The first phase of Kusama's parachain slot auction has kicked off and will run for the next several weeks. It marks a milestone for both Kusama and Polkadot in their efforts to expand blockchain interoperability. These blockchains also present competition to Ethereum in the DeFi app hosting business.
Polkadot notes that parachains are a piece of core functionality outlined in its whitepaper. Parachains will enable Polkadot to achieve its scalable multi-chain structure.
What are parachains and why are they important?
Polkadot’s technology helps connect different blockchains to enable cross-chain transfer of data and assets. Blockchain interoperability simplifies launching of DeFi products.
Kusama is an experimental blockchain that leads projects to the Polkadot ecosystem. Kusama describes itself as Polkadot’s canary network. It offers a platform for developers to test their products before bringing them to Polkadot. Parachains are independent chains that can be designed for specific applications and can have their own tokens.
The whole idea of parachains is to try to make it easy to tap into a variety of blockchains. Parachains are expected to spur innovation by enabling developers to access tools and features that different platforms offer. In the end, those efforts should fuel the adoption of blockchain products and help grow the industry.
Kusama parachain auction dates
Kusama decided to use an auction process to determine which parachains join its network and hopefully make it to Polkadot. Some 100 parachain slots will be available. The first phase of the auction will involve distributing five slots to the highest bidders. Parachains that place their bids early will have a higher chance of consideration than those that come late.
The bidding for the first parachain slot on Kusama started on June 15. The auction ending period will begin on June 17. Bids made before this date will be considered in the final results. A bid made after this date will have a lower priority of consideration.
Kusama will announce the winning bid for the first slot on June 22. The highest bid will carry the day. On the same date, the auction for the second parachain slot will open. The third, fourth, and fifth slot auctions will start on June 29, July 6, and July 13, respectively.
That would wrap up the first batch of Kusama parachain slot offerings. There will be a break after that to allow Kusama to study the performance of the network before launching the second round of auctions.
Kraken offers an auction platform
Ahead of the opening of the Kusama parachain auction, crypto exchange Kraken launched a platform to enable its customers to participate in the auction directly from its platform. Kraken initially enabled its members to join Karura and Shiden bids.
Kusama and Polkadot tokens surge in parachain auction.
Projects use the Kusama token (KSM) to bid for the parachain slots. Karura is one of the projects seeking Polkadot parachain slots. Karura raised 200,000 KSM tokens worth $100 million to fund its bid. Stake Technologies, the parent of Shiden, which is also seeking a parachain slot with Polkadot and Kusama, raised $10 million ahead of the auction opening.
As a result, Kusama crypto price has skyrocketed since its demand has increased. KSM crypto has gained 450 percent in 2021 and nearly 7,000 percent in the past year. Polkadot’s DOT crypto has climbed 170 percent in 2021 and more than 330 percent in the past year. In addition to the association with the Kusama parachain auction, Polkadot coin has also gained due to its recent listing on Coinbase.