Can Polkadot surpass Ethereum? Parachain slot auction attracts much attention

Recently, the Polkadot (DOT) ecosystem has received good news about parachains. The Polkadot official first announced that it will announce the latest progress of the parachain at the Decoded conference on December 3rd at the end of the year . Then, Parity’s engineer revealed the new progress of Rococo in the official Element chat room and said that the parachain Cumulus master code has been upgraded to version v1 and has initially met the conditions for online public testing.

Now, I will explain to you in detail what Polkadot is and what its ecological development is like.

Polkadot is a cross-chain project. The token is called DOT. The original initial issuance was 10 million DOT (old), and it will be issued annually thereafter, with no upper limit on the total amount. Since Polkadot completed a 1:100 split on August 22, 2020, in order to distinguish, the DOT before the split will be called DOT (old), and the DOT after the split will be called DOT (new).

Its concept is that everyone's identity and data is controlled by themselves, without being influenced by any central agency, to achieve a completely decentralized Internet where users have full control. It aims to connect private chains, consortium chains, public chains, open networks and oracles, as well as future technologies that have not yet been created. Polkadot facilitates the Internet, and independent blockchains can exchange information and transactions in a trustless manner through Polkadot's relay chain.

From the design and development in 2016 to the mainnet launch in 2020, it took a full four years. Polkadot has greater ambitions in scalability and richness than Ethereum . Ethereum maximizes the performance of one chain, while Polkadot allows 100 chains to run simultaneously. Limited by the standardization of smart contracts, only simple contract logic can be executed on the Ethereum chain, while Polkadot allows 100 chains to have their own strengths, such as some focusing on privacy and identity, and some focusing on asset storage and transactions... Of course, the non-standardized approach may also cause Polkadot to have more security issues.

If ETH2.0 wants to divide transactions into multiple execution logics on a single chain, each logic is handled by a dedicated shard, and the entire network uses the "beacon chain" to save transaction results and make decisions, then Polkadot will connect to 100 chains, each chain runs freely, and the interaction between chains is controlled by the "relay chain".

Team Strength

Founder: Dr. Gavin Wood

Gavin is the former co-founder and CTO of Ethereum. He is known as the invisible boss of Ethereum. He is low-key and mysterious, but his position is very important. He was the author of the Ethereum Yellow Paper . He invented the basic components of the blockchain industry, including Solidity, Proof of Authority consensus, and Whisper. Gavin currently leads the innovation of Substrate and Polkadot at Parity. He coined the term Web 3.0 in 2014 and serves as the president of Web3 Foundation.

Web3 Foundation

Polkadot is the flagship project of the Web3 Foundation. The Web3 Foundation is working with best-in-class entities to build Polkadot and promote the development of services and applications that will run on it. Researchers from Inria Paris and ETH Zurich, developers from Parity Technologies, and capital partners from crypto funds such as Polychain Capital are all working together to develop an implementation of Web3.0 with Polkadot at its core.

The Web3 Foundation has commissioned five teams and more than 100 developers to build Polkadot, including: Parity Technologies, ChainSafe, Soramitsu, PolkadotJS, and the Web3 Foundation provides grants for the development of the ecosystem.

Polkadot Ecosystem - Parachain

As a token circulating in the entire Polkadot ecosystem, DOT’s value is mainly supported by three key functions.

First, as a governance token, it has a decision-making function , which is of little significance or far-fetched for ordinary investors. Secondly, as a circulating token, it has a trading function , which is needed by both project owners and ordinary users. Because in the Polkadot ecosystem, participants also need to stake a certain amount of DOT to perform tasks. In short, DOT is a scenario that both project owners and users need to use.

Of course, this is a long-term and macro judgment on the price of DOT. The third key function of DOT has a more direct impact on the price, that is, the project party needs to bind DOT to add it as a parallel chain, which is the "slot auction".

Polkadot’s cross-chain is achieved through a two-layer structure of relay chain-parallel chain.

The relay chain is responsible for verifying the information interaction of the entire network, and the parachain is used to implement different functions and businesses. The projects that have emerged in the Polkadot ecosystem exist on the parachain. But the problem is that the parachain must be connected to the relay chain to achieve cross-chain and become a real Polkadot ecosystem project.

The number of slots that the relay chain opens to parachains is limited (about 100) , which requires project owners to obtain the right to rent through bidding. What's more cruel is that the slot auction is open in batches, and at the beginning, it is auctioned one by one.

It is worth mentioning that the “auction” is not really to pay DOT, but to lock the position during the rental period. This means that any Polkadot ecological project will actively prepare for the slot auction and strive to be the first to get the entry key.

There are many ways to “auction”, including but not limited to hoarding DOT yourself (of course it should be far from enough), canvassing votes through resource exchange (at that time, you can pay attention to the benefits released by various Polkadot ecological project parties), borrowing...

The project party may use multiple parallel methods to raise DOT, and then participate in the auction of the "head slot" of the Polkadot slot.

Therefore, the project party will announce a series of incentive policies for slot auctions in the near future, releasing its own tokens and other rights and interests, which is beneficial to ordinary investors.

Investment institutions, exchanges, mining pools, etc. that own a large amount of DOT also have a strong presence. They will certainly not miss this feast and will choose to cooperate directly with the project party to exchange resources.

It should be noted that when whales and ordinary investors participate at the same time, it is a great test of how the project's incentive distribution plan balances the interests of both parties.

Since 2020, the tokens in the Polkadot ecosystem have achieved amazing growth. For example, LINK has increased by more than 100 times, and DOT and KSM have achieved dozens of times of gains. This parachain slot auction is also a good thing for DOT and KSM.

So will Polkadot be like Ethereum in the ICO era? Let us continue to pay attention to the prosperity and development of its ecosystem.