Crab Parachain Part III: What’s the Parachain Crowdloan?
Introduction
Crowdloan functionality was designed to help new parachains fundraise to get a “slot” on the Kusama network. These slots are competitive, which means many projects may need to lock a large number of tokens to secure the slot lease when they’re auctioned off. Crowdloans help continually bring fresh projects into the ecosystem by letting the community “back” a project without directly giving them control of funds.
For Kusama, the crowdloan is a way for new projects to garner the support they need to connect to the Kusama network as a parachain. Crowdloan is just one way for a project to raise KSM to bid. There are numerous other ways that a project can raise these tokens to bid in the parachain auction including private and public sales, ICOs, IDOs, and more.
The term itself can be misleading, since you’re not actually “loaning” funds to the parachain; rather, your crowdloan contributions (KSM tokens for Kusama project crowdloans) are locked into a Kusama account for a designated period of time (a “lock period”). Typically, during this lock period (or after), you are eligible to receive a reward. This reward is usually in the form of a native token from the project.
Typical Process for a Crowdloan
- The team creates a crowdloan campaign, setting a maximum of total allowed contributions and a campaign end date (to account for the possibility of losing one or more auctions, a campaign can last for several auctions), and invites their community to participate.
- Crowdloan contributors initiate a special transaction allocating transferable KSM to the campaign’s index (this is different from a normal send transaction, contributors should NOT send KSM to an external account).
- KSM contributions can be submitted throughout the duration of the crowdloan campaign or until an auction is won, up to the maximum amount of contributions set by the parachain team when creating the campaign.
- If there are enough contributions to win an auction, the chain is automatically deployed at the start of the lease, and the full amount of KSM contributed to the campaign index will remain locked for the duration of the lease.
- Crowdloaned KSM can be unlocked and returned to contributor’s control at the end of the lease period. In the event that a crowdloan campaign ends without the team winning an auction, contributors’ KSM can be unlocked at the end of the campaign.
For more details, please refer to https://guide.kusama.network/docs/learn-crowdloans.
Features of the Crowdloan
Crowdloans present a way for users to help projects launch without jeopardizing their assets, as they are only locked temporarily.
Tokens are not accessible by the project
Development teams do not control the assets contributed to the crowdloan and have no access to tokens. Once contributed, they are locked on the Relay Chain.
Tokens are returned once the lease is over
Kusama has ‘slots’ for projects to participate in a crowdloan. Each of these slots on the network has an expiration date. Once the slot lease is over, users who participated receive back their initially locked assets.
Parachains must prove their value
When the lease expires, projects must find a way to renew their lease. For projects with immediate success, they can often do this using funds from their treasury. For others, they may need to hold another crowdloan or find another way to raise the funds they need to secure the slot again. This dynamic creates a situation where projects must constantly prove their value in order to retain their spot on the network.
Long lease periods
Once your assets are locked (for up to one year on the Kusama network), there’s no way to pull them out if you want to do something else with them. They’re locked. Therefore, it’s important to consider your options carefully before choosing a crowdloan to back.
Each Crowdloan is unique
Each crowdloan on the Kusama network has its own unique terms and conditions. Such as lease period, rewards pool, total genesis supply, hard cap, etc.
FAQs
Crowdloans FAQ’s , please check this article.
Contact Us
If you have any problems, please send an email to hello@crab.network.
About Crab Network
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Crab is a canary network with real economic value for Darwinia, and its positioning is similar to Polkadot’s Kusama Network. Crab Network has won the 22nd Kusama parachain slot! You can check Crab status through Polkadot{.js} , Subscan or Subview.
Crab provides smart contract solutions based on DVM (Darwinia Virtual Machine), which is compatible with the EVM (Ethereum Virtual Machine) paradigm at a low level. Therefore, it is easy for projects in the Ethereum ecosystem to migrate to the Crab Smart Chain. (Tips: DVM is built on Frontier with a fully EVM-compatible instruction set and an Ethereum RPC-like external interface.)
