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OKEx Insights: The Polkadot parachain has launched v1, and the bidding war is about to start

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Polkadot's parachain slot auction has two interesting designs: candle auction and initial parachain crowdfunding (hereinafter referred to as IPO).

Original title: "OKEx Insights: Polkadot Parachain has launched v1, and the auction war is about to start"

Original source: OKEx

Bitcoin has recently ushered in a rare bull market in the past two years, triggering a new round of investment in encrypted assets. At the same time, blockchain technology, the infrastructure of the encryption industry, is also developing at a high speed: On November 6, Parity (top blockchain technology team) engineer Bastian tweeted the latest progress of the Polkadot parachain: Version V1 has been launched, updating the consensus code.

According to Polkadot founder Gavin Wood's speech at the Polkadot China Tour event in October, the parachain slot auction is expected to start at the end of the year.

The work of the former CTO of Ethereum

In addition to the revolutionary cross-chain technology, the strong background of the founders undoubtedly made Polkadot more famous, especially Gavin Wood, the co-founder and CTO of Ethereum. Although it was V God who first proposed the idea of Ethereum, Gavin was the one who actually realized and built the foundation of Ethereum. He almost wrote the earliest C++ version of the Ethereum client cpp-ethereum, which is called Ethereum. Fang's "Invisible Brain".

Polca founder, with Gavin Wood in the middle

According to the official website, Polkadot is a network protocol that supports cross-chain transmission of arbitrary data, not just tokens. Polkadot is a real multi- Chain application environment, in which transactions such as cross-chain registry and cross-chain calculation can be performed, making it possible to build apps that obtain permission data from private chains and use them on public chains.

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The Polkadot parachain is a dedicated chain connected to the Polkadot main network. On the basis of the security protection of the main network, the parachain has customized The two characteristics of personalization and autonomy: each parachain can have characteristics different from the main network according to its own use, and can also control its own governance capabilities.

In addition to sharing security with the main network, the parallel chain also has two major innovations: scalability and parallel transactions: the interaction on the parallel chain can be processed in parallel to achieve a highly scalable system; transactions can be dispersed throughout the chain, allowing more transactions to be processed in the same time period.

It can be said that the Polkadot parachain is the "king of public chains" Ethereum's existing lack of expansion It is a step faster than Ethereum 2.0, which is still in the crowdfunding stage, and will naturally be favored by project parties and investors.

Ingenious bidding rules

Poca Parachains are good, but a "chain" is hard to find. Gavin Wood said in July this year that the upper limit of the number of parachains will be about 100, and the development team also needs to conduct phased tests on the operation of the relay link into the parachain, and there will be a large number of parallel chains in a short time. link in.

Parity Technologies Asia Technical Director Jia Yaoqi pointed out that although in addition to directly using parachains, some lightweight projects can actually choose to use parallel threads ( parathread), or directly deploy to some parachains that support smart contracts, but they all need to wait for the parachains to actually land before they will be gradually realized.

These methods are obviously not suitable for large-scale projects that have already taken shape. When the supply exceeds demand, the project party needs to rent slots through bidding and then connect to the parachain. Slots are like electrical sockets, and parallel chains are similar to electrical appliances. With limited cable carrying capacity, only a few necessary household appliances can be "powered on".

Polca's parachain slot auction has two interesting designs: candle auction and initial parachain crowdfunding (hereinafter referred to as IPO).

The project party will compete for the parachain card slot in the form of a candle auction. The candle auction method (CandleAuction) means that the auction will Immediately stop around the point, the highest bidder wins the bid. To win the slot, the project party needs to pledge as much Polkadot token DOT as possible.

According to the research literature of the Web3 Foundation, the candle auction design of the parachain is the valuation Higher bidders have a higher chance of winning the bid, which is related to their valuation relative to the market. A retroactive close means that bidders need to submit their bids carefully once the auction has started. To put it simply, if bidders try or use routines, the risk of not being able to bid will increase accordingly.

If it’s just like this, it’s not the most capital Can the project party with the strongest and highest bid be photographed? Don't worry, the project party can also crowdfund. The IPO allows the project to borrow from the outside, that is, use the brains of the team to design their own incentives to attract investors to lock more DOT to themselves. With an IPO, not only investors can participate in slot auctions, but also project parties participating in the auction can show their talents by distributing tokens and other methods.

Beware of malicious competition

At present, there are DeFi project Acala, privacy infrastructure Phala, IoT blockchain project MXC, decentralized wallet HashKey Me, and cross-chain network ChainX, Darwinia, Bifrost and other projects announced that they will participate in the first A round of auction for Polkadot parachain slots. In fact, in addition to practical applications, participating in the auction is also a proof of the strength of the project itself.

In addition, participating in the auction through pledge can also enrich the application scenarios of DOT, enhance value support, and reduce circulation . According to the OKEx market, as of press time, DOT 24H has increased by 4.76%.

However, the form of bidding will inevitably bring some problems. The founder of Acala once pointed out that bidding may lead to Problems such as bad money driving out good money and institutional middlemen earning the price difference have emerged.

In auctions, well-funded junk projects may beat good Depoca Parallel Chain Slot” is a gimmick, issuing coins to pull the market to cut leeks; some institutions may also focus on the fat of the Parachain Slot, personally end the auction to stock up on goods, and then resell them to project parties that are in urgent need of slots Arbitrage, which instead increases the development costs of some projects that really need it.

As Zhu Weiyu, partner of investment firm NGC Ventures said: "If some well-known public chains Going to the auction in person, some high-quality projects with relatively insufficient financial strength may not be able to get slots, this problem needs to be considered by the Web3 Foundation and the ecology how to solve it.”

Summary

If the first round of auction is held as scheduled, the first batch of projects can also be successfully connected to the parachain, Polkadot, led by the co-founder of Ethereum, is one step closer to the title of "Ethereum Killer", which means "the person who needs to tie the bell to untie the bell".

As investors, if we want to use our DOTs to support project bidding, we While comparing incentives, don't forget to judge the value of the project itself. In case we unintentionally become the booster of bad money driving out good money, we will bear the loss in the end.