Polkadot Crowdloan proposal set to pass, how to participate and what are the pros and cons?
The proposal for opening Polkadot parallel chain registration and crowdloan has been approved and entered the public voting stage. If the proposal is passed, parallel chain teams will be able to register their parallel chains and open crowdfunding. This article will introduce the benefits and drawbacks of participating in crowdloan.
The motion to enable parachain registration and crowdloans has passed Polkadot's council and gone to a public referendum. If passed, parachain teams will be able to register their parachain and open their crowdloan on Nov. 4, 2021 at approx. 19:15 CET. https://t.co/5ouDWBmnvc
— Polkadot (@Polkadot) November 1, 2021
Table of Contents
Polkadot Proposal 42
Polkassembly is currently conducting a vote on Proposal 42, aiming to upgrade Polkadot Runtime to v9122. If the proposal is passed, parallel chain team registration and crowd loans will open on November 4th. Based on the current voting status, the likelihood of the proposal passing is quite high.
Note: To participate in this vote, you will need to prepare the Polkadot.js wallet.
Polkadot Parachain Slot Auction
With the approval of Proposal 39, the first parachain slot auction will take place on 11/11. However, due to the limited number of slots, parallel chain teams that can provide more DOT for bidding will have a better chance of winning the auction and obtaining the lease rights for the slots.
Crowdloans
In addition to the DOT held by parallel chain teams themselves, teams can also obtain more DOT through crowdloans to help their parallel chains win slot auctions. In simple terms, DOT holders can lend tokens to parallel chain teams, and teams can use these tokens to participate in bidding.
To encourage users to lend tokens to them, teams must provide incentive plans. A common example is distributing their protocol tokens to crowdloan participants. Once DOT is lent out, participants cannot withdraw it at any time and can only retrieve it after the end of the team's slot lease period.
The Polkadot slot lease period is based on 3-month units, with a maximum lease period of two years. This means that the cost of participating in crowdloans is the opportunity cost during the team's lease period. During this period, participants cannot cash out when the token price rises, exit when it falls, or use it as gas fees on the Polkadot network. However, each team will provide different incentive plans to attract more DOT holders to lend tokens.
Advantages of Crowdloans
With the emergence of crowdloans as a fundraising method, it is expected to reduce the financial pressure on parallel chain teams. They do not need to be very wealthy, but they must have attractive investment ideas and a strong development team. In addition, DOT holders can help shape the Polkadot network ecosystem by supporting teams they like.
How to Participate in Crowdloans
If you want to participate in crowdloans, you need to go to the Polkadot.js APP link to access the Polkadot.js wallet. Then, click on Network -> Parachains -> Crowdloan to see the parallel chain teams open for crowdloans.
Note: If Polkadot Proposal 42 is successfully passed, crowdloans will open after 11/4.
