In a recent tech talk at Sub0 Asia 2024, Max Rebol and Mario Altenburger from Harbour Industrial delved into the transition from parachain auctions to core time within the Polkadot ecosystem. As co-runners of a Polkadot-focused VC fund, Max and Mario shared their perspectives on how this shift impacts both their business model and the broader blockchain community. This article expands on their insights using slides from their presentation to provide a comprehensive understanding of this significant change.
Introduction to the Transition to Polkadot Coretime
Max and Mario have been deeply involved in parachain auctions, a model where projects bid for limited block space on the Polkadot network. However, the landscape is shifting towards a new model known as core time, which necessitates significant changes in strategy and execution.
Understanding the Old Model: Parachain Auctions
Parachain auctions were introduced to allocate limited block space efficiently. Initially costly, this mechanism evolved to become an effective tool for pricing and leasing block space. Despite its efficiency, several key considerations emerged for projects contemplating parachain slots:
- Necessity: Do you need a dedicated parachain, or can you leverage existing projects like Moonbeam or Tanganika for your needs?
- Affordability: Can you financially sustain a parachain slot?
- Readiness: Are you prepared to launch immediately to avoid wasting resources?
Crowd loans played a pivotal role in this model, enabling projects to garner community support and funding. Platforms like Parachains.info provided valuable data, and the auction’s candle mechanism required projects to be strategic in their bids.
Transitioning to Core Time
The shift to core time introduces a fundamentally different approach. Instead of locking up DOT (the native Polkadot token) for a specified period, projects now pay for block space upfront. This change, while significant, is not as drastic as it might seem:
- Economic Implications: Both models involve opportunity costs. Whether locking DOT for two years or paying upfront, the net cost over time can be similar.
- Treasury vs. Burn: A key debate is whether funds should be directed to the treasury or burned. Burning DOT introduces predictable deflationary pressure, counteracting Polkadot’s inflationary model and potentially stabilizing the ecosystem.
Allocating Core Time: The New Dynamics
With core time, third-party marketplaces like Lastic are emerging, offering more flexible and short-term options for acquiring block space. This model resembles renting a house versus staying at a hotel or Airbnb, providing various levels of commitment based on project needs.
Implications for Crowd Loans
While parachain auctions and their associated crowd loans were excellent for community building, the new model lacks an equivalent mechanism. Max and Mario predict that community-driven funding will evolve, possibly through third-party platforms, maintaining engagement and support for new projects.
Strategic Adjustments for Harbour Industrial
For Harbour Industrial, this transition means shifting from a crowd loan provider to a core time broker. They plan to continue supporting projects in acquiring block space efficiently and cost-effectively while also exploring traditional VC opportunities.
Conclusion
The transition from parachain auctions to core time marks a significant evolution in the Polkadot ecosystem. As Max and Mario illustrated, while this change introduces new challenges, it also offers greater flexibility and efficiency. Projects must adapt their strategies accordingly, leveraging new tools and models to thrive in this dynamic environment.
