Moonbeam, Polkadot’s Parachain Star: Explained

Polkadot (DOT), is one of the leading blockchain networks in the crypto space and the DOT cryptocurrency has a market capitalization of more than $6 billion as of July 18, 2023. However, it remains one of the most trusted and talked-about projects in the industry due to its innovative parachains that made significant waves in the digital asset space in 2021. 

It is crucial to note that Polkadot was created by Dr. Gavin Wood, one of the co-founders of Ethereum. The project was initiated by the Web3 Foundation, which focuses on building decentralized web infrastructure.

Polkadot parachain auctions were held during the 2021 crypto market bull run and the winners of the auction included Moonbeam, a smart contract platform for building cross-chain connected applications—enabling users to interact with multiple blockchains at the same time. 

It was recently revealed that the largest decentralized crypto exchange, Uniswap, would debut on Moonbeam because it has the highest activity on the blockchain network and is also the “the most EVM-friendly in our ecosystem,” as per Uniswap.

What is Polkadot (DOT)?

At its core, Polkadot is a heterogeneous multi-chain network. It consists of a central “relay chain” that connects multiple, independent blockchains called “parachains” and “bridges.” This architecture allows various blockchains to interoperate, enabling data and assets to move between them efficiently and securely.

Key components of the Polkadot ecosystem:

Relay Chain: The central chain responsible for coordinating communication between the different parachains and ensuring the overall security of the network.

Parachains: Independent blockchains that connect to the relay chain. Each parachain can have its own rules, logic, and purpose. This approach allows for specialized use cases and better scalability.

Bridges: These facilitate communication between Polkadot and other blockchains or networks, enabling cross-chain interoperability.

Polkadot’s Consensus Mechanism: Polkadot uses a hybrid consensus mechanism, combining elements of Proof of Stake (PoS) and Byzantine Fault Tolerance (BFT). This approach aims to achieve both security and scalability.

DOT Token: DOT is the native cryptocurrency of the Polkadot network. It is used for staking, governance, and participating in the platform’s activities.

The primary advantages of Polkadot’s architecture include increased scalability, allowing many chains to run in parallel, and the ability to upgrade the network without hard forks. Additionally, it provides developers with an open and flexible environment for creating custom blockchains and decentralized applications (dApps) that can interact seamlessly with each other and the broader blockchain ecosystem.

The Concept of Parachains

Parachains, short for “parallel blockchains,” are an essential concept in the Polkadot ecosystem. They are independent blockchains that run in parallel to the Polkadot relay chain. These parachains can have their own rules, logic, and functionalities, making them highly flexible and customizable for specific use cases. Parachains are designed to work together and communicate with the relay chain to achieve a connected and interoperable blockchain network.

Here’s a more detailed explanation of parachains on Polkadot:

Autonomous and Specialized Chains: Each parachain operates autonomously and can be designed for a specific purpose or application. For example, one parachain might be focused on decentralized finance (DeFi) applications, while another might be dedicated to identity management or supply chain tracking. This specialization allows for better scalability and efficiency by distributing the workload across multiple chains.

Slot Auctions: To connect to the Polkadot network as a parachain, projects need to secure a slot on the relay chain. These slots are auctioned off, and the projects with the highest bids win the slots. The auction mechanism helps allocate the limited capacity of the relay chain fairly and ensures that only the most valuable parachains are included.

Relay Chain Interaction: Parachains communicate with the Polkadot relay chain using cross-chain message passing. This mechanism allows parachains to send and receive messages to other parachains, the relay chain itself, and external blockchains connected to Polkadot via bridges. This interaction facilitates the exchange of data and assets between different parts of the network, promoting interoperability.

Shared Security: One significant advantage of Polkadot’s design is that all parachains benefit from the security of the relay chain. The relay chain’s consensus mechanism, which is a hybrid of Proof of Stake (PoS) and Byzantine Fault Tolerance (BFT), provides security for the entire network. This shared security model ensures that even smaller parachains can be adequately protected from attacks.

Scalability and Parallel Processing: By having multiple parachains running in parallel, Polkadot can process multiple transactions and smart contract executions simultaneously. This scalability is a crucial factor in avoiding congestion and high fees, which can occur on networks with a single blockchain.

Upgradability and Governance: Parachains can be upgraded independently without requiring a hard fork of the entire Polkadot network. This upgradeability is essential as it allows each parachain to evolve and adapt to changing requirements and advancements in technology. Governance decisions for each parachain can be made by the respective communities using on-chain mechanisms.

Polkadot’s Consensus Mechanism: The relay chain of Polkadot uses a hybrid consensus mechanism called Nominated Proof of Stake (NPoS). It combines aspects of PoS, where DOT token holders can nominate validators, and BFT, which provides finality and faster block confirmation times.

How are Parachain Auctions Held?

Parachain auctions on Polkadot are a mechanism used to allocate slots on the relay chain to different parachains. These auctions determine which projects get the opportunity to connect their parachains to the Polkadot network and become part of the ecosystem. The process involves bidding with DOT tokens, Polkadot’s native cryptocurrency, and the highest bidders win the available slots.

Here’s a step-by-step explanation of how parachain auctions are held:

Announcement: Before an auction takes place, the Polkadot community and potential parachain projects are informed about the upcoming auction schedule. The announcement typically includes details about the auction’s start and end dates, the number of available slots, and other relevant information.

Application: Projects interested in securing a parachain slot need to apply to participate in the auction. They prepare and submit their applications to the Polkadot governance system. These applications should outline the project’s purpose, features, potential benefits to the Polkadot network, and any other relevant details.

Auction Start: When the auction period begins, the bidding process is open. Projects that have been approved to participate can start placing their bids.

Bidding with DOT Tokens: During the auction, projects bid with DOT tokens to acquire a parachain slot. The bids are expressed in terms of the number of DOT tokens the project is willing to lock up for the duration of the parachain lease. The lease period is usually for a specific duration, often several months.

Locking DOT Tokens: To participate in the auction, bidders must lock up the number of DOT tokens they are bidding with. These tokens remain locked for the entire lease period of the parachain, which is the duration the parachain is connected to the Polkadot network.

Slot Allocation: At the end of the auction period, the projects with the highest bids for the available slots win the right to connect their parachains to the relay chain. The winning projects are allocated the respective parachain slots they bid for.

Refunding: Projects that participated in the auction but were not successful in winning a slot have their locked DOT tokens refunded. The refund is typically sent back to the original account after the auction concludes.

Parachain Lease: After winning a slot, the parachain lease period begins. During this time, the winning project’s parachain operates as an independent blockchain, while still being secured by the Polkadot relay chain.

Renewal or Replacement: When the parachain lease period nears its end, the project can decide whether to renew the lease for a further period by participating in the auction again. Alternatively, if the project no longer requires a parachain slot or wants to upgrade to a new one, they can participate in subsequent auctions to replace their slot.

What is Moonbeam?

The parachain auction process ensures that the most valuable and competitive projects gain access to the Polkadot network while allowing for regular updates and new parachains to join the ecosystem over time. Interestingly, Moonbeam is one of the winners of the 2021 parachain auctions held on the Polkadot network.

Moonbeam is an Ethereum-compatible smart contract platform that operates as a parachain on the Polkadot network. It allows developers to deploy applications that are interoperable with both the Ethereum ecosystem and the broader Polkadot network, taking advantage of Polkadot’s scalability, security, and cross-chain capabilities.


Ethereum Compatibility: Moonbeam provides a fully Ethereum-compatible environment on Polkadot, enabling developers to deploy and run existing Ethereum smart contracts without the need for significant modifications. This compatibility allows projects to seamlessly extend their reach to new users and assets on multiple chains while continuing to use familiar Ethereum-based tools such as MetaMask, Remix, Hardhat, Waffle, and Truffle.

Cross-Chain Functionality: Moonbeam’s primary focus is on facilitating cross-chain smart contract functionality. By becoming a parachain on the Polkadot network, Moonbeam achieves integration and connectivity with other parachains and non-Polkadot-based chains, such as Ethereum and Bitcoin, via bridges. This cross-chain integration allows developers to leverage assets and users from different chains and build applications that operate across multiple blockchains.

Multi-Chain Future: Moonbeam is designed to cater to the multi-chain future, where various chains coexist with numerous users and assets on each chain. It aims to serve new kinds of assets and users that exist across two or more chains, enabling developers to shift their workloads and logic to Moonbeam and tap into a broader user base.

Solidity Support: Moonbeam offers support for Solidity, Vyper, and other programming languages that compile to EVM (Ethereum Virtual Machine) bytecode. This ensures that developers can use their preferred programming languages and tools when building decentralized applications on Moonbeam.

On-Chain Governance and Staking: Moonbeam extends the base Ethereum feature set with additional functionalities like on-chain governance and staking. These features empower users and holders of the Moonbeam native token to participate in the network’s decision-making process and secure the network by staking their tokens.

Pre-Built Integrations: Moonbeam provides built-in integrations for assets like DOT (Polkadot’s native token) and ERC-20 tokens, as well as infrastructure services like Chainlink and The Graph. This facilitates smooth interoperability and interaction with other blockchain ecosystems and services.

Minimal Configuration Changes: Developers can port their projects to Moonbeam with minimal to no code changes. This streamlined process allows projects to tap into the Polkadot ecosystem and access its assets and user base without major development efforts.

Moonbeam Winning the 2021 Parachain Auction

Moonbeam’s victory in the 2021 parachain auction was achieved through a highly successful crowdloan campaign.

During the crowdloan campaign, Moonbeam’s community demonstrated astonishing support, contributing over 35 million DOT (approximately $1.4 billion USD) to help secure the parachain slot. This significant contribution made Moonbeam stand out among other projects in the auction, setting a new precedent for crowdloans in terms of the largest total contributions and the highest number of contributors by far.

Over 200,000 participants contributed DOT to the crowdloan, demonstrating broad participation from Moonbeam’s global community. The average contribution per participant was approximately 170 DOT.

As a result of this community-driven effort, Moonbeam secured the parachain slot on Polkadot, solidifying its position as a scalable smart contract platform with a strong presence in the Polkadot ecosystem.

Overall, Moonbeam’s victory in the parachain auction highlighted the strong community support it received and its significant contribution to the Polkadot ecosystem. This achievement allowed Moonbeam to secure its place as an essential component in the growing multi-chain environment of Polkadot.

GLMR Token

GLMR serves as the native utility token of the Moonbeam platform and has multiple use cases within the ecosystem. It can be used to pay transaction fees on the Moonbeam network and also serves as a means for on-chain governance. Token holders can participate in network issues such as proposal referendums and electing council members, giving them a say in the future development and upgrades of the protocol.

Polkadot vs. Kusama

Polkadot and Kusama are both blockchain networks created by the same team and founded by Dr. Gavin Wood, one of the co-founders of Ethereum. While they share some similarities, they serve different purposes and have distinct characteristics. Here’s a comparison of Polkadot and Kusama:

Main Purpose

Polkadot: Polkadot is designed as a multi-chain blockchain platform that enables interoperability between different blockchains. It aims to create a scalable and decentralized network where multiple blockchains, known as parachains, can connect and communicate with each other.

Kusama: Kusama is often referred to as the “canary network” or a “wild cousin” of Polkadot. It serves as a highly experimental and fast-moving platform that allows developers to test new features, upgrades, and governance mechanisms before they are deployed on Polkadot. Kusama is considered a more risk-tolerant environment for innovation and rapid iteration.

Governance Model

Polkadot: Polkadot employs a more conservative and cautious governance model. Significant upgrades and changes to the network go through a carefully orchestrated and community-driven process.

Kusama: Kusama has a more rapid and permissionless governance process, allowing stakeholders to experiment with various governance mechanisms and make changes faster. This makes Kusama better suited for early-stage testing and experimentation.


Polkadot: As the main and more mature network, Polkadot is considered more secure and reliable due to its cautious approach to upgrades and a more thoroughly tested codebase.

Kusama: Being an experimental network, Kusama carries higher risks of vulnerabilities and potential security issues. The network attracts risk-tolerant participants who are willing to take on more experimental features.

Token Economics

Polkadot: DOT is the native token of the Polkadot network and has a stable and well-established market.

Kusama: KSM is the native token of Kusama. It is considered a “canary token” as its value and utility are closely linked to Polkadot’s development and success. KSM can be used for governance and staking in both networks.

Parachain Auctions

Polkadot: Polkadot conducts parachain auctions for projects to secure a slot on the network. These auctions are more expensive and competitive.

Kusama: Kusama’s auctions are less costly and competitive, making it more accessible for projects to secure a parachain slot.

Polkadot is the more established and secure multi-chain platform, whereas Kusama serves as an experimental and fast-moving network for early-stage testing and innovation. Both networks have their unique strengths and purposes, catering to different use cases and developer communities.

Other Parachain Projects on Polkadot


Acala won the first coveted Polkadot parachain slot through the candle auction process. The auction took place on November 18, 2021, and Acala secured the slot by receiving approximately 32.5 million DOT (Polkadot’s native cryptocurrency) contributed by 81,000 participants.

Astar Network

Astar Network is a layer-one smart contract blockchain platform in the Polkadot ecosystem and aims to drive the mainstream adoption of blockchain technology and Web3 by focusing on delivering Web3 capabilities to billions of users and further decentralizing its network.

The project has successfully raised $22 million in strategic funding, led by Polychain Capital and joined by venture capital firms like Alameda Research, Alchemy Ventures, Crypto.com Capital, and notable angel investors including Polkadot creator Gavin Wood and Japanese soccer player Keisuke Honda.

Parallel Finance

Parallel Finance is a decentralized finance (DeFi) platform that operates on the Polkadot ecosystem. It aims to provide a comprehensive suite of DeFi applications and services to users, enabling them to streamline their capital, achieve higher capital efficiency, and optimize their yield on the Polkadot network. Parallel Finance focuses on building a user-friendly and secure DeFi ecosystem to attract millions of users over the coming years.


It is important to note that Polkadot is still in its early stages of development. There are a number of challenges that need to be addressed before Polkadot can be widely adopted. These challenges include scalability, security, and interoperability. Despite these challenges, Polkadot has the potential to be a major player in the blockchain space. If Polkadot can successfully address the challenges it faces, it could become the backbone of the decentralized internet.

Moonbeam’s main features revolve around its Ethereum compatibility, cross-chain functionality, support for Solidity and other programming languages, on-chain governance, and easy integration with the Polkadot ecosystem. These features make Moonbeam an attractive platform for developers looking to extend their applications to multiple blockchains and benefit from the growing multi-chain future.


What is Moonbeam on Polkadot?

Moonbeam is an Ethereum-compatible smart contract platform that operates as a parachain on the Polkadot network and won the parachain auctions in 2021.

What are parachains on Polkadot?

Parachains are independent blockchains that run in parallel to the Polkadot relay chain. These parachains can have their own rules, logic, and functionalities, making them highly flexible and customizable for specific use cases.

Why is Polkadot famous in crypto?

Polkadot is famous in the cryptocurrency world for its innovative and unique approach to blockchain technology, specifically its focus on interoperability and scalability.

Which project was the first winner of Polkadot parachain auctions in 2021?

Acala won the first coveted Polkadot parachain slot through the candle auction process and the auction took place on November 18, 2021.

What are some famous projects on Polkadot?

Some famous projects on Polkadot include Moonbeam, Acala, Parallel Finance, and Astar Network.

What is GLMR cryptocurrency?

GLMR serves as the native utility token of the Moonbeam platform and has multiple use cases within the ecosystem. It can be used to pay transaction fees on the Moonbeam network and also serves as a means for on-chain governance.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Micah Abiodun

Micah is a crypto enthusiast with a strong understanding of the crypto industry and its potential for shaping the future. A result-driven Chemical Engineer (with a specialization in the field of process engineering and piping design), Micah visualizes and articulates the intricate details of blockchain ecosystems. In his free time, he explores various interests, including sports and music.

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