Polkadot and Kusama are multi-blockchain networks that allow projects, which work on them be able to transfer tons of data. Accordingly, projects can have their own blockchains called “Parachains”. These parachains would be allocated to projects through the auction process handled by Polkadot and Kusama community. Let’s take a look at Polkadot status as well as Kusama.
Polkadot status; parachains
In order to secure a parachain, projects must provide security throughout auctions. For this purpose, projects should stake DOT and KSM tokens with unknown ending time.
Now, the number of these parachains are limited to 100 and each is divided into four batches of six- months rental period and projects can participate in one or more period according to their needs. Since about 400 projects have been built on Polkadot and Kusama so far, this made parachains become limited. As a result, in order to win the auctions, projects should provide required finance using other ways.
Considering Polkadot status, a solution comes named “CrowdLoan”. So, projects can encourage others to lock their DOT and KSM tokens. Then, people who participate in this CrowdLoan activity, can stake their tokens for 6, 12, 18 and 24 months. In return, they can receive some amount of the project token or any other valuable asset as reward.
Thus, in order to incentivize people to participate in CrowdLoan, projects must provide attractive reward plans in a way, which is profitable for both investors and project.
Now, CrowdLoan is being provided by centralized exchanges, which are not reliable for investors. This is where Bounce Finance enters, by providing a crypto called “AUCTION” and as it is decentralized, it removes intermediaries and third-parties. Consequently, the process would be less risky.