Solving Polkadot’s Parachain Slot Auction Liquidity Problem
“Polkadot is built to connect private and consortium chains, public and permissionless networks, oracles, and future technologies that are yet to be created. Polkadot facilitates an internet where independent blockchains can exchange information and transactions in a trustless way via the Polkadot relay chain,” is how Polkadot explain their service. But what does that mean in practice? As you may know, the parachain is a blockchain that runs on the Polkadot network, and it’s connected to the Polkadot network by renting a parachain slot on the relay chain. However, Polkadot can only provide a limited number of parachain slots due to network resource constraints, which is reflected in the value of the parachain slot auction.
The only way to actually know if you’ve won the right to use the slot is to look at the amount of DOT locked up in the related project’s ‘crowd loan’ pool. As a result, all project parties involved in the Polkadot Parachain Slot Auction introduce a reward mechanism to encourage users to participate in the DOT lock-up. If a project bid is successful, the DOT invested by users participating in the crowd loan project will be locked in the Parachain account for two years, even though investors can reap project token rewards. Users, however, are unable to withdraw the DOT invested by themselves during the lock-up period. As a result, this means users’ DOT liquidity will be significantly reduced.
BigONE’s liquidity solution
To address the problem of liquidity associated with DOT locked positions when users participate in the Polkadot Parachain slot auction, BigONE will simultaneously launch its own liquidity products, namely the “DOT and BDOT 1:1 exchange” mechanism. This allows investors to not only get the token rewards harvested during the lock-up period from the funds contributed to the crowd loan; but also, the BDOT (BigONE Dot) can be used for transactions on BigONE’s Polkadot Parachain Slot Auction, which makes this initiative one-of-a-kind.
What is BDOT?
Simply put, BDOT is a proof of equity that represents funds that have been locked in the crowd loan pool and are anchored 1:1 with DOT. BDOT provides liquidity services for users locked DOT during the duration of the Polkadot Parachain slot lease. When the Polkadot Parachain slot lease expires, users can use BDOT to exchange for the locked DOT.
Users can participate in the Polkadot Parachain slot auction with a single click using the service provided by BigONE Exchange and release their liquidity via the liquid assets anchored to the DOT, with their share of the liquid visualized as BDOT assets. In addition, owners of BDOT can receive token rewards from the crowdlending project parties participating in the auction. The value of these rewarded tokens is expected to rise as the crowdlending project bids successfully. To summarize, BigONE’s product BDOT releases liquidity to make it easier for users to participate in the Polkadot Parachain slot auction.
What else do you need to know about BDOT?
By locking in DOT with BigONE, a user indirectly supports and participates in the Polkadot Parachain Slot Auction. The crowdlending project will use the DOT raised to join the Polkadot Parachain Slot Auction. The relationship between DOT, BDOT, and the crowdlending project reward tokens is as follows:
· Users lock in DOT on the BigONE Exchange;
· BigONE will issue a corresponding amount of BDOT according to the amount of DOT locked by the user. Please note that both BDOT/DOT, and BDOT/USDT can be traded on BigONE;
· BigONE will issue a corresponding amount of crowd-lending project reward tokens in proportion to the user’s BDOT amount. It should be noted that BDOT is the only means for users to get such rewards in BigONE;
The crowdlending project’s reward tokens will be calculated and distributed based on the number of BDOTs in the user’s account during the Polkadot parachain slot lease period. BigONE will charge a handling fee of 10% for the reward tokens obtained by the user. A portion of the fee is invested in the BigONE Polkadot Parachain Slot Auction products’ invitation reward pool. At that time, users who have a relationship with the inviter and the invitee will receive a portion of the invitation reward.
BigONE’s original BDOT can both solve the DOT liquidity loss caused by long-term lock-up after users support Polkadot’s parallel crowdlending project, so that users who participate can receive the return on locked assets. It may also enable DOT holders concerned about the long lock-up period to participate more actively in the Polkadot Parachain Slot Auction, thus demonstrating that the BigONE Exchange and its community aims to fully empower the Polkadot network ecosystem.
For more details of BigONE’s Polkadot Parachain Slot Auction service launching shortly see here.
