An introduction to the process by which blockchain teams building "parachains" can earn a parachain slot on Polkadot or Kusama. This process includes a crowdloan, parachain auction, then launch of the parachain. Acala will be launching on Polkadot and Karura will be launching on Kusama - these networks are used in the examples. This process used to be known as a Parachain Lease Offering (PLO) but this terminology is outdated.

1. Intro to Crowdloans and Parachain Slot
Auctions on Polkadot and Kusama
Dan Reecer - VP of Growth at Acala

2. To understand this presentation, you’ll first need
background on Polkadot and Kusama
If you don’t have that background, please first review these Intro to
Polkadot and Kusama slides.
For further Polkadot/Kusama introductory education:
1. Polkadot for Beginners Twitter thread.
2. Polkadot for Beginners on YouTube.

3. Dan Reecer
VP of Growth at Acala & Karura
Twitter: @danreecer_
Background:
● Prev. Growth & Community at Web3
Foundation (Polkadot & Kusama
Launch Team)

5. Crowdloans & Parachain Auctions
Polkadot & Kusama

6. Crowdloan live
Parachain
auction
If win, parachain
earns slot and
launches
Time
Path to Launch on Kusama or Polkadot
Parachain slot duration (e.g. 1 year)

7. Parachain Slot Auctions
Crowdloans are live
Parachain
auction
Launch
Time
Why is this needed?
To connect to Polkadot or Kusama for all the benefits of these networks, a parachain team
must win a slot in the network in an open “candle auction”. Slots on Polkadot will be up to
24 months and slots on Kusama will be up to ~1 year.
How does it work?
Parachain teams compete for a slot in the network. They can bid in two ways:
1) A single account (whale)
2) Using the “crowdloan module” to crowdsource KSM (for Kusama crowdloans) or DOT
(for Polkadot crowdloans) to use as their bid in the auction
How often?
Parachain auctions will happen on an ongoing basis for the foreseeable future. They are
expected to be approximately every 2 weeks.

8. Step 1: Crowdloans
Crowdloans are live
Parachain
auction
Launch
Time
Crowdloan facts:
● Used for auction bid: Parachains crowdsource KSM (for Kusama) or DOT (for
Polkadot) from community to use for their bid in the auction
● Tokens locked: Supporters’ unstaked KSM/DOT is locked for a period of time (6-24
months for Polkadot, but chosen by the parachain)
○ In return, supporters receive a distribution of the parachain’s native token (vest
depends on parachain)
○ Supporter opportunity cost lies in staking rewards no longer generated
● Original tokens returned: After the parachain’s slot duration expires, for example 1
year, all original KSM or DOT is returned to supporters.
● Not touched by team: The KSM or DOT are never touched by the parachain team!
The funds are locked in the Kusama or Polkadot Relay Chain (core of the network)

9. Parachain A’s
crowdloan module
55k KSM
Kusama Crowdloan Example
Crowdloan is live
Parachain B’s
crowdloan module
45k KSM
Parachain C’s
crowdloan module
40k KSM
Crowdloans are live
Parachain
auction
Launch
Time

10. Parachain A’s
crowdloan module
55k KSM
Parachain slot auction
Parachain B
crowdloan module
45k KSM
Parachain C
crowdloan module
40k KSM
Step 2: Parachain Slot Auction
Crowdloans are live
Crowdloans are live
Parachain
auction
Launch
Time

11. Parachain C
Bid: 40k KSM
Parachain A
Bid: 55k KSM
Parachain B
Bid: 45k KSM
Parachain E
Bid: 60k KSM
Parachain F
Bid: 75k KSM
After the close time, a “random beacon” in Polkadot’s code uses
randomness to determine the end-time of the auction.
Parachain A wins.
open time close time
Auction Duration
end time
Randomly selected end time
Known Open Time Known Close Time
Crowdloans are live
Parachain
auction
Launch
Time
Step 2: Parachain Slot Auction

12. Karura’s
crowdloan module:
for example,
500k KSM
Parachain auction
Karura’s Path to Launch on Kusama (example)
Karura Wins 🎉
Karura’s example
500k KSM is locked in
Relay Chain (not to team)
Launch
KAR
Karura earns slot and
launches
KAR
distributed
to
supporters
🏆
Crowdloans are live
KAR
KAR
KAR KAR
Karura parachain slot duration (for example: 1 year)
KSM returned
to supporters

13. Acala’s crowdloan
module: for
example,
10M DOT
Parachain auction
Acala’s Path to Launch on Polkadot (example)
Acala Wins 🎉
Acala’s example
10M DOT is locked in
Relay Chain (not to team)
Launch
ACA
Acala earns slot and
launches
KAR
distributed
to
supporters
🏆
Crowdloans are live
ACA
ACA
ACA ACA
Acala parachain slot duration (for example: 2 years)
DOT returned
to supporters

14. Crowdloan
Parachain
auction
Launch
Time
Parachain slot duration (for example: 1 year)
What now?
To stay live, the parachain can:
1. Host another crowdloan for a 2nd parachain auction
2. Self-fund a parachain auction (e.g. Acala & Karura’s decentralized
sovereign wealth funds)
3. Move to a parathread (pay as you go) instead of a parachain slot
KSM or DOT
returned to
supporters

15. For further Polkadot/Kusama introductory education:
1. Polkadot for Beginners Twitter thread.
2. Polkadot for Beginners on YouTube.
For further Crowdloan and Parachain Auction education:
3. Crowdloans and Parachain Auctions in 8 minutes on YouTube.
4. Intro to Crowdloans and Parachain Auctions, hosted by Acala & Karura on
YouTube.

16. Feel free to reach out on Twitter with questions or
collaborations: @danreecer_
Learn more about Acala and Karura at http://acala.network
Thank you