Polkadot’s ongoing parachain rollout represents the final launch phase for its multi-chain sharded architecture, following rigorous testing, optimization, and auditing, initially carried out on testnets like Rococo and canary network Kusama.
The first indication that Polkadot parachains were afoot came in September when Gavin Wood hinted that they were “technologically ready for launch.” Sure enough, this was followed in October with a motion for the Polkadot Council to open up the network’s first parachain slot auctions, later approved by on-chain governance, creating buy pressure for DOT in the run-up to the launches.
The auctions are split into batches, with the first batch of five running weekly from November 11. The winning projects will then be onboarded on December 17 for the lease period to 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 assigned by an on-chain candle auction mechanism with successful projects locking up a bond in DOT for the duration of the lease.
Parachain teams can fund their auction bids with the help of a community crowdloan campaign, enabling them to accept contributions from DOT holders and demonstrating demand for the project’s idea. Crowdloan participants get their DOT returned at the end of the lease, and parachain teams can choose to reward them with their project’s native token.
Auctions and crowdloans differ dramatically from an initial coin (ICO), exchange (IEO), or DEX (IDO) offerings since holders are not compelled to transfer control of their DOT in exchange for the project’s tokens. In fact, DOT is actually returned if projects lose an auction bid; slot-holders, meanwhile, reimburse supporters when their lease expires.
And there’s another key difference: project teams cannot use DOT at their discretion or sell it on the market. Instead, they benefit from access to scarce network…
