Polkadot unveils new details on its on-chain auctions for parachains

  • Polkadot has released new details about its on-chain auctions and parachain slots, specifically “common good parachains”.
  • Parachains that serve as a common good to the network as a whole do not have to participate in the auctions or lock DOT tokens.

As CNF reported, Polkadot first published its roadmap for the rollout of parachains last week. Parachains are the final piece of the protocol’s core functionality outlined in the whitepaper to realize a scalable multi-chain architecture. About a key component, the parachain slots and on-chain auctions, the Polkadot team has now published a new blog post to introduce the component in more detail.

Since the Polkadot network will be composed of myriad parachains – each optimized for its own domain, such as smart contracts, identity, DeFi, or robotics – and the relay chain can support a limited number of parachains, chains must be selected that have access to their compute capacity. This is where on-chain auctions come into play.

The parachain teams “or perhaps even the chains themselves” can bid by expressing their willingness to lock DOT tokens for the duration of the parachain slot lease. The highest bidding parachains will be awarded the lease of the slot. However, there will be exceptions, slots that are allocated to parachains because they are “beneficial to the network as a whole.” These Parachains will also not be required to lock DOT tokens.

Polkadot’s common good parachains

To promote those very parachains that are beneficial to the commons, Polkadot introduces the concept of “common goods” as part of its governance process. Through a public referendum, network stakeholders can decide which parachain to register outside the auction process. The blog post explains:

As with all decisions that go through public referenda, the network’s stakeholders have the final say in what passes and what does not. Understanding this, we may initially see two categories of blockchains that qualify as common good chains in the Polkadot network: system level chains and public utility chains.

System level parachains shift functionality from the relay chain to parachains, minimizing the administrative use of the relay chain. Examples, according to the Polkadot, include “parachains for balances, elections (for both staking and Council), governance, and identity.”

Eventually, the Relay Chain could become transactionless, as in, it would only validate parachain state transitions and all of its current transactional functionality would exist within parachains.

Public utility chains add new functionality that does not yet exist and that stakeholders believe adds value to the entire network. Examples could include “bridges, generic asset chains, and DOT-denominated smart contract platforms” that operate without a new token but with DOT or KSM (Kusama). Ultimately, however, system level parachains will likely play a more important role:

Because public utility chains add functionality beyond the scope of the Relay Chain, we expect the network stakeholders to approve them only in rare scenarios. The vast majority of common good chains will likely be the unopinionated system level chains.

About Author

Jake Simmons

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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