Batch 1 of the Polkadot Parachain Auctions is now over, with 5 projects winning the first ever slots. All slots from the first batch successfully launchd on the 17th of December 2021. PoF subscribers were able to view our strategy going into these auctions, and subsequently 4 out of 5 of our selected projects have secured their right to be a foundational component of the budding Polkadot ecosystem.
However, this is not the end of the journey as we only allocated a portion of our DOT to the first batch – we still have other batches to participate in. We have been monitoring the contenders for the second batch closely over the course of the last few weeks. In this journal we’ll analyse the first batch and present our allocation for the second batch!
Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.
TLDR
4 out of 5 of our selected projects have secured a slot in the first ever batch of Polkadot Parachains.
Those 4 projects were Moonbeam, Acala, Parallel Finance, Astar Network.
Manta Network unfortunately did not secure a slot and so we still have 3% of our DOT to allocate from the first batch.
For batch 2, our first pick is Composable Finance.
We will be allocating 10% to Composable, leaving us with 13% of our DOT still to allocate.
We may choose to participate in another batch 2 project further down the line.
For more information, please read on!
For those who are not familiar with Polkadot Parachains, please read the following journals to get up to speed with our Giga-Brain Plan:
Polkadot Fundamentals:
https://www.proofoffuture.com/post/polkadot-the-internet-of-blockchains
Strategy:
https://www.proofoffuture.com/post/the-full-giga-brain-polkadot-plan
Participation:
https://www.proofoffuture.com/post/giga-brain-polkadot-season-incoming
Batch 1 Analysis
Let’s have a look at how batch 1 has played out:
As expected, Moonbeam and Acala won the first and second auctions – they were no-brainers for us as the products offered by those projects will be essential for Polkadot DeFi. Similarly, with the number of people using Parallel’s Crowdloan infrastructure to contribute to the auctions and the utility of their DeFi products, it was clear to us that they would earn their place in the future Polkadot Ecosystem.
With Astar Network offering the infrastructure for Web3.0 developers from any background through WASM and their focus on interoperability (a key fundamental goal for Polkadot in general) we believe that Astar can attract developers from other ecosystems. Being able to streamline the process for external developers is essential for attracting talent, and we believe Astar can facilitate that.
Our final pick, Manta Network, unfortunately didn’t win a slot in the first round – as hyped as zk-SNARK technology is currently we feel that they didn’t win because there’s a lot of hype around zk-Rollups on Ethereum at the moment so most of the attention is there. However, Manta is definitely a project to keep an eye on and we believe it is inevitable they will eventually secure a slot on Polkadot.
Parallel Finance Offer
For those who have contributed to a project through Parallel Finance and that project did not secure a slot in the first batch, Parallel is offering a “Loyalty” program.
If a user has contributed to a project that hasn’t secured a slot in the first batch, they can re-allocate through Parallel rather than receive a refund on their DOT. The incentive for doing this is a 25% boost to their PARA token contribution bonus (a 1 PARA increase on the 4 PARA per DOT contributed) if the new project secures a slot in the second batch.
Now that we’ve covered what’s been happening with the first batch, what’s the plan for the second batch?
Composable Finance (LAYR)
Composable Finance is a cross-chain platform built for DeFi interoperability between not only multiple chains, but also multiple Ethereum Layer 2 solutions. By leveraging the liquidity on Ethereum and its Layer 2, combined with the liquidity present on both the Polkadot and Kusama ecosystems, Composable aims to become a hyper-liquidity layer connecting DeFi across all these platforms.
Picasso is the Kusama sister-project for Composable Finance, winning the 13th Kusama Parachain Auction. The idea behind Composable is that decentralised applications (DApps) built using their infrastructure have the option to deploy across all the chains and layers integrated with Composable. Currently DeFi is segregated by chain, and the vision that Composable has set out will massively improve and streamline the key area that DeFi participants currently struggle with – moving their assets between blockchains and DeFi interoperability.
Tokenomics
LAYR is the utility and governance token for Composable Finance and is used for paying transaction fees and staking. Here’s a breakdown:
LAYR has a total supply of 100 million tokens, with 12% of the total supply (12 million LAYR) available as Crowdloan rewards.
25% of these reward will be available on the launch of the second batch, with 75% linearly unlocked over 1 ½ years.
Stablecoin Crowdloan
Unique to Composable Finance, contributors will be able to contribute using ERC-20 standard stablecoins such as USDT, USDC, and DAI. Here’s how it works:
The user deposits stablecoins through the Composable Finance Crowdloan Hub with a 1% fee, plus Ethereum transaction fees.
Composable will use the stablecoins to purchase DOT and contribute to their own Crowdloan campaign.
Contributors will receive LAYR tokens in the exact same manner as those who contribute DOT in the standard Crowdloan.
At the end of the 96-week lease period stablecoin contributors will receive the DOT that was purchased using the stablecoins instead of the original tokens.
Composable believes that this offering will remove the barrier to entry for a lot of Ethereum DeFi users and provide them with exposure to the Polkadot ecosystem in a more accessible fashion.
We will be allocating 10% of our DOT towards Composable Finance through Parallel. The reasoning behind such a large allocation is that a lot of the projects we will be allocating to already have tokens available on the market. Additionally, Composable already has a working product and a Parachain slot on Polkadot is the final step towards fully integrating the network. We believe that there will be better opportunities down the line in other batches, and so we are content with only allocating to Composable for batch 2.
Originally the plan was to re-allocate to Manta Network, however after having waited a week it is apparent that Manta will not be participating in this batch. Rewards for Batch 1 cannot be claimed yet and we will release a journal for this process once we can do it ourselves.
Linking the Polkadot ecosystem to Ethereum L2, whilst also bridging all the various L2 solutions to each other via the Mosaic bridge is huge. We have seen the hype around Ethereum Layer 2 in the last few months and we believe the utility here cannot be understated.
Since Manta Network failed in securing a Parachain slot we would like to keep the 3% of our DOT previously allocated to that project if they decide to participate in batch 2 later. If not, we may choose to utilise that DOT later in Batch 2 on another project. After allocating 10% to Composable, we have 13% of our DOT left to allocate out of the 50% total (27% going to batch 1).