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How to Earn Interest on Polkadot (DOT) with Parachain Slot Auctions on Binance Earn

2021-11-04
Staking

For the first time, Binance users looking to support their favorite Polkadot projects can now participate in DOT Slot Auctions on the Binance Earn platform. Before you participate in your first auction, you can read this to learn how you can participate in Parachain Auctions and DOT Slot Auctions. 

Main Takeaways:

  • Learn the basics and benefits of the DOT slot auction, now available on Binance Earn, and how it differs from the Polkadot Parachain Auction.

  • Starting on 4 November, Binance is offering a $30M Warm-Up Bonus prize p for users who stake their DOT funds in one click. 

  • Find out how you can use your DOT holdings to support innovative projects and generate passive income rewards simultaneously.

Binance’s new DOT Slot Auctions give HODLers the chance to stake DOT and earn tokens from the most exciting and innovative projects around. You can take part in Polkadot Parachain Slot Auctions directly from your Binance account, saving you the hassle of doing it yourself. 

The steps to join are simple. First, stake your DOT via Binance’s DOT Slot Auction and vote for your favorite project. If the project wins the auction by having the most amount staked during a random snapshot, you’ll receive a share of the new project’s tokens. 

What is a Polkadot Parachain Slot Auction?

The Polkadot network has two kinds of blockchains:

  • Parachains: Individual blockchains that use the relay chain for their security and to cooperate with other parachains.

  • Relay Chain: The central chain used in the Polkadot network. 

The relay chain currently supports a maximum of 100 parachains, meaning that space is tight and projects must compete. To distribute the parachains fairly, Polkadot created the Parachain Slot Auction using the candle auction format. Fun fact: Candle auctions are a type of auction that have been used since the 16th century. Historically, ship sellers would light a candle to signal the auction open phase. Bidding would continue until the flame died out, signaling the end of the auction, and the last standing bid would be named the winner. 

Nowadays, instead of a lit candle, candle auctions will employ a random number to determine the duration of the auction. Parachain Slot Auctions, however, differ slightly. Instead of a random duration that is unknown to the participants, the auction open phase has a set duration where users can stake their DOT behind their favorite projects.

Once the open phase is finished, a random snapshot is retroactively taken, and the staked DOT is counted at this time. In other words, the cutoff time for bids is randomly determined after the auction open phase is completed. Whichever project had the most bids at the time of the snapshot is the winner. For example, if the auction lasts 14 days and the random snapshot is taken at the 48 hour mark, all bids placed after the first 48 hours would not count towards determining the winner.

Once a winner has been determined, all DOT staked behind the project is locked for a 96 week period. During this lockup period, the winning project will distribute their tokens as a reward to their backers on a quarterly basis. Additionally, Binance will issue BDOT tokens for eligible stakers at a 1:1 ratio. These BDOT tokens will be usable while DOT tokens are locked. Any tokens staked behind losing projects are returned to their original holders.

How Binance Earn’s Dot Slot Auction Differs From Other Auctions

Our DOT Slot Auction offers you a safe and easy way to take part in Polkadot’s Parachain Slot Auctions. The process is split into two subscription periods: 

Binance Warm-Up Period

The Binance Warm-Up Period takes place over a seven day period from 4 November, 2021 to 11 November, 2021. If users stake their DOT during the warm-up period, their DOT will be locked and inaccessible until the subsequent auction period ends. During this time, you can try out and experience exactly how the DOT Slot Auction works and start voting on projects. As a reward for your early participation, you’ll also share a $30M “Warm-up Bonus”. All $30M token rewards will be distributed to users after the warm-up period ends. 

Auction Period 

The Auction Period is where you vote by staking your DOT on your favorite project(s). If the project ends up winning the slot via the candle auction, your DOT will be locked for a maximum of two years. However, Binance will issue BDOT for stakers to use while their DOT is locked up at a 1:1 ratio. If your project doesn’t win, your staked DOT will be returned once the  Auction Period is over.

How Can I Benefit From Binance’s Dot Slot Auctions?

Along with other Binance Earn products, DOT Slot Auctions benefit from Binance’s robust ecosystem and security. Binance does the hard work, leaving you with a simple way to get your DOT earning passive income.  The major benefits for all stakers include:

  1. $30M Warm-up Bonus. The early participants who vote DOTs for their selected projects can share the $30 million worth of tokens from the Polkadot parachain projects. Only in 1 week, all the $30M worth of tokens will be 100% distributed to users.

  2. SAFU funds. Binance takes its responsibility seriously in keeping users’ funds safe and secure.

  3. Simple voting mechanism. All it takes is one click to stake and vote. All you need to deal with are your voting rewards, not extra wallets, transfer fees, or DApps.

  4. Friendly for new users. Even if you’re not a crypto expert, the investment needed and rewards on offer are plain to understand.

  5. Higher rewards. Binance offers extra voting rewards during the DOT Slot Auction warm-up period. 

  6. No minimums. There is no minimum staking amount. You can start with as little as 0.1 DOT.

  7. Liquidity solution. Your DOT may be locked, but Binance issues a pegged BDOT token at a 1:1 ratio for you to use while your DOT is earning. 

How Do I Participate in a Dot Slot Auction?

Binance makes it easy for beginners and enthusiasts alike to participate in DOT Slot Auctions

Vote

  1. During the Warm-Up period, click [Vote] for your chosen projects, you will get a share of the $30M in rewards.

  2. On 2021-11-11 at 12:59 (UTC) the Auction Period officially starts. Users who didn’t participate in the Warm-Up Period still can vote for the projects;

  3. After the 5 rounds of the auction end, the auction result will be announced. If your selected projects win the slot, your staked DOT will be locked up for 2 years. If your selected projects lose the slot, your DOT will be returned to Spot Wallet in 2 days. 

Claim the rewards

  1. On the page of DOT Slot Auction, click [Claim Rewards].

  2. Users can claim the rewards hourly or cumulatively.

Conclusion

A DOT Slot Auction lets you get involved with Polkadot’s cutting edge innovation while simultaneously earning rewards. You’re not just staking tokens here. You’re also helping projects get up off the ground and BUIDL the blockchain ecosystem. Use Binance Earn to make your DOT start working for you today with a DOT Slot Auction.

Share $30M in Rewards: Participate in the DOT Slot Auction

Disclaimer: The trading and listing of Polkadot (DOT) Slot Auction parachain project tokens on Binance will go through the same strict listing review process Binance does for any other coin/token. Supporting the DOT Slot Auction does not guarantee the listing of tokens for the corresponding Polkadot parachain projects. Binance does not guarantee any listings as per our internal policy. Any projects that claim to be listed on Binance will be disqualified from our internal listing reviews.

The article has been edited on June 23, 2022.