Explained | What are Parachain Auctions and how do they work?

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Parachain auctions occur on the two sister blockchains, Polkadot (DOT)and Kusama (KSM). The auctions allow developers to create new cryptoassets and decentralised applications (dApps) on top of these blockchains.However, before we understand what parachain auctions are, it is vitalthat we first understand how these two blockchains work.

They have aunique construct consisting of two chains — the relay chain and theparachain.The Relay Chain:The main blockchain where vetted and finalizedtransactions are added as blocks.Parachains: These are independent blockchains linked to the RelayChain such that they can use the Relay Chain’s computing power toscrutinize transaction data.Parachains on Polkadot and Kusama allow developers to createindependent blockchains that are linked to the relay chains of the twosister blockchains. This allows each parachain to have its own uniquespecifications, including block times, transaction fees, governancemechanism and mining rewards.Also Read: Polkadot blockchain: How is it different and why is it on crypto enthusiasts’ radar?This is unlike Ethereum, where dApps need to be built within the specifications set by the network.

Therefore, the parachain can be thought of as an interoperability chain. It allows third-party dApps and crypto assets to be integrated within the Polkadot (DOT) and Kusama (KSM) networks.The relay chain handles network security, the consensus mechanism andtransaction settlement.

And by virtue of being linked with the relay chain,all independent projects on the parachain benefit from the features of therelay chain.What are Parachain Auctions?Presently, both blockchains are capable of supporting 100 parachain slotseach. These slots can be occupied for three months at a