What is Polkadot Crowdloan?
Let's find out Polkadot Crowdloan meaning, definition in crypto, what is Polkadot Crowdloan, and all other detailed facts.
The process of staking Polkadot tokens is known as Polkadot Crowdloan. It's done specifically to raise funds for certain projects.
Polkadot is an open-source protocol. It allows data and applications to be shared between different blockchains. There are two types of blockchains in the Polkadot ecosystem – the Relay Chain and parachains.
Relay Chain can be thought of as the core of Polkadot. Essentially, it connects different parachains. Parachains, on the other hand, are similar to Ethereum Plasma chains. Basically, they can conduct transactions without relying on the Relay Chain. As a result, parachains can significantly improve blockchain scalability.
Parachain projects need to lease a slot for their parachains through the Parachain Slot Auction if they want to connect to the Relay Chain. Projects stake DOT tokens to bid for a spot in the auction. The ones that stake the biggest amount of DOT tokens become the parachains of Polkadot. They can lease a slot for around 3 to 22 months.
The staked DOT is locked into the project's slot auction bid once the users engage in the crowdloan. The tokens stay locked in the parachain slot until the lease of a slot ends.
You might be wondering how to get the DOT tokens. This is where Polkadot Crowdloan comes in since it can be used to obtain these tokens. Essentially, crowdloan is a crowdsourcing system. In a crowdloan, users stake DOT to support the parachain projects they favor. For doing that, they get various rewards, including tokens from the parachain they support.