Crowdloan

A method used to obtain user support for projects during a parachain slot auction on PolkaDot or Kusama.

Crowdloans are a novel method for projects to gather the funds (in DOT or KSM tokens) needed to pay for a parachain slot lease. Fans of the project collectively "loan" the project their tokens which the project uses to bid for a parachain slot. If the bid is successful, the "loaned" tokens are locked for a period of time (usually two years) in an account overseen by the blockchain. The participants in a crowdloan typically earn rewards in form of the project's native token.

Polkadot Crowdloan is a novel method to earn rewards on the Polkadot ecosystem. Moreover, the risks are low since the tokens loaned are not actually accessible to the project. If a project's bid is unsuccessful, the tokens loaned are returned back to the contributors.