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

The important thing to note here is that time on Kusama is usually shorter than on Polkadot — that means parachain slot duration on Kusama is shorter than on Polkadot. To be precise, projects can bid on 6 slots, each lasting 8 weeks — therefore most of them will go for a 6 slot period that will guarantee them parachain slot for a total of 48 weeks.

Credits to Shawn Tabrizi and his wonderful presentation at Polkadot Decoded

Auction timeframe on Kusama

We don’t know the exact date of the first auction yet but we believe we are really close because the only thing left is upgrading Shell parachain to a Statemine. Therefore we recommend to unbond your KSM tokens (if you are staking) because crowdloans will start some time before the auctions.

Credits to the Plasm Network

Why crowdloan?

So how does this work? Each project will provide you an easy-to-use web interface where you can lock your KSM tokens for the project's bid period (usually 48 weeks) and receive a reward in a form of tokens or/and NFTs for your support.

The mechanics

The important thing here is that the security of this process is guaranteed by Kusama's relay chain so the project cannot withhold your funds even if it wanted to. Also, the only cost here is the opportunity cost — you don’t pay for participation in the crowdloan, you are just locking your KSM tokens!

Now let’s have a look at the projects participating in crowdloans and what benefits can offer you for your support!

Khala (Phala)

Khala Crowdloan strategy

There are 15,000,000 PHA set aside for rewards on Kusama auctions. Based on the above ratio, when the KSM in the Khala Crowdloan reaches 150,000, there is no more PHA that can be distributed to contributors.

When Khala wins a slot and runs as a parachain successfully, 34% of the PHA in the reward pool will be given to contributors’ addresses immediately. The remaining 66% will be vested monthly over 11 months.

There is an additional reward available for Referrals. If a Crowdloan participant invites an additional participant who makes an additional contribution, they will each receive an additional reward: an extra 0.5% on the additional contribution.

Karura (Acala)

Karura Crowdloan strategy

For every 1 KSM contributed, a minimum of 12 KAR is rewarded — which means that reward can be even higher, depending on the amount of support.

You can join Karura’s Crowdloan by following our referral link!

Shiden (Plasm)

Shiden Crowdloan strategy

Received SDN tokens will be locked 1 month and then periodically released every month with vesting of 10 months. Important thing here is that the crowdloan will start at the first day of auction and rewards for joining will be highest in this period!

Shiden will use 22% of the total supply (15,400,000 SDN) and bid for 1–8 periods (8 periods lasting for 48 weeks). Shiden is proud to be a community-driven project and wants to distribute 65% of the tokens to the community members in total.

Crab (Darwinia)

Crab crowdloan strategy

30% of the price pool will be released immediately and rest will be vested for duration of parachain slot period (48 weeks). Crab strategy offers wide range of rewards, therefore please refer to their article describing all the benefits.

Bifrost

Bifrost crowdloan strategy

You will receive at least 10 BNC tokens for 1 KSM with some of the tokens being airdropped immediately, 50% only after successful winning of the auction and rest gradually within 48 week period.

You will need a personal code to enter the crowdloan and we will be pleased if will use ours NA0418 :-)

Genshiro (Equilibrium)

Genshiro crowdloan strategy

Users can earn up to 30% APY while participating in the crowdloan but the final amount depends on the amount staked and Kusama’s staking rewards rate. You can read more in Genshiro explanatory article about crowdloans.

Robonomics

Robonomics crowdloan strategy

Moonriver (Moonbeam)

Moonriver crowdloan strategy

You will receive 30% of those right after the parachain launch, rest will be distributed via vesting during parachain slot duration.

Shadow (Crust)

Shadow crowdloan strategy

SherpaX (ChainX)

SherpaX crowdloan strategy

Conclusion

So, if you are a KSM holder and you intend to hold your tokens anyway — then crowdloans are a no-brainer and definitely try to support your favorite project(s)! If not, then consider locking your KSM for various benefits because you will not only get valuable tokens before they enter the market but also support smooth start of crowdloans and auctions as well!

If you like this article, consider supporting us by nomination of your tokens to Kusama or Polkadot validator going by the POLKADOTTERS name.

Stay tuned for further information about the Polkadot ecosystem projects here on Medium, our Twitter channel Polkadotters as well as in our Facebook Group Polkadot unofficial! If you are feeling really generous, you can send some DOTs to our donate address 🙂

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