The first-ever parachain slot auction on @kusamanetwork has begun!
Quick rundown of what happened the past week, what's happening now, and what's coming in the next 7 days.
Comment with questions and feel free to share if you learn something ⤵️
In the past week, many teams have opened their 'crowdloan' to garner $KSM contributions from their communities in support of their bid in the parachain slot auction. @KaruraNetwork, for example, currently has 362,791 $KSM in the crowdloan.
We have now entered the 'opening period' of the auction which you could think of as just a 2-day warm-up period. The winning bid cannot be chosen during this period. You'll see a blank screen on Polkadot.js dashboard because crowdloans auto-bid on day 3 - the 'ending period'.
On Thurday around 12pm UTC, the real games will begin. This is the start of the day 3-7 'ending period'. Each team's full crowdloan will automatically bid once this ending period begins, like pushing a stack of poker chips all-in.
During the auction, crowdloans remain open. Anyone can continue to contribute to a parachain team's crowdloan to increase their bid. Any new contributions to the crowdloan will be reflected in the team's cumulative bid at the end of each block (green arrow showing bid increase).
At the end of the 7 days, a random block in time will be chosen from the ending period. The highest bid at this time will win the 1st parachain slot on @kusamanetwork. In this example, @KaruraNetwork would win with a 400k $KSM bid.
So, teams will want to get in their highest possible bid during the ending period to give them the best chance of having the highest bid during each block of time during the ending period.
Here is a breakdown of this process showing what would happen if the randomized block was selected during ~day 5. In this example, Karura's bid would have increased to 400k $KSM and would be the highest bid at that point in time.
In this example, although the winning bid was 400k, this example shows that 550k KSM total would be locked for the 48-weeks of this parachain slot since that was the crowdloan's end amount. Users would get $KAR rewards even for bids after the winning block time.
Remember that all $KSM contributed to the crowdloan is never touched by the team. It is all locked - kind of like a stake of KSM to maintain the lease on that slot.
Here is a look at the full process from crowdloan to auction to launch. All contributed $KSM is returned to the community at the end of the 48-week parachain slot.
If a team doesn't win the first auction, their crowdloan will remain open so they can bid in subsequent auctions with the same crowdloaned $KSM. On Polkadot.js, the "Days" on the dashboard show the days left to use the crowdloan as a bid.
Since we're just in the beginning of Kusama's life, auctions will be paused after the first 5 auctions. In the future, these will continue running on a periodic basis until we scale to 100+ parachains.
Here is a thread on the upcoming DeFi Hub of Kusama, @KaruraNetwork, which is currently leading in the auction process.
"The Launch of Parachains" has been published by Gavin Wood (@gavofyork) explaining timeline and next steps as we approach the first parachain auction on Kusama. Some new info!
If you don't have time to read or aren't technical, I simplified the key points in 14 tweets below ↘️
With the launch of parachain functionality, Kusama and Polkadot's multi-chain functionality is about to become a reality.
The latest upgrade on Kusama includes the ability to deploy parachains (layer 1 blockchains like Ethereum) to the network. It also includes logic for running parachain slot auctions and crowdloans which can be used to crowdfund a team's auction bid.
It's important to understand what Polkadot and Kusama are enabling with this new approach to a multi-chain network. Polkadot is a 3-layered platform, unlike legacy networks like Ethereum who are just one isolated chain with apps. Here is a simple diagram to explain:
Last year I lost a mentor who was a world-class entrepreneur, a brilliant financial mind, and a family man, who was close to his life goal of buying the Cleveland Browns. Here are some things he taught me about business and life.
My favorite: “Have ridiculous expectations.”
↘
On Business and Investing:
"You have to think unreasonably. You have to have unreasonable goals, otherwise you will react emotionally. In a simple framework you might double or triple your money and tell your friends about it while you sell out making $50k... (cont.)
..."Yet, the nearly insane person who has an audacious goal of holding $50-100M will ride through the noise until he gets closer to his/her goal and be unfazed by near-term moves.
Think long term, position yourself asymmetrically and have ridiculous expectations."
Polkadot is complicated as hell! This 24-tweet thread is a beginner's guide to @Polkadot $DOT and @KusamaNetwork $KSM in simple English.
What is Polkadot? Kusama? Parachains? Crowdloan and Parachain slot auction?
Comment with other questions and share if you learn something ⤵️
What is Polkadot?
@Polkadot is a platform on which blockchain networks are built and connected into one unified network. These connected chains, called parachains, form a living organism of networks all in sync and secure. This forms the foundation on which Web3 will be built.
Dr. Gavin Wood, @gavofyork, founded @Polkadot after inventing the Ethereum Virtual Machine and the Solidity programming language for #Ethereum as the co-founder and CTO. Ethereum wasn't going to scale, and thus, Polkadot was born in 2017. polkadot.network/gavin-wood/