Polkadot wants to scale up its offerings by providing state of the art services to the crypto enthusiasts and developers. The company has now released a new IPO model based on the Substrate crowdfunding module in which the various teams can receive DOT loans from the different DOT token holders.
Polkadot Details Its Initial Parachain Offering Model
The Polkadot team provided an in-depth analysis of the Initial Parachain Offering and how it functions. Like Ethereum Shards, the parachain allows faster and highly scalable networks that can offer more efficiency to the users. Polkadot blockchain grows through the distribution of the fund’s transactions across parallel blockchains called as parachain. Now the new model IPO builds on the same principle.
Polkadot begins to auction the limited parachain through candle auctions as there is an anticipated shortage of the parachain in the ‘midterms’ over the next few years.
Since there are just about 100 parachain slots available for blockchain developers, there is a supply deficit to meet the growing demand for parachain. Polkadot IPO would address the situation so that even the startups can get loans to afford the parachain lease’s bond.
Understanding the Polkadot IPO Model
In this model, the funds collected can be traversed across the Polkadot Relay chain, and in case your project makes the necessary cut off funds in an auction, the DOT loans can be paid back to the users when the parachain lease duration ends. If the threshold amount required is not raised in the auction, the DOT loans are reverted instantly
Mitigating the Risks of ICO
There is a substantial difference in the Initial Coin Offering and Initial Parachain Offering wherein the users need to send money in the various crypto tokens to the developer team to get the native token. Experts have often talked about the underlying security threats and risks of falling prey to the hackers and scammers. There have been several incidents of frauds and scams in which fake perpetrators duped people. While ICO’s are susceptible to many risks, the novel IPOs work on parachain models in which users get back their DOT tokens once the leasing period culminates. The native token is also rewarded for the contribution.