Acala Collects More Than $500 Million Worth of DOT in Its Polkadot Crowdloan

Key highlights:

• The first Polkadot parachain slot auction will kick off on November 11
• Selected projects are already raising DOT via crowdloans to fund their auction bids
• So far, users have committed more than $500 million worth of DOT to back Acala's parachain slot ambitions

Polkadot's parachain slot auctions are about to launch

Multiple Polkadot-based projects have started their crowdloan campaigns in an attempt to gather enough DOT to win a parachain slot auction. The first parachain slot auction on Polkadot will officially kick off on November 11, and will last for one week. The last auction from the first batch of five auctions will conclude on December 16.

Polkadot is a Proof-of-Stake blockchain platform that consists of a main Relay Chain and parachains that connect to the Relay Chain. These parachains are built using the Substrate framework, and can be customized for specific use-cases (DeFi, custom tokens, NFTs, gaming, etc.). Each parachain that’s connected to the Relay Chain benefits from its security, and can also interoperate with other parachains.

The amount of parachains supported by Polkadot is limited, which is why projects that want to connect their parachain have to first win a parachain slot auction. In order to win an auction, a project has to submit the largest bid in the form of DOT. DOT holders can help their favorite projects win a parachain slot by temporarily lending them DOT through “crowdloans”.

DeFi hub Acala is currently dominating Polkadot crowdloans with over $500 million worth of DOT raised

According to parachains.info, Acala is currently dominating the race for the first parachain slot. So far, backers have committed more than 9.9 million DOT towards Acala’s crowdloan, which translates to almost $520 million at current prices. Moonbeam is in second place with about 5.48 million DOT ($285 million), while Astar is in third place with 1.49 million DOT ($77 million). 

In order to incentivize users to loan their DOT, projects typically offer their native tokens as a reward. For example, users who commit their DOT to the Acala crowdloan token will be rewarded with ACA tokens if the project is sucessful in securing its parachain slot. The ACA reward scales depending on the size of the user’s DOT contribution. 

Crowdloans are different from ICOs and other popular token sale models because participants will get their DOT back once the project’s parachain lease expires. However, participating in a crowdloan does come with a liquidity cost - the leasing period is 96 weeks, which is almost two years. 

Acala is offering users an alternative option with its Liquid Crowdloan system, which is designed to give crowdloan participants access to liquidity even though their underlying DOT remains locked. Users who contribute DOT to Acala receive an equivalent amount of lcDOT tokens, which represent their locked DOT. These tokens can be used freely and are redeemable for crowdloaned DOT once it unlocks following the 96-week period.