Polkadot crowdloans (and how to use them to your advantage)

We have described the inner workings parachain auctions in our previous article, now we are going to focus on the crowdloans. So, what is a crowdloan and why may you want to participate in the crowdloan instead of bidding directly in the auctions?

Auctions recap

To just briefly remind what the auctions are and how they work — there is a limited amount of parachain slots on Polkadot/Kusama and projects will have to compete for them. The competition will take a form of a candle auction and each project will bid for a different amount of slots.

Credits to Shawn Tabrizi and his wonderful presentation at Polkadot Decoded

Auction timeframe on Kusama

There will be an initial set of 5 auctions happening on Kusama. Each auction will last exactly one week, the winner will be immediately onboarded as a parachain and a new round of the auction will start right after that.

Credits to the Plasm Network

Why crowdloan?

Although you can directly bid for a project in a parachain auction, most of the projects will try to win the auction by themselves. Therefore they are trying to accumulate as much funds as they can and they will reward their supporters with various benefits. Actually, this is your only chance to get your KAR (Karura) or SDN (Shiden) before they get listed on any exchange and thus benefit from the fact that you are an early supporter.

The mechanics

So, you lock your tokens in order to support the project and now you are expecting your reward. If the project (be it Karura, Bifrost or Shiden) wins the slot, you will receive its tokens immediately (conditions vary from project to project and we will describe this further on). If not, your tokens will still be locked for the next couple of auction rounds and if the project still fails to win a slot, your funds will be returned to you immediately.

Khala (Phala)

Phala Network is a PoS network that aims to solve the problem of privacy of smart contracts running on an open blockchain. Once becoming a parachain, Phala will provide the ability to run private contracts for all other parachains.

Khala Crowdloan strategy

Khala is a Phala Network canary chain. Every KSM locked by you through the Crowdloan will be rewarded by 100 PHA (PHA: KSM = 100:1). The fixed reward ratio for the Crowdloan is intended to provide each participant a full 100 PHA per KSM, regardless of how many KSM is raised.

Karura (Acala)

Acala has couple of goals to achieve while becoming a central DeFi hub in the Kusama ecosystem. The most important one is the creation of algorithmic multi-collateral stablecoin aUSD, pegged 1:1 to US Dollar. Others is to run Acala DEX that will use aUSD for trading various tokens (in a similar fashion to Uniswap) or liquid staking for Kusama and Polkadot networks .

Karura Crowdloan strategy

KSM holders lock their tokens on Kusama for 48 weeks to help Karura lease a parachain slot and gain access to Kusama’s plug-and-play security. In return for KSM holders’ loan, KAR (Karura’s native token) will be distributed to participants.

Shiden (Plasm)

Plasm is a fully functional EVM & WASM platform on Polkadot not only supporting Ethereum smart contracts but also cutting-edge Layer2 technologies such as Plasma and Rollups that scale these contracts to a new level. Plasm will provide interoperability with other bridged blockchains (like Cosmos) to access the entire Polkadot/Kusama ecosystem.

Shiden Crowdloan strategy

Shiden will use crowdfund to secure parachain slot by Kusama’s crowdloan mechanism allowing KSM holders to contribute by locking up their own KSM tokens for 11 months. Shiden will then reward its contributors by providing SDN tokens, the ratio will be roughly 1 KSM = 25 SDN.

Crab (Darwinia)

Darwinia is a decentralized cross-chain bridge network based on Substrate. It provides a safe, permissionless and non-custodial bridge solution that connects Polkadot with other blockchains such as Ethereum, Tron and others. It can become a central hub for wiring transactions between all popular blockchains and therefore a major exchange of value.

Crab crowdloan strategy

Darwinia will go for the 4th parachain slot (remember, each auction will last for one week so Darwinia will join auctions month after they begin). It will offer variety of rewards including CRING, RING, NFTs a even a BTC price for crowdloan contributors.

Bifrost

Bifrost is the DeFi project based on Substrate which will run as a Polkadot parachain. The goal of Bifrost is to unlock liquidity of the staked funds for Proof of Stake projects within the entire Polkadot ecosystem. That means you stake on any Polkadot-based project without locking your tokens and losing the opportunity to participate in the DeFi ecosystem!

Bifrost crowdloan strategy

Bifrost will actually used its newly released SALP protocol to allow users to provide their KSM tokens in exchange for vsKSM that will have the same value! And of course, with a nice BNC token airdrop as well. So, you don’t actually lose the opportunity to use your KSM tokens since your vsKSM will be usable through the entire Kusama ecosystem.

Genshiro (Equilibrium)

Equilibrium is a cross-chain money market. Cross-chain means that it allows trading and using all the connected blockchains such as Bitcoin, EOS and in the future Ethereum, Binance Smart chain, Cosmos, Tezos or Tron. Equilibrium will contain all the DeFi tools we already know — trading, staking, lending & borrowing of all the main crypto assets including stablecoins and much more.

Genshiro crowdloan strategy

20% of the 1.2 billion GENS token supply will go towards crowdloan— that’s 240 million tokens. Their strategy is quite interesting because they don’t want their supporters to lose rewards from KSM staking — therefore KSM staking reward will be calculated into the total reward received from the crowdloan.

Robonomics

Robonomics Network is the blockchain, that aims at robot-to-human and robot-to-robot communication. Robonomics will use their Robot operating system that creates a ground level for the Smart Cities, autonomous service providers, marketplaces for robotics and the Industry 4.0 implementation.

Robonomics crowdloan strategy

Each KSM locked will result in 1 XRT token as a reward. 25% of XRT tokens will be distributed right after winning the slot, rest is estimated to come 2–4 weeks afterwards. XRT is an ERC-20 token and currently tradable on Uniswap and Huobi.

Moonriver (Moonbeam)

Moonbeam is an implementation of EVM (Ethereum virtual machine) based on Substrate which aims to help developers and users to migrate on Polkadot while still being connected to the “old” Ethereum chain via bridges. Moonbeam has been very successful in on-boarding new projects to their network so we are really looking forward to their launch!

Moonriver crowdloan strategy

Moonriver will distribute 3 million MOVR tokens (30% of the total supply) to its supporters. There is no fixed reward ratio for the reward, you will get proportional number of tokens from the whole distribution. So, let’s say you lock 10 KSM and total amount of locked KSM is 1000, you will get 1% of the total supply — that is 30,000 MOVR tokens.

Shadow (Crust)

Crust will provide decentralized cloud storage for the whole Polkadot ecosystem. Crust supports multiple storage layer protocols such as IPFS and DHT. It leverages TEE tech for storage work validation and Polkadot’s Substrate tech framework for the chain. It aims to build a decentralized cloud ecosystem that values data privacy and ownership.

Shadow crowdloan strategy

Crust will distribute 15,000 CRU and 3,000,000 CSM (Shadow native token) during the crowdloan period. The ratio of rewards is per 1 KSM = 0.07 CRU+14 CSM each week, that is, contributors can receive 7 CRU and 1, 400 CSM for every 100 KSM loaned per week. 30% of these tokens will be distributed immediately after win of the auction, rest will be given to users periodically every week.

SherpaX (ChainX)

ChainX is a decentralized cross-chain bridge network that will connect the Polkadot ecosystem with the Bitcoin blockchain. ChainX is already running for quite some time giving users stable rewards from staking on their chain.

SherpaX crowdloan strategy

Every user will get 10 KSX (SherpaX native token) for 1 KSM of their contribution. There’s also a quota bonus (more KSM you lock, the higher is the bonus) and invitation bonus for inviting people with your referral link (up to 5%).

Conclusion

We have tried to provide a comprehensive guide so everyone can understand benefit of crowdloans. Like we said, most of the project will provide easy-to-use interface for you to participate. Security of your funds is guaranteed by the relay chain and those funds will be returned to you after 48 weeks.

Czech bloggers & community builders. We are validators of Polkadot, Kusama, Darwinia, Crab, Bifrost, HydraDX, StaFi, Centrifuge under the name: POLKADOTTERS

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