. In this way, Polkadot officially designed a slogan for Kusama, called Anticipation Chaos).
It is equivalent to an experiment on a testnet. They don’t know how Kusama will perform after having real incentives, real money transfers, real codes, and real mistakes made by real teams.
4. Why is the entire Polkadot/Kusama process so complicated?
Gavin said that this is because Polkadot itself is more complicated than all previous blockchains. Polkadot took 20-50 (depending on how to calculate) expert-level developers for three years to get to today. Until the release of this agreement has a version of the parachain with all functions. In comparison, it took him and Jeff one or two weeks to build Ethereum with all the functions.
(Of course, there are still many detailed questions about slot auctions. If the above questions do not answer your doubts, you can consider joining the Polkadot Ecological Research Institute community to ask questions. If it is a common question, we will collect it and publish the second one. .)
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.