Web3 and DeFi trading engine project Polkadex is asking for a massive favor from its community this week as it bids to secure a coveted parachain slot on the interoperable Polkadot blockchain.
Polkadex is a fully decentralized and hybrid peer-to-peer crypto orderbook built on Substrate that aims to combine the best aspects of centralized and decentralized exchanges. While decentralized exchanges have become commonplace in recent years, they tend to be hamstrung by problems including slow transaction speeds and a lack of liquidity, meaning slippage becomes unavoidable when trading on such platforms.
Polkadex’s goal is to remedy that by fusing the liquidity of centralized crypto exchanges with the autonomy and security of decentralized platforms. Its main components are the Polkadex Orderbook, which is an exchange platform with no custody of funds, the Polkadex IDO Platform for Substrate-based token launches, and Polkadex Mobile, a mobile trading app that supports cold wallets.
The fourth and final component of Polkadex will be its decentralized blockchain network, built on one of Polkadot’s parachains to support swap protocols with feeless swaps.
One of the main advantages of Polkadex Orderbook will be its high scalability. It has been designed to support 500,000 transactions per second with sub-millisecond latency, meaning it can handle high-frequency and algorithm-based trading. It also boasts support for Ethereum and Substrate assets. The idea with Polkadex is to make decentralized trading more powerful and accessible by improving liquidity and reducing gas fees through its cross-chain support. One of its most interesting features is its asset delegation capability, which makes it possible for platform users to delegate their assets to a third-party – such as an algorithmic trading bot or a fund manager – so they can trade on their behalf.
Why does Polkadex need a parachain slot?
Securing a Polkadot parachain is key to Polkadex’s ambition to enable more powerful and accessible decentralized trading. Parachains are specialized Layer-1 blockchains built on the Polkadot network that can be tailored to suit different purposes. Notably, the parachains on Polkadot are all interconnected, meaning data and assets can flow freely across all of them. It’s this unique characteristic that enables parachains to overcome the isolation of existing Layer-1 blockchains. It means projects built on Polkadot’s parachains will be able to innovate to a degree that’s unprecedented in the blockchain industry.
Polkadex needs a parachain slot for interoperability with other blockchains. If it gets one, it will benefit from being more scalable, easily upgradeable thanks to Substrate’s blockchain framework and lower gas fees. Another key advantage is that parachains get to share the security of Polkadot’s network as soon as they connect to it.
“The Polkadex network does not yet benefit from the interoperability and shared security that come with being a parachain,” the project’s leaders wrote on Medium. “Interoperability is key for Polkadex. The ability to trustfully move an asset from a different chain over to Polkadex will be a game-changer for traders and decentralized finance fans alike.”
Polkadex is bidding to lease a parachain slot for 96 weeks via an auction and it will need the backing of its community if it’s to succeed in that goal. The community is being asked to contribute DOT (the native token of Polkadot) holdings to its crowdloan campaign in return for some very generous PDEX (Polkadex’s coin) token and NFT rewards.
The next crowdloan kicks off on January 17, but community members should note that if they decide to back Polkadex their DOT tokens will be locked up for an indeterminate period of time. Assuming Polkadex wins a parachain slot, those tokens will be inaccessible for the next 96 weeks. If it fails to secure a slot, the tokens will be unlocked once the auction runs its course.
While the DOT tokens are locked, Polkdex will reward its backers with PDEX tokens. In its blog post, the team said two million PDEX tokens have been set aside for rewards, with 1.5 million PDEX to be used as base rewards, distributed in an equal manner, and the other 500,000 PDEX as bonuses, including a 15% early-bird bonus for all contributions within the first 72 hours of the Crowdloan going live. One quarter of the PDEX will be paid out in bulk the moment Polkadex becomes a parachain, with the remaining tokens to be vested linearly over the 96 week duration.
In addition, Polkadex will also hand out 1,000 limited edition and utility-based NFTs to the top 1,000 contributors to the auction, on top of their base rewards and bonuses.
“We need your support in the form of DOT contributions to the Polkadex Crowdloan, which will go live on January 17th,” the Polkadex team said in its appeal. “Your loaned DOT will go a long way towards fulfilling the original vision of interoperability and trustless cross-chain transfers.”
For more details on the rewards and how to contribute DOT to Polkadex’s parachain bid check out its crowdloan campaign here.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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