#10- Referenda #14 Polkadot Slot Auction Strategy for Phala

This is a proposal to the whole PHAmily (both the Khala and Phala community):

  • If the proposal passes, we will use the proposed strategy to join #6 - #11 slot auctions.
  • If the proposal fails, we will initiate a public referendum to update the Khala Network on Kusama to Phala’s economics, effectively creating the Phala network on Kusama. Later, we choose the best time and strategy to join the Polkadot network as a parachain (but after auction #11).

TLDR: The strategy in short

  • Phala Network will join as crowdloan to bid for auctions #6 to #11.
  • The auction cap will be set to 8 mln $DOT.
  • The total reward budget will be 10% of $PHA’s total supply. Part of the $PHA reward will come from future on-chain treasury, guaranteed by Secure Mining rate in tokenomic paper.
  • Basic reward: Contribution of 1 $DOT will return 12 $PHA as reward. 15% will unlock immediately, and the rest will be linearly vesting for 96 weeks.
  • No whitelist, No early birds, No referral reward. We think you are already tired of this! We distribute bonuses directly to all contributors equally.
  • The only extra reward will be:
    • Old Gangster bonus: Contributors from previous Khala Kusama auction will have a 5% extra reward. So will the ones who have over 300 $PHA on Khala address before blockheight #902400
  • If we fail to win a slot between #6 - #11, we will drop out of the auction but initiate a public referendum to upgrade Khala Network into Phala Network on Kusama directly. We will join the auction when there is a better opportunity in the future.

What does the Phala community wish for?

Marvin Tong, the founder & council member of Phala Network published an open discussion for the strategy of Polkadot slot auction before. The Phala community had a month- long discussion and the major ideas are:

  • We don’t need to participate in the 1st batch slot auction. The most important thing is to focus on building actual projects on Khala
  • People don’t like whitelist, but KSM contributors for Khala definitely deserve bonus.
  • People want simple rules.
  • Handle the budget carefully and responsibly: Set the reward percentage to what the network can realistically afford to give up.
  • Set a minimum reward based on a cap.
  • A plan for the possible result of Phala losing the 2nd batch auction.
  • Leave marks for the people contributed via CEX.

We want to listen to our community and support all of these ideas. We strive to give a simple, fair and long-term benefit plan.

Here it is:

Budget Strategy

10% of $PHA supply is the budget for this round of Polkadot slot auction.

In our tokenomic breakdown, we have reserved a total of 6.9% from our token supply for Polkadot and Kusama slot auctions. To secure a Kusama parachain slot, we have already used 2.5%, leaving 4.4% for the Polkadot slot auction.

So where does the rest 5.6% of the total supply come from?

The answer is the future Phala on-chain treasury. Because in Phala tokenomic paper, 70% of total supply is mint out and there is a 20% of mining tax. So we can get at least 70 mln $PHA for slot auction:

Months Mining Rewards Tax To treasury
6 129600000 25920000
12 97200000 19440000
18 72900000 14580000
24 54675000 10935000
Total 354375000 70875000

We also need enough budget to grow Phala’s ecosystem and 5.6% from treasury will be enough for it. In total, 5.6% + 4.4% make 10% and that is the total amount allocated to reward crowdloan contributors.

Since part of the budget is coming from mining treasury, the rewards cannot be sent to accounts immediately after on-boarding. However, that is not a problem. Because paying out the rewards gradually works perfectly fine together with the vesting schedule, which means, some parts of the rewards are sent out gradually per block.

Basic Reward Rules

  • Each $DOT contribution will have a reward of 12 $PHA
  • Auction cap for Phala will be $8 mln DOT
  • 15% of the total rewards (including basic and extra rewards) will unlock immediately, and the rest will be linearly vesting over 96 weeks.


We are planning to join the auction via the following Decentralized tools:

  • Polkadot.js
  • Parallel Crowdloans. You can choose to get liquid cDOT for each DOT contribution, or directly contribute to Polkadot pallet via your address

Other tools are still under review

You could join the auction via following centralized platforms:

  • Kraken
  • Okex
  • Kucoin
  • Gate.io
  • Huobi
  • MXC

Other platforms are still under review

Extra Reward Rules

We think Polkadot & Kusama community members are already tired of following so many rules to get rewards, so we abstain from using any incentives such as:

  • Whitelists, because it takes a lot time to join tons of campaigns.
  • Referrel links, because it gives the members who use CEX a disadvantage.
  • Early bird, because people might miss the registration and feel very frustrated. It also forces users to lock up their tokens very early, which is unfair.
  • Un-fixed ratio, because it induces a lot of uncertainty about future rewards for contributors.

We want to give the community a simple and clean plan and use as much as the bonus budget possible to reward all community members. If we win, we win; if we lose, we also win. While we abstain from giving early-bird or referral bonuses, we still want to value our supporters who helped us to obtain our Kusama parachain slot. Therefore, we will still use one simple bonus mechanism for our early supporters.

Old Gangster bonus

  • All addresses that contributed to previous Khala Crowdloan will have a 5% extra reward, on top of the basic rewards.
  • Based on the snapshot by Khala blockweight #902400 , every Khala address with more than 300 $PHA balance will also be in the old gangster list. If you use this address (each Khala address have a Polkadot address) to contribute to Polakdot crowdloan, you can win an OG bonus as well.

We will provide a tool that can help you verify if your Polkadot address is “old gangster” or not.

Strategy if Phala loses

In the case that Phala doesn’t win during the campaign of auctions #6 - #11, your contribution for $DOT will be returned to your addresses. And Phala community will choose from the following strategy:

  • Exit from 3nd batch of slot auction, but keep an eye on it to decide if we will rejoin the bidding at a better time with a smaller budget.
  • Upgrade the Khala network to the economics of Phala. This will be a major update of the tokenomic parameters. For example, mining parameter will become Phala version, and we will also change the names on polkadot.js, explorers etc. Note, that this is subject to governance and it is up to the token holders to decide the outcome.
  • All contributors to Phala slot auction, even though we do not win, can get on the whitelist for Phala World 1st generation NFT sales. Phala World is a metaverse for Phala community on top of Bit.Country, all players will use RMRK NFT to build and play around with PVE & PVP mode in the future. We are planning to launch the NFT sale and airdrop in Jan-Feb, 2022.

With this strategy, we are set for all possibilities and think that this is in the interest of the whole community.


I would like to share my thoughts:

  • from my PoV 1:12 reward ratio considering current DOT and PHA prices is not enough to encourage people to contribute crowdloan in required amount to win slot
  • I understand decision to get future treasure funds but it also has bad consequence - those funds will not be available for other purpose. So I’m not fun of that solution. Especially cuz I see other things which require funding

On the other hand:

  • I’m not sure how community, VC and retail investors will react for fact that mainnet will run on Kusama - does any one tried such action before?

How do you imagine migrating with such mainnet to Polkadot in future? Tokenomics on Kusama would be reverted to original?

1 Like
  • If we want to give a reward ratio of more than 1:12, then 10% of the total supply is not enough
  • Even though 1:12, already sacrifices most part of the future treasury. (But I think we left enough for ecosystem growth)

So you can see, the conflict between “higher ratio” and “less cost for treasury” is there.

As another solution, is that we can choose not to join Polkadot slot auction in this batch, so this will be a decision made by $PHA community.

About launch Phala on Kusama:

  • This is an innovation from Phala community which never happened before. In the technical side, it’s possible: and enable parachains transfer from Kusama to Polkadot is definitely some feature that Polkadot team needs to support.
  • We can do that, but many other parachains cant transfer, because we are the very few project only have 1 tokenomic

I think the 1:12 ratio is great since it would be Phala tokens on Polkadot, in other words if Phala wins the auction, the tokens’ value will increase.
Also Phala has unique tokenomics as there is a single coin on both khala and polkadot, compared to other projects their Polkadot tokens have no current price as they are not tradable.


Sure we can speculate about prices rising, however how many people will think this way?
Most of crowdloans participants will calculate current price.

0,35$ PHA x 12 = 4,2$
26$ DOT

4,2/26 = 16% - is is something about what you can get by staking DOT
it is for 2 years so APR = 8%

Don’t get me wrong - I’m not hating / fud’ing or anything like that… just I want to be realistic.
IMO participating in second batch with such strategy is waste of time (4 months until second batch end)
I understand we can’t get more coins so IMO is is better to not participate in second batch at all or watch how many coins will be required and adjust cap and ratio.
Meanwhile start mainnet on Kusama.


Totally understand. Lauch on Kusama is also a good idea for me.
That’s why we want let the community decide, both results could work out!

Sure we can do the arithmetic, however participating in a crowdloan is not the same as buying; since you get your DOT back (after 96weeks or 45days with BDOT). I imagine there are many people bullish on DOT so they will stake it on an ‘alt’ coin project for some ROI. So it is like trading time for PHA tokens + hodling DOT :)


Phala is an extremely interesting project but also very complicated for the average user, the interest generated to date is mainly from “nerdy” users and I don’t think we can focus on speculation and high rewards due to the tokenomic (even if having a single token for both blockchain is absolutely better in the long run) to incentivize crowdloan participation.

My suggestion is to build a stable and definitive blockchain on Kusama, deploy Fat Contract and Phala World and then participate in the crowdloan on Polkadot.

The PHA value could increase considering the demand from Fat Contract and Phala World, therefore the 1:12 ratio could be more attractive, moreover in the next 3/6 months (estimated time of the Fat Contract release) the competition in the auctions could be minor.


@analord What does it change if you get APY similar to less risky staking DOT? In such case if you can calculate you will join other projects or just stay with staking DOT.
Sadly we don’t have such large community, which would invest DOT into auction even if it is not profitable.

100% agree @Cappex sadly looks like we are in minority.


We can’t let this happen marv , we need to encourage people to contribute their Dot’s for phala network , and 12PHA per Dot is not enough at all , here are some of my suggestions that may work out or at least worth trying :

1- Phala world! share the metaverse with contributors. give everyone a share of the phalaworld , also raffle some of the rarest NFT’s among them , or …

2- liquid Dot ! im sure you have seen what Acala is doing with their lcDOT thing , i think that was the main reason that they secured the first slot on polkadot , you should do that too. ( many projects have done it by now , we should learn about the past auctions and experiences)

3(and conclusion) -marketing , you don’t do that at all ! you need to shill the project , everyone in the space should hear about phala and its potential , then they might know that 12PHA can worth way more than $4 in the future , and they also will get a share of phalaworld by contributing , they will enter to a raffle for rare valuable nft’s , they also stay liquid with something like lcDot , this will encourage A LOT more people than just giving them 12pha per dot and a whitelist.

i know sacrificing the whole phalaworld for a polkadot slot is not what you want , but that’s maybe the only chance for us. no whitelist no sale no nothing , share it to the contributors (if we win.) it will be community owned , how can you distribute it better than this ?!

huge partnerships and attracting big investors are also needed but it’s too late i guess.

1 Like

it seems that the decision is now directed towards participation with an high support in positive voting, I think that at the end of this batch in case of non-victory it will be plausible to evaluate the second way and develop on Kusama.

Your points are valid and the rewards may appear too low. But, remember that forgone staking rewards are (a big part) of the opportunity costs of locking DOTs in crowdloans. Those opportunity costs need to be off-set with the reward scheme, which is the case with the current ratio. Also, the APY for DOT is more or less stable while $PHA from crowdloans offers a substantial upside (and also downside, i.e., more risk and generally more chance for higher return).

One issue is that Phala is in the unique situation of both having a token already on Kusama (priced) and launching with the same token on Polkadot. I think in general, other projects will probably give similar returns, but this is not obvious because their tokens are not distributed and not priced yet. This makes people hope for abnormal returns. Maybe this fact will keep people from contributing to Phala and we are not able to gain a slot in the very near future. This is why we have a Plan B.

The main reason why I think we should still make the effort to become an early Polkadot parachain is that it is the most efficient way to grow the community, distribute the tokens to interested people, and make them involved with the project. This situation offers great opportunities because many users have not yet “found their place” when it comes to parachains and it is possible to get those people on board with Phala. At a later stage, it might be much more difficult to attract this many users at once.


1- We did mention in whitelist for Phala World contributors, no?
2- Aye. And we have that plan with Parallel, if you checked it. There are many professional liquidity-DOT protocols here, we can use them to help contributors for liquidity
3- We are doing marketing. The question is, you suggest me shilling $PHA like whom? There are many cases.

Both launching on Kusama and attending 2nd batch slot auction are fine for me. We have talked about several plans but the team has different ideas for it.

But the result from the vote today is that the community support the Phala bid auction from the 2nd batch more.

I know that if we launch on Kusama directly, will be good news to miners with more rewards, and then Khala will be totally instead by Phala. But we have to bid slot (Kusama or Polkadot ) from July even before that time next year, and Phala can’t attend Polkadot’s parachain eco until we win one.

No matter what the result is, the team will try our best. If finally, we can’t win one, we will discuss with the team and council members to see what to do next. It’s really hard to balance.

1 Like
1 Like

We already can notice large drop in required amount of DOT to win slot.
Maybe it is better to wait a little and participate in next batch? Still slot on DOT is a way better than mainnet on Kusama.
Luckly market is in side trend so it doesn’t change anything to wait a little bit more - right?