Continuing my review of different ways to earn on Binance crypto exchange, today I would like to tell you about the auctions of PolkaDot network parachain slots, which have been launched on Binance since the beginning of November.
I should say that you can participate in crowdloan campaigns for PolkaDot slots by yourself - via PolkaDot.js purse, but on Binance this process is much more convenient and intuitive. Plus, on Binance, you can sometimes get even more profit from participating in a crowdslot.
First, a few words about what auctions, crowdslots and parachines are.
PolkaDot is not just a linear blockchain like Ethereum, but a kind of meta-blockchain or blockchain-blockchain that combines multiple partially independent networks - parachains. PolkaDot's bandwidth is limited, especially now that blockchain is not yet fully deployed. Therefore, it is impossible for any willing project to deploy on a separate parachain.
To fairly distribute parachain slots to the most deserving projects, the PolkaDot team has implemented an auction mechanism. Every project that wants a parachain slot bids in a weekly auction with DOT coins. The highest bidder wins the slot and the winner's DOT is blocked for the duration of the slot's lease - 96 weeks maximum. Losers get their DOTs back and may then participate in the next auction.
A crowdfunding is a way to support the community, in which anyone can lock their DOT coins online, thereby voting for a project they sympathize with. All user bids in this case count towards the project's total bid. In this way, a project from not wealthy developers with a strong community has a good chance to get a parachute slot.
And to encourage users to give their votes, the project gives away its tokens to those who blocked their DOTs during the crowdfunding process by voting for the project. That's the way to make money from crowdslots. You block your DOTs by voting for a promising project, and if it wins the auction, your DOTs are blocked, and in exchange you get the project tokens. The DOTs will be returned to you when the project's slot lease expires.
It sounds quite complicated, but the process of participating in Binance's crowdfunding is so simple that you actually only need to make a couple of clicks to cast your vote for a project.
In more detail, the procedure is as follows:
- Go to your account on Binance or register a new one using my referral link from the description
- Get verified in order to unlock all of Binance's functions
- Topup your balance with DOT coins or buy them directly on Binance for Bitcoin, USDT or many other currencies, including fiat currencies
- Go to Binance Earn in the DOT Slot Auction section
- Choose a project you want to vote for from the list
- Click on Vote button
- Enter your DOT amount, click on the checkbox to agree to the terms and confirm
Just keep in mind that the first phase of the crowdfunding campaign ends on December 21st - you can only submit your vote by that date.
After you submit your vote, your DOTs will be blocked. If the project wins the slot, your DOTs will be locked until the end of the rental period. If it loses, they will return to your Binance spot balance a few days after the end of the auction.
If you win, token rewards will accrue to you in several stages. The first batch of rewards will come 5 days after the end of the first auction, around December 26th. It would be a great Christmas present if your project wins.
After that, the rewards will arrive every 92 days. They will be accumulated on the Binance Earn page and you will be able to claim them at any time.
In doing so, Binance will distribute all 100% of the rewards received from the projects without leaving any commissions.
As for the additional benefits I mentioned at the beginning of this article. First, before the start of the main auction period, Binance Earn had an active one-week Warm-Up period, during which users could get additional rewards from the total pool of $30 million. That period is now over.
However, the second beneficial aspect of crowdslots on Binance are BDOT tokens. These are synthetic assets equal in value to real DOTs. If your chosen project wins, you can get a BDOT amount equal to the number of DOTs you have blocked on your Binance spot balance. These tokens can be used as you see fit, and you can profit from them by trading and maybe even stealing, while your real DOTs are locked up. And after your slot rental period is over, you can trade BDOTs back for locked DOTs at a 1 to 1 ratio. Just keep in mind that if you sell BDOT tokens, you won't be able to get your DOTs back after the lease period ends.
And finally, I would like to say that although the process of participating in crowdfunding campaign through Binance Earn is as simple as possible, your profitability here still depends on how well you choose the project to which you will give your vote. Therefore, in order to maximize profits, you need to conduct a detailed analysis of the prospects of each project. At a minimum, study those data that provides information about each project exchange Binance. Although, in the case of failure, you will not lose anything - if the project does not win the auction, you will simply get back all your DOT.
This is a big advantage of crowdslots compared to standard investments in IEOs, ICOs and so on.
In addition, another point worth noting is that the tokens of the winning projects that will be distributed on Binance Earn will not necessarily be added to the Binance listing. You will be able to withdraw these tokens from Binance when the corresponding parachines will be launched for them, but whether it will be possible to trade them on Binance will be decided by the exchange representatives separately for each particular project.
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