Crowdloans FAQ Print
Modified on: Tue, 24 Oct, 2023 at 9:13 AM
Parachain slot auctions are a nobel method that enables projects to onboard on the Relay Chain and utilize its shared security and interoperability. To acquire these slots, a call to the community can be made from the project, and any user can support their preferred project in winning a slot. This mechanism is is referred to as a "crowdloan". Because of its novelty in the blockchain industry, there are many questions raised during the process. In this article we'll try to address the most common questions in a user-friendly FAQ.
TABLE OF CONTENTS
- 1. How do I participate in a crowdloan?
- 2. Do I have to do KYC in order to participate? (Can e.g. U.S. residents participate in crowdloans?)
- 3. Where can I get DOT/KSM tokens to participate in a crowdloan?
- 4. How do I create a DOT/KSM account so I can participate?
- 5. Can I participate in crowdloans with my Ledger?
- 6. Can I cancel a contribution once I have submitted it?
- 7. When will I get my tokens back?
- 8. How can I get my tokens back?
- 9. Can I contribute more once I have submitted my contribution?
- 10. Where I can see my rewards?
- 11. Can I contribute with all my DOT/KSM balance?
- 12. My account was reaped. Will I receive my rewards?
1. How do I participate in a crowdloan?
The short and simple step-by-step process is laid out for you here.
2. Do I have to do KYC in order to participate? (Can e.g. U.S. residents participate in crowdloans?)
3. Where can I get DOT/KSM tokens to participate in a crowdloan?
You can check this on public listing services. See more information on where to buy DOT/KSM here.
4. How do I create a DOT/KSM account so I can participate?
The account creation process on polkadot.js is laid out in this article.
Make sure you switch to the Polkadot network before you follow the instructions (or Kusama for the respective crowdloans). You can do this by clicking on the network on the top left and then selecting the correct network node from the list.
5. Can I participate in crowdloans with my Ledger?
It depends. Both the Polkadot and Kusama apps support the crowdloan extrinsics, so it's technically possible to participate with a Ledger account, but here are a couple of things that you need to keep in mind:
- Some parachain candidates batch the 'crowdloan.contribute' extrinsic with a 'remark' extrinsic, which means they send a message along with your contribution, especially if you use their UI to contribute. In that case, it's not possible to use a Ledger account because the Ledger apps don't support including the 'contribute' extrinsic in a batch call.
- Web3 Foundation made a deal with Zondax (the company that develops the Polkadot and Kusama Ledger apps) for them to create apps for all auction winners on Polkadot. However, the deal covers the Basic package, which includes only basic transfer extrinsics. The reward mechanism that most crowdloan winners use is that part of the tokens they give to contributors are locked in a vesting schedule. What this means is that the tokens need to be vested periodically in order to become transferable. But the Basic package doesn't include the 'vesting' extrinsics, so it won't be possible to unlock these tokens unless the parachain has paid to include that functionality in their Ledger app.
In any case, it's highly recommended that you contact the parachain candidate you want to contribute to and ask them if you can do it with your Ledger account, before contributing.
6. Can I cancel a contribution once I have submitted it?
No, it is not possible to cancel your contribution once it's done. While you will receive your tokens back eventually, you will have wait until they will be released again.
7. When will I get my tokens back?
Your tokens will be released when one of these two events occurs:
- The auction is over without your parachain candidate winning a slot. In this case your tokens will become liquid again once the auction period is completed.
- Your parachain candidate successfully secured a slot. In this case your tokens will be released once the lease period of the parachain has come to an end.
8. How can I get my tokens back?
Typically, there's no need for any action on your part. The extrinsic to unlock the contributed tokens can be initiated by anyone, often handled by the team responsible for the crowdloan. However, if they don't take action, it's open to anyone to execute, resulting in the tokens immediately returning to the original contributors' accounts.
9. Can I contribute more once I have submitted my contribution?
Yes, you can. Simply follow the exact same contribution process again, as you did the first time.
10. Where I can see my rewards?
Each parachain team has their own rewards mechanism for those who contributed to their crowdloan and they are the ones that set the rules of the rewards distribution. So, to get accurate information on this matter, it's best if you contact the team of the specific parachain that you contributed to.
What usually happens, though, is the following:
- The rewards are sent to the same account that you contributed with, but on the specific parachain, so you can't see them on the relay chain. Substrate accounts can be used on many chains and to find out how to access your account on a parachain, check this article.
- The rewards aren't sent out right away, so if the parachain you contributed to just won the auction, it's probably normal that you haven't received any rewards yet.
- A portion of the reward is given out right away as transferable balance while the rest is vested over a period of time.
Again, this is the way parachain teams usually distribute their rewards, but you shouldn't rely on this information. The parachain you contributed to might be doing things very differently, so it's best if you look for this information on their site or contact their support.
11. Can I contribute with all my DOT/KSM balance?
Yes. In that case your account will be reaped (deactivated) and will be reactivated either when you send more than the existential deposit (ED) to it or your contribution gets returned.
In fact, if you plan on contributing enough to bring your balance below the existential deposit (which is 1 DOT on Polkadot) you should contribute the entire balance, minus the transaction fees. If your balance drops below the ED any remaining funds will be burned and lost!
For example, if you have 10.5 DOT in your account and you want to contribute 10 DOT you should instead contribute 10.48 DOT. If you contribute 10 DOT, the remaining 0.5 DOT will be lost. The 0.02 DOT subtracted from the balance is an (over)estimation of the fees you'll need to pay for the transaction.
Otherwise, make sure that your balance (after the subtraction of fees) will be above 1 DOT. So, to be safe leave at least 1.1 DOT behind, if you don't plan to contribute everything.
12. My account was reaped. Will I receive my rewards?
Yes. The rewards promised by the parachain team are distributed on their chain, in their native token. An account can be used on many chains and getting reaped on one chain doesn't affect the account on another.
Your contribution is safe too. If your account is still inactive when you receive back your contribution, it will be reactivated then. But you can also reactivate it any time you want by sending at least 1 DOT to it.
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Disclaimer: We always strive to provide you with the best support we can and we take all care to ensure that our instructions are accurate and concise. However, following these instructions properly, as well as the general management of your accounts and funds, is ultimately your responsibility. Web3 Foundation cannot be held liable for any accidental loss of funds or any other damage you might incur.