Acala wins first Polkadot parachain auction with $1.3 billion raised

Acala, an Ethereum-compatible DeFi protocol for scaling DApps, has secured first place in Polkadot’s parachain auctions, with over 81,000 stakeholders locking up their funds in the crowd loan. As a result, the upcoming Polkadot DeFi hub raised nearly $1.3 billion from approximately 25,000 contributors in its token ICO.

The first coveted Polkadot parachain slot was won by decentralized finance (DeFi) platform Acala after days of jockeying for first place with Moonbeam, an Ethereum compatibility layer.

The winner was decided by the candle auction process, which randomly selected a block from the past seven days, at which point Acala was in the lead.

Acala raised a total of 32.5 million DOT, worth roughly $1.28 billion, from 24,934 contributors via an initial coin offering (ICO) structured as a crowdloan. As the proceeds are classified as ‘crypto debt,’ Acala would eventually need to pay back the DOT it had solicited from investors. In addition, users’ DOTs are locked for the duration of the rental agreement for Polkadot’s parallel chains up for sale.

Polkadot is an inter-chain smart contract network that enables the transfer of assets between its parachains. Earlier this month, its developers deployed the first parachain for auction. However, the technology is still undergoing heavy development. Nevertheless, Polkadot projects have raised over 87.6 million DOT ($3.44 billion).

The second Polkadot parachain auction is ongoing, with the spot up for leasing for the next two years. Currently, the projected winner is Moonbeam, an Ethereum (ETH) compatible smart contract platform designed for building interoperable applications. It is in active development and expected to launch its mainnet by the end of the year.

Thus far, Moonbeam has raised 34.28 million DOT, or roughly $1.35 billion, in its auction from over 46,000 contributors. Investors will receive one Moonbeam (GLMR) token for each DOT they pledge, with 30% of rewards immediately available for claiming, and the remaining 70% shall vest throughout the 96-week lease. The reward pool consists of 100 million, or 10%, of its token supply of 1 billion. GLMR’s token inflation stands at 5% per annum.

“There’s real competition, and this is really what we want with the auction,” Polkadot creator Gavin Wood told CoinDesk. “It’s something that wouldn’t really have happened in a traditional auction, where they would have kept very low, all the way until the end, and then they would have put everything that they had in as late as possible.”

Wood pointed out that while there is a “glamor factor” about being the first-ever auction winner, on a technical level, it makes no difference since all the parachains are going to be activated at the same time.

This opening batch of five Polkadot parachains will be auctioned off by mid-December, and then all the projects will go live simultaneously on Dec. 17. This is notably different from Polkadot’s “canary network” Kusama’s parachain auctions earlier this year. In that case, the first parachain was won by Acala’s sister project Kurara, which meant that the project could go live first.

The auction revealed some interesting data insights. For instance, one participant is responsible for around 40% of all Polkadot contributions, according to Polkadot data indexing service SubQuery. Also, project leads say major exchanges participating in the crowdloan process appear to have grouped individual users into a central wallet, perhaps accounting for the large contributors.