Original | Odaily Planet Daily
Author | 0xSekiro
On October 24, when the channel height reaches 17856000, the first batch of 113 million DOTs participating in the crowdlending of the Polkadot ecosystem will be unlocked, accounting for about 7.4% of the total issuance. The amount involved in this unlocking, calculated at the current price of $4 for DOT, is about $605 million.
From November 11 to December 16, 2021, five winners on Polkadot, represented by Acala Network and Moonbeam, obtained the right to use the first batch of slots. It was also from this moment that the development of the parachain of Polkadot, a well-known public chain, officially began to operate to the outside world.
Two years have passed in a flash, and the Web3 industry has been surging and iterating frequently. We have witnessed the rise of DeFi Summer, the emergence of Layer 2 concepts, and the BTC ecosystem concept. At the same time, the birth of new public chains such as Aptos and Sui and the collapse of LUNA and FTX also reflect the cruel law of the alternation of the old and the new in the Web3 industry.
Old players leave, new players come in, and after the industry landscape has been reshuffled many times, there are still some holdouts, such as Polkadot.
With the arrival of the first crowd-lending DOT unlocking node, Polkadot will unlock DOT 6 more times in the next 2 years. There is no doubt that the big test has arrived.
For the current DeFi ecosystem with LSD as the mainstream, how to maximize the possibility of attracting this capital after unlocking has become an important task for all project parties, especially the Polkadot parachains.
To see the big picture from the small details, Odaily Planet Daily will start from the perspective of the five project parties unlocked in the first phase, and try to deduce the direction of Polkadot through their recent actions and the recently released Polkadot 2023 financial report.
What is crowd lending?
Crowdloan is a way for other parachains to access the Polkadot mainnet slot and become a Polkadot mainnet parachain. The slots of the Polkadot mainnet are rented out in the form of auctions. Each ecosystem contributor needs to provide a certain amount of DOT for staking and win the slot auction held by Polkadot.
So far, Polkadot has conducted 9 rounds of auctions for a total of 45 slots. Before this unlocking begins, Polkadot will conduct 6 rounds of crowdlending unlocking in the next 2 years. For this reason, the Polkadot community launched a referendum to increase the ideal pledge rate from the current 52.5% to 60% to cope with the upcoming unlocking pressure.
The following is the scale and schedule of each round of crowdlending unlocking in Polkadot:
According to the chart, we can see that there are 7 rounds of unlocking, with a total of about 151 million DOTs unlocked. Based on the current price of $4, a total of $605 million DOTs will be unlocked, and the value of each round of crowdlending unlocking is in a decreasing state. The biggest selling pressure comes from the upcoming first round of unlocking and the second round of unlocking on January 16 next year.
In the first round of 5 slots auction, five teams, Acala Network, Moonbeam, Astar, Parallel Finance and Clover Finance, won them. These five parachains are also the protagonists of the crowd-lending DOT unlocking on October 24.
According to statistics, among the 113 million DOTs unlocked this time, each team unlocked a different share. Among them, Moonbeam and Acala are the biggest unlockers, unlocking 35.76 million DOTs and 32.52 million DOTs respectively; Parallel, Astar, and Clover unlocked 10.75 million DOTs, 10.33 million DOTs, and 9.75 million DOTs respectively. The figure below is a detailed comparison of the specific amounts unlocked by the five teams and the current TVL of each team based on the data statistics of the DeFilama platform.
From this point of view, the main competitors at present are Moonbeam and Acala, and the amount of unlocked DOT is 368% and 704% of their current TVL respectively. Especially Acala, which suffered a hacker attack on August 14 this year, and more than 130 million aUSD were mistakenly mined, causing the price of aUSD on the chain to fall below $0.01, which was seriously decoupled. Although Acala actively carried out recovery actions later, this black swan also severely hit user confidence. We can see that after this, Acala's TVL scale plummeted from the previous $11 billion to about $17 million now.
In contrast, Moonbeam's TVL has been in a downward trend since it reached its peak in 2022.
Therefore, for Moonbeam, Acala and other parallel chains, whoever can “intercept” the DOT that is about to be unlocked as much as possible and convert it into their own Holders will have the opportunity to take the lead in the subsequent development process.
What preparations have been made for the 5 ecosystems?
Among the five related parachains, Acala and Moonbeam are the most prominent. This is not only because the two parachains have the largest amount of DOT pledged, but also because the number of contributors is relatively large, with 24,934 contributors for Acala and 48,346 contributors for Moon. As for the other three, except for Parallel Finance, which has also launched staking mining services, Astar has deployed Ethereum Layer 2 early and transformed to the B-side, and Clover Finance, which focuses on wallets and cross-chain, and involves a small amount of money, we have not found any corresponding actions of these two ecosystems.
Acala
Launched Euphrates staking service to attract LCDOT staking.
Acala launched the LCDOT unilateral staking function Euphrates at the end of September this year, which allows LCDOT holders to stake DOT and obtain the output income of ACATAI tokens. In this event, Acala prepared 5 million ACA representatives and TAI tokens for rewards. The official expects the average annualized rate to be around 35%-55%.
When Acala’s slot lease expires on October 24, its previously staked LCDOT will also be unlocked. Users can choose to convert DOT into Acala Liquid Stake DOT (LDOT) or Taiga DOT (tDOT) and make corresponding stakes.
Currently, the TVL of the LDOT staking pool is 3.56 million US dollars, and the expected initial annualized interest rate after unlocking is 214.2%; the TVL of the tDOT staking pool is 4.79 million US dollars, and the initial annualized interest rate after unlocking is 212.75%.
Holders who complete staking in Euphrates will receive corresponding LST, which can be used to participate in DeFi investments in the Acala ecosystem, such as Taiga Finance and Meta Defender.
Moonbeam
Moonbeam's lending protocol Moonwell provides an xcDOT lending model, providing users with an annualized staking return of about 13%. At the same time, Moonbeam recently started cooperation with another Polkadot ecosystem project Bifrost, which launched Omni LST based on Moonbeam, aiming to encourage unlocked DOT to participate in staking.
Parallel Finance
Launched cDOT staking mining service, users can achieve 10%-15% mining rewards by depositing DOT in Parallel’s own lending system.
From this we can see that, except for multi-chain deployment like Clover, other parties are trying to attract the unlocked DOT. On the one hand, they are launching staking mining activities related to cDOT, and on the other hand, they are also actively using projects in their respective ecosystems to gain the favor of DOT Holders.
In addition, Bifrost, which has no unlocking pressure in the short term, has also recently launched the "Polkadot Unlock Harvest" event to attract the participation of DOT users through airdrops and incentives to share the prize pool.
New Trends in Polkadot
Polkadot’s official WeChat public account PolkaWorld launched a vote on October 13: the first batch of Crowdloan’s DOT is about to be unlocked, and users are going to do what they plan to do.
More than 100 users voted on the day in the seven options of "Sell", "Hold", "Pledge", "Participate in Ecosystem Projects", "Participate in Governance Voting", "Participate in Other Crowd Loans", and "Not Decided Yet". Among them, the "Sell" option had the highest proportion, with 39 votes, accounting for about 36% of the total votes. The "Hold" option received 23 votes, accounting for 21%, and the "Pledge" option received 20 votes, accounting for 18%.
Judging from the voting data, after 2 years of staking, the trust of Holders in DOT seems to have declined. In a TG community of Acala, group members are discussing whether DOT will plummet after being unlocked.
Phala governance member Cappex posted on the X platform that although he was panicked about the upcoming unlocking of DOT, he also believed that most of the holders of DOT liquidity crowd-loan were long-termists. Holders who had low confidence in DOT during the crowd-loan period may have fled by selling pledge certificates. In other words, the price of DOT after unlocking may have been confirmed by the market before unlocking.
In addition, a considerable number of members were not bothered by the selling pressure of DOT and discussed which projects the DOT on hand should participate in mining after unlocking.
Two years ago, each ecosystem borrowed DOT from users, and locked it for two years. These DOTs were locked tightly, causing the entire ecosystem to miss the opportunity for a bull market. As the crowd loans expire, each ecosystem will try its best to use the ecosystem itself or projects on the ecosystem to take over, so it may be a new opportunity for DOT holders.
In fact, the unlocking of crowd-loan DOT is not only a new opportunity for DOT holders and project parties, but also a new starting point for Polkadot itself.
As early as August this year, at the Polkadot Decoded conference, Polkadot founder Gavin Wood proposed the concept of Polkadot 2.0.
In the new concept, Polkadot will change the previous slot auction leasing mechanism and adopt the Coretime procurement mechanism, which is similar to the concept of carbon emission index trading in the traditional financial field. Coretime refers to the time required to perform verification and consensus on the Polkadot relay chain. Each connected ecosystem purchases a share of Coretime according to its own needs.
In addition, in the recently released Polkadot Q3 2023 financial report, we can also see the overall changes in Polkadot, such as a 65% increase in R&D costs, from $5.8 million last year to $11.43 million this year. In contrast, funding for external expansion such as traditional external media has decreased by 10%. At the same time, it is also recognized that Polkadot currently has some "non-essential" expenditures, such as the $350,000 entrusted to Messari for related research... (See "Quick Look at Polkadot's Q3 Financial Report: Where Did the $21 Million Go?" for details)
Coupled with the recent announcement by Web3 Foundation of a $40 million community incentive plan and the 19th batch of Grant lists, we can see that Polkadot is moving forward steadily.
Summarize
Currently, Polkadot ranks 16th in the market value of the entire network, which is about 4.7 billion US dollars. As an old-fashioned king-level public chain, it is still in a relatively advantageous position. Although the challenges from Layer 2 and new public chains have become increasingly severe in the past two years, with the launch of a series of iterative ideas of Polkadot, we can still give optimistic expectations in the future.
