How can Acala, Plasm, Kilt, Bifrost, Crust, Phala participate in the parachain auction of these 6 projects?
Written by: OKEx
Looking forward to Kusama’s parachain bidding for more than half a year, I will finally meet with us. The final bidding plan is likely to be announced at today’s Polkadot Decoded conference. As a KSM token holder, which parachains should we focus on? How to calculate the final profit? What is the bidding strategy of each parachain project side? Today we will share around these issues.
The Polkadot Decode community online meeting will start at 21:45 on May 19th, Beijing time, and it is very likely that Kusama parachain development rules will be announced. At 3:30 on May 20th, Beijing time, Gavin will have a friendly “bar chat” with Aeron Buchanan and Alistair Stewart. Gavin may personally announce the Kusama parachain auction details.
Kusama uses auctions to release slots. Most parachain teams will choose to use Kusama’s built-in crowd loan mechanism (Crowdloan) to crowdfund their slot leases, so that investors can use their KSM to support parallel Chain in order to obtain the token rewards of the parachain.
So, which crowd-lending assets should we focus on? What are the characteristics of these parachain projects? What kind of rewards will they provide for this crowd loan? The author lists six parachains here, they are Acala, Plasm, Kilt, Bifrost, Crust, Phala.
Parachains that need attention
Acala Network
Project Description
Acala is the world’s first decentralized open financial alliance and Polkadot Ecological Financial Center. It aims to create an open financial framework in conjunction with the Polkadot Ecosystem to bring financial stability, liquidity and accessibility to global crypto assets , Has launched the cross-chain multi-asset mortgage stablecoin Honzon protocol, the Homa protocol for releasing Staking asset liquidity, and core Layer 1 modules such as decentralized exchanges.
Program features
Acala is the DeFi Hub in the Polkadot ecology and the infrastructure equivalent to the DeFi field. It mainly includes several large modules:
- The first is the decentralized over-collateralized stable currency (aUSD) system, which is equivalent to the Maker DAO of the Polkadot ecology, used for over-collateralized stable currency issuance;
- The second is decentralized asset swap, an automatic market maker based on the AMM mechanism, which is equivalent to Uniswap providing DEX functions for the Polkadot ecosystem;
- The third is to release the liquidity of staking. Through this module, users can exchange their pledged tokens on the main network into intermediary tokens (L-KSM/L-DOT) into circulation and increase capital utilization.
Bidding strategy
a) Token information
- Main network: Acala Network (ACA), with a total of 1 billion ACA;
- Pioneer Network: Karula Network (KAR), the total amount of KAR is 100 million;
b) Bidding strategy
The Karula bid will give out about 11% of the total KAR as a reward. Users can understand this as “Paradrop”. Assuming that 100 KSMs are locked, at least 1200 KARs will be obtained. If it is 1:12 (at least) according to the one-year period, it means that there may be more. After the network is online, 30% will be released immediately, and the remaining 70% will be linearly released block by block according to the one-year lock-up period.
Plasm Network
Project Description
Plasm Network is a multi-virtual machine, extensible, and interoperable smart contract parachain based on Polkadot. Plasm supports two-layer expansion contracts including Optimistic Rollups and ZK Rollups, and is compatible with Ethereum Solidity smart contracts and WASM smart contracts. In addition, it is also developing heterogeneous chain cross-chain bridges to ecosystems including Ethereum and Cosmos. Plasm has a unique DApp Staking and Operator Trading mechanism, which allows developers to obtain profit through development on Plasm and sell their own contract operation rights; and community members can continue to earn benefits through DApp Staking.
Program features
First, Plasm is the earliest smart contract platform in the Polkadot ecosystem that implements EVM+WASM multi-virtual machines. That is to say, existing projects based on Ethereum Solidity smart contracts and emerging projects based on WASM smart contracts can be directly migrated/deployed in Plasm on.
Second, it is also the only project in the Polkadot ecosystem that supports Layer 2. However, I believe that the above two points may be realized in more projects in the medium-term future.
Third, Plasm’s most groundbreaking and innovative is its unique DApp Staking and Operator Trading mechanism. This will allow developers to earn income through development on Plasm, and community members can share dividends through DApp Staking. In addition, developers can also sell smart contract operation rights on the chain.
Bidding strategy
a) Token information
- Main network: Plasm Network
- Pioneer Network: Shiden Network, with a total issuance of 45 million, SDN and PLM 1:1 correspondence.
b) Bidding strategy
It is planned to reserve 30% of the total SDN supply for Kusama card slot auctions. For the first card slot auction with a lease period of 48 weeks, 15% of the total SDN tokens will be used, which is 6.75 million SDN tokens to reward the locked-up KSM users who support the Shiden bidding.
Kilt Protocol
Project Description
KILT’s open source blockchain protocol makes it possible to describe and prove any type of characteristics of individuals, organizations and even things in a standardized way. It is used to publish claims-based verifiable and revocable anonymous credentials on Web 3.0, providing applications with user data sovereignty and interoperability. KILT has the potential to build a new business model around trust.
Program features
Teacher Gu Yanxi’s evaluation of Kilt Protocol: The Kilt project focuses on providing identity authentication in a distributed manner. The identity authentication function is a necessary condition for large-scale financial applications. Although the current DeFi applications are popular, they are still financial transactions between anonymous users. Therefore, it is impossible to promote the application on a large scale. The Kilt project can provide the identity authentication of participants in a distributed manner, and the granularity of identity authentication is more refined than that of existing physical entities. Therefore Kilt will be widely adopted. Obviously the market has a clear judgment on this, so it has begun to support Kilt as a parachain in the Polkadot ecology.
Bidding strategy
Kilt Protocol has not yet given a detailed bidding strategy. Earlier on February 16, Kilt Protocol’s CEO and founder Ingo Rübe shared their plans for the next few months. They mentioned their bidding plan, but did not mention the reward mechanism in detail.
Bifrost Finance
Project Description
Bifrost (Rainbow Bridge) is the basic protocol of Polkadot’s ecological DeFi. It is committed to becoming an infrastructure for pledged assets to provide liquidity. Currently, it has launched a derivative vToken for staking and Polkadot’s Parachain Slot (PLO).
Project Features
First, the first liquid derivative product: vETH was launched in the fourth quarter of 2020. vETH is specially designed for users who participate in Ethereum 2.0. Holding vETH is equivalent to participating in Ethereum 2.0 pledge while gaining income, and can trade or participate in DeFi applications at any time during the lock-up period. As of today, a total of 17,788 ETH minting value of vETH has been accumulated through two vETH minting airdrops, which is equivalent to generating a total locked-up market value of $27M. After accessing the parachain, the general liquidity derivative vToken will be launched, which can be compatible with most PoS public chains and will continue to operate according to the developed logic and token economic model.
Second, during the parachain auction period, SALP (Card Slot Auction Liquidity Agreement) will be launched to solve the opportunity cost of participating in the parachain pledge.
How does SALP work? After users participate in the Kusama parachain auction through Bifrost, they can obtain the two assets of vsKSM and vsBond through the SALP protocol. vsKSM represents the KSM token pledged in the parachain slot. You can trade at any time with vsKSM, and you can trade at DEX in the future. Trading with CEX; vsBond represents the rights and interests attached to participating in the parachain auction.
How is the price of vsKSM guaranteed? Some people may think that the SALP agreement is in fact increased leverage, which will also cause the asset vsKSM price to fall sharply, but it does not. We know that there will be a redemption period for the vsBond issued to each parachain. After the expiration, as long as you hold vsKSM and vsBond, you can redeem KSM on a one-to-one basis, which means that as long as you have a lower price in the market When your vsBond expires, you can get KSM one-to-one. The price difference in the middle is the arbitrage space. Therefore, the SALP agreement is a risk hedging tool for investors participating in the slot on the one hand, and on the other On the one hand, it can actually increase the number of KSM and DOT locks in the entire parachain slot during flat shooting, giving the entire Polkadot ecology more ways to play. Bifrost is the first parachain to use the SALP protocol.
Bidding strategy
a) Token information
- 16.2 million (10 years later), currently 5 million in circulation
b) Bidding strategy
No advance network. 1 KSM: X BNC reward (X will be announced at the beginning of the official phase, and the ratio is at least greater than 1 KSM: 10 BNC).
Crust Network
Project Description
Crust provides a decentralized storage network for the Web3 ecosystem, supports multiple storage layer protocols including IPFS, and provides interfaces to the application layer. Crust’s technology stack can also support a decentralized computing layer. Crust aims to build a distributed cloud ecosystem that values ​​data privacy and ownership.
Program features
First, off-chain data storage. For some blockchain-based applications, such as NFTs, decentralized social platforms, etc., the business involves a large amount of user data, and the amount of storage on the chain cannot load these huge data. Developers can integrate Crust for some decentralized blockchain full-node data storage solutions based on the Crust/IPFS network.
Second, P2P content distribution network. Under the role of the Crust network incentive layer protocol, the nodes in the Crust network will spontaneously spread CDN files in the network and assume the responsibilities of edge nodes, resulting in faster data transmission. Users can use Crust to provide content distribution and acceleration for some decentralized videos, social media sites, software, and personal private sharing.
Third, the deployment of decentralized websites and DAPPs. Developers can deploy their own Dapp and website based on the Crust/IPFS network. Developers only need to pay attention to the construction of Dapp and website, without any server management, and it has the characteristics of high availability, high security, and low cost. Currently, the website deployment of Uniswap and PolkaApps has been migrated to Crust. In the next phase, Crust hopes that more websites will be deployed through Crust’s decentralized deployment.
Bidding strategy
a) Token information
b) Bidding strategy
- The pioneer network is a token shared between Crust Shadow and the main network.
Rewards will be distributed to KSM contributors in the form of airdropped CRUs. The tentative ratio of rewards distributed every week is 1:0.07. That is, contributors can get 7 CRUs for every 100 KSMs per week, and rewards will continue to be issued until the set time for crowd loan acquisition ends or the auction is won.
Crust reserves 40% of the tokens developed by the community for related activities of parachain slot auctions. This number is approximately 2 million CRU. This 2 million CRU is not used up at once, it includes auction encouragement, possible purchase of DOT, and future lease maintenance and many other expenses.
Phala
Project Description
Phala Network is a private computing cloud without permission and trustlessness. Phala is built on Substrate and operates as a parachain of the Polkadot ecosystem to provide computing power equivalent to existing cloud services and protect the privacy of hosting programs. Based on Phala’s TEE-blockchain hybrid architecture, developers can easily deploy and run Phala confidential smart contracts in the TEE area of ​​the CPU.
Program features
Phala Network uses Polkadot’s cross-chain capabilities to become the data privacy layer for other blockchain applications, such as DeFi transaction positions, transaction history confidentiality, DID private data joint computing, and light node cross-chain bridges. Phala’s high-performance contracts make it possible to build a private computing cloud, providing trustless serverless computing services for high concurrency and big data analysis. Cloud products under development include Web3 Analytics, a decentralized alternative to Google Analytics.
Bidding strategy
a) Token information
- Phala Network, PHA, with a total circulation of 1 billion
b) Bidding strategy
Participation in the auction reward situation KSM: PHA =1:100. The upper limit of the PHA reward pool is 15 million PHA, that is, after Phala reaches the support of 150,000 KSM, it will no longer continue to reward supporters.
How to interpret the bidding strategy of each parachain?
Taking Crust Shadow as an example, we know that rewards for KSM contributors are distributed in the form of airdropped CRUs, and the tentative ratio of rewards distributed every week is 1:0.07. That is, contributors can get 7 CRUs for every 100 KSMs per week, and rewards will continue to be issued until the set time for crowd loan acquisition ends or the auction is won.
So, what is this annualized return?
The current CRU token price is 66 US dollars, and the KSM token price is 530 US dollars. Let’s assume that the moment Crust Shadow obtains the parachain, the price of CRU is US$70 and the price of KSM is US$600. Crust Shadow participated in the Polkadot slot auction in the first round and officially won the parachain slot in the sixth round. 100 KSMs participated in the bidding of slots supporting Crust Shadow.
So, what is the annualized return of your 100 KSM tokens?
First calculate how much you can get. If you pledge 100 KSM from the beginning, you will get: 100*0.07*5*6*70=14700 USD. The annualized income is: 14700/60000*11*100=269.5%
If the CRU price rises to $140, the annualized return will be as high as 269.5%*2=539%, and it is almost risk-free.
The most important parachains are summarized below. You can follow the calculation method above and combine the characteristics of different parachains to combine your own bidding strategy.
Summary
After paying attention to each valuable parachain, we believe that time will show the true value of KSM. Just as Lu Yao knows horsepower, he will see people’s hearts over time. Let’s wait and see together.
