Authors: Fatemeh Shirazi and Alistair Stewart (design also from Gavin Wood)
Last updated: 20.12.2019
To run a parachain in Polkadot a parachain slot needs to be obtained. Parachain slots are locked on a deposit basis. We define two types of parachains, namely, community beta slots and commercial slots. We want to reserve 20% slots for community beta parachain slots (“fair”, non- or limited-premine) chains that W3F will deploy or support. The remaining 80% of the slots can be more “publicly” or “commercially” opened. Commercial slot are auctioned as follows.
Auctioning Parachain Slots
Since some of the bidders are smart contracts sealed-bid auctions are difficult to realise in our context. We use auctions to have a fair and transparent parachain allocation procedure. Since implementing seal-bid auctions are difficult and to avoid bid sniping we adopt a Candle auction with a retroactively determined close as follows.
Once the auction has started within a fixed window bidders can post bids for 1-4 lease periods, where each lease period is 6 months. Bids go into the block as transactions. Bidders are allowed to submit multiple bids. Bids that a bidder is submitting either should intersect with all winning bids by same bidder or be contiguous with winning bids by the same bidder.
For 4 lease periods we have 10 possible ranges. We store the winner for each one of the 10 ranges in a designated data structure. We need to make sure that a new bid does not have a gap with a winning bid on another interval from the same bidder. This means that once a bidder has won a bid for a given range, say for example lease periods 1-2, then he cannot bid on 4 unless someone overbids him for 1-2.
If an incoming bid is not winning in it's interval, it is ignored. Otherwise we update the winner for this interval and then calculate the new winning bids. The new winner(s) are calculated by choosing the combination of bids where the average deposit for overall all 4 lease periods is most. Once a bid is added to the block, the amount of their bid gets reserved.
Once a fixed number of blocks have been produced for the auction a random numbers decides which one of the previous blocks was the closing block and we return the winners and their corresponding ranges for that closing block. The reserved funds of losers are going to be released once the ending time of the auction is determined and the final winners are decided.
For example, let us assume we have three bidders that want to submit bids for a parachain slot. Bidder submits the bid (1-4,75 DOT), bidder submits (3-4, 90 DOTs), and bidder submits (1-2, 30). In this example bidder wins because if bidder and bidder win each unit would only be locked for an average of 60 DOTs or something else equivalent to 240 DOT-intervals, while of bidder wins each unit is locked for 75 DOTs.