What Are Candle Auctions In Polkadot ($DOT)?

As a seasoned analyst with years of experience in the blockchain industry, I find myself constantly intrigued by the unique mechanisms employed in various projects to address complex challenges. In this case, the use of candle auctions on Polkadot and Kusama is nothing short of fascinating.


In both Polkadot and Kusama networks, parachain auctions are significant events as they decide which projects get assigned a parachain slot and how many tokens will be locked for this purpose.

In both Polkadot and Kusama, the method used to distribute parachain slots is known as candle auctions. These auctions resemble traditional open auctions, where competitors continuously increase their bids. The highest bidder emerges victorious once the auction concludes.

Understanding Candle Auctions

In the 16th century, candle auctions were initially employed for ship sales, deriving their name from the method used to set the auction duration – each inch of burning candle corresponded to an hour of bidding time. When the flame went out, the highest bid at that moment was declared the winner. Modern online candle auctions operate differently; they employ a random number to determine when the auction ends. However, for parachain slot auctions, there’s a slight twist: instead of ending randomly, these auctions run for a set duration, and the winning bid is chosen at random from all bids submitted during that period, with the results determined after the auction has concluded.

How Do Candle Auctions On Polkadot Work?

Candle auctions on Polkadot are split into two parts: The opening period and the ending period.

The Opening Period

The auction’s commencement triggers the start of a duration extending over one day and sixteen additional hours, serving as a preparatory stage. During this stretch, parachains can establish their initial offers, refine their strategies, and execute plans aimed at securing a winning position in the slot auction. It’s important to note that Polkadot will still receive bids during this preliminary phase; however, these bids won’t influence the final results of the slot auction.

The Ending Period

This concluding segment lasts for 5 days and occurs once the opening one is done. The auction could end during this final stretch because of the candle auction procedure.)

The Role Of VRF

During the specified closing phase, the auction may conclude unexpectedly. The exact moment the auction finishes is determined unpredictably and instantaneously by the Verifiable Random Function (VRF). Each participant’s chance of winning the auction equals the number of blocks containing their highest bid, divided by the total count of blocks in the closing period. Polkadot ensures a random conclusion by continuously circulating throughout the ending phase, taking screenshots (snapshots) at each block within this phase to identify winners for specific blocks. Once the auction is over, one of these snapshots will be selected randomly as the declared winner.

In Polkadot, parachain auctions span a full seven days. The initial phase runs for approximately a day and a half (18 hours), followed by a five-day bidding period. The final six hours are used to identify and declare the successful bidder.

Why Use Candle Auctions?

Candle auctions aim to resolve two significant challenges that often arise in blockchain-based auctions: the practice of front-running and the reliance on smart contracts among participants. Front-running occurs frequently on blockchains since information about upcoming transactions may spread among network users before they are incorporated into new blocks. In a blockchain auction, some bidders might have the ability to view other bids and alter their strategies prior to these being recorded on the blockchain itself.

In the process of using smart contracts for bidding, there arises a challenge with transparency. Since the value of the smart contract might be known prior, the auctioneer can create a fake bidder and make deceitful bids (shill bids). This is a major issue that affects second-price auctions.

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2024-08-15 17:17