What is up with Polka-DOT? A beginners guide to Agile Core Time
Cheesy right? A few weeks ago, I had the chance to listen to a presentation given by Harbour Industrial Capital — a super niche VC firm within the Web3 space, specifically focused on the Polkadot Blockchain Ecosystem right in Hong Kong.
The founders transitioned from traditional finance to the crypto world, starting up a fund out of the Cayman Islands and now actively manage funds for family offices — super cool, right?
The topic of discussion: Models of Block Space Allocation — What’s That Supposed to Mean?
As someone relatively new to the Polkadot ecosystem but not Web3, I found the discussion on block space allocation both challenging and fascinating. At a super high level, what I believe Polkadot is attempting to do is fundamentally upgrade how resources in the cloud — more specifically block space — is owned, allocated and ultimately utilized.
Polkadot’s Vision: Upgrading Cloud Resources
At its inception, Polkadot tackled the blockchain trilemma — balancing security, scalability, and decentralization.
Polkadot’s strategy? Maximize security, focus on decentralization, and limit to 100 parachains or network participants. This architecture raises the question of how to effectively manage these limited “slots” in the Polkadot ecosystem.
Why Bid for a Slot in the First Place?
Security. It’s akin to leasing an apartment in a well-protected community. Imagine having a 24-hour security team, a guard dog, a concierge, and personal mail services — all for one big upfront fee. This setup spares you the hassle of individually sourcing these services to ensure a secure living environment.
Further, owning a slot grants you access to the entire Polkadot ecosystem, enhancing interoperability through the XCMP protocol. This feature is like having easy communication channels with everyone in the neighborhood. Additionally, it offers predictable gas fees, comparable to having consistent and known costs for mail shipping. And, thanks to the robust security measures, you can be assured of living among trustworthy neighbors — aside from the occasional quirky tech bros.
Jokes aside, for the average individual, these details might not seem crucial. However, for a technology business, security is paramount. The assurance of safety and the ability to conduct business seamlessly, without significant overhead, is invaluable. Gaining a slot on Polkadot means you can operate freely within your “apartment,” leveraging these benefits to their fullest.
Parachain Slot Auctions: The Quest for a Slot
Getting a slot is like renting an apartment but first, you need to bid for it and win at a candle acution. Each slot is auctioned off for a 96-week lease and needs renewal aka you get kicked out at the end of your term.
A candle auction is an old auction method where a candle was used to mark the passage of time. The auction ended when the candle went out. People bid beforehand to ensure their bids are considered before the unpredictable end of the auction. The voting mechanism is essentially the bidding process — participants place their bid amounts in hope to win the auction. Auctions can get expensive.
However, there’s an innovative solution within Polkadot: crowdsourcing or crowdfunding your bid. This approach allows you to pool resources with others, making it more feasible to compete in the auction.
Why Upgrade the Model? Isn’t It Already “Sophisticated”?
Imagine you’ve bought an apartment that’s larger than your needs, or you’re planning a vacation. In the real world, you’d have options like renting out the excess space. However, with a Polkadot slot, these flexible solutions aren’t available. You can’t sublease or rent it out, which raises a crucial question: what do you do with these under-utilized resources? This dilemma was highlighted by Gavin Wood in his speech in Copenhagen, where he laid out Polkadot’s vision last summer.
For large organizations, engaging in high-stakes bidding is par for the course. But for smaller teams with innovative ideas, the high barrier to entry — in terms of capital and resources — is a significant hurdle.
The original auction model, especially the parachain auction model, served its purpose well initially. It provided a stable foundation during the early stages of projects. However, as the industry evolves and welcomes more and newer developers, an upgrade is essential. Polkadot’s response to this is the introduction of Agile Core Time, a more adaptable and flexible approach that aligns with the growing and changing needs of the developer community.
Understanding Agile Core Time: What’s Changing?
Lock vs Pay
Imagine you’re eyeing a two-year lease. Under the old model, you had to pay for your slot upfront. With Agile Core Time, the process evolves. Instead of paying, you stake your DOT (Polkadot’s native token), and upon lease expiry, you get your stake back. So, are you really paying more? Not exactly. This new approach shifts from a straight payment to a staking mechanism, offering a different financial model. (Learn more about staking in Polkadot here)
Core Time Markets: Nascent and Elastic
Two types of markets emerge under Agile Core Time: nascent and elastic core time markets. ‘Nascent’ refers to the early stages of these markets, while ‘elastic’ signifies a more mature phase. For the first time, we’re seeing the creation of a block space marketplace, where buying, selling, and trading blockchain computing resources become possible.
In the nascent core time markets, think of it as the Airbnb of block space. You don’t leave your apartment (or slot) vacant; instead, you rent it out. This market allows you to utilize just a portion of a slot, akin to renting a room on Airbnb and then subletting it — though this is purely hypothetical.
Elastic core time markets offer even more flexibility. Here, you can release your lease entirely, selling it repeatedly until the contract ends. It’s like realizing you won’t use the apartment you’ve rented and deciding to let it go entirely.
So are Parachain auctions going away?
No, the landscape is evolving. Instead of being locked into buying a house, the Polkadot is evolving to offer more flexible options — simliar to choosing between renting, staying in a hotel, or booking an Airbnb. This shift is a game-changer, especially for the average user or small teams navigating who like to tinker — move fast & break things.
Enterprises or funds, like Harbour Industrial Capital, might even step into a new role as brokers. They could start buying slots to rent them out or flip them for a profit. It’s a dynamic market, and initially, we might see either an abundance or a scarcity of core time. For current slot owners, this change brings a breath of fresh air, infusing the system with unprecedented flexibility.
This evolution could potentially lower the entry barriers for new developer teams eager to build on Polkadot. However, it’s still a big question mark whether this new approach will be effective or even attractive enough to lure developers. Agile core time is set to debut on Kusama later this quarter but but its arrival to Polkadot is still up in the air.
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This content is for educational purposes only and it does not constitute trading/financial advice. The author of this article may hold assets mentioned in the piece.
