Crowdloan

Crowdloan is a decentralized fundraising mechanism used primarily in the Polkadot and Kusama ecosystems. In a crowdloan, users lend their cryptocurrency (often DOT or KSM tokens) to a project competing for a parachain slot in an auction. The loaned tokens are locked for a specified period, during which the project uses the funds to bid for the parachain slot. If the project wins, contributors are rewarded, typically with the project’s native tokens. After the lease period, the loaned tokens are returned to the contributors. Crowdloans provide a way for users to support projects they believe in without directly purchasing tokens, although they involve risks such as lock-up periods and uncertainty about rewards.