Polkadot Coretime Redesign: Can It Empower DOT Even More This Time?

Polkadot Coretime Mechanism: From Slot Auctions to Coretime Sales

In its early stages, Polkadot allocated block space through a parachain slot auction mechanism, where the core approach involved competitive auctions for locking DOT tokens to acquire slot (block space) usage rights for fixed terms. Specifically, project teams were required to bid and lock DOT in auctions, with lease periods ranging from 6 months to 2 years. This mechanism was essentially a “deposit-based lease,” as project teams bore the opportunity cost of locked DOT rather than direct fee payments.

Polkadot used a modified candle auction system to ensure fair price discovery by randomly ending the auction and avoiding last-minute sniping. While this worked well at the beginning, the system became increasingly inefficient. The fixed number of slots limited network scalability, and unused block space went to waste. For example, during the first auction in 2021, the cost of a single slot was prohibitively high for smaller teams. Even Dr. Gavin Wood admitted at the 2023 Decoded conference that “the auction model isn’t flexible enough.” Candle auctions have been useful for launching parachains and attracting projects to the ecosystem, but the model no longer fits the network’s evolving vision.

In Polkadot 2.0, the slot system was replaced by a more flexible mechanism called Coretime. Projects can pay DOT to purchase relay chain verification and consensus resources on demand. Instead of renting space by locking DOT, projects can now buy blockspace directly using DOT, which is priced dynamically based on supply and demand. This turns network resources into a more fluid and efficient market. There’s no need to lock up large amounts of DOT for long periods, lowering the barrier to entry for new projects.

Switching from a leasing model to a payment model has significantly improved DOT’s value capture capabilities. Under the previous slot auction system, DOT was used as collateral， so its value capture relied on reducing the circulating supply through token lockups. However, these tokens were eventually returned, limiting the long-term impact on value. With the Coretime model, projects now pay DOT directly to access blockspace, and the tokens are burned, permanently reducing the total supply. This introduces a deflationary mechanism tied directly to ecosystem growth.

Therefore, DOT’s utility has shifted from a temporary lockup mechanism to a permanent burn mechanism, greatly enhancing its ability to capture value. However, while Coretime has injected new momentum into the Polkadot ecosystem, it has also started to reveal certain issues, signaling the need for thoughtful redesigns based on real market dynamics.

The Current Problems with Coretime

The Coretime model was introduced in Polkadot 2.0 to improve the efficiency of block space allocation through market-based mechanisms. It also aimed to increase DOT’s value capture through direct payments. But after some time in operation, certain issues have emerged that are now impacting the ecosystem in real ways.

1. Coretime Monopoly and High-Price Resale

In April, a group called coretimenegotiation publicly disclosed on the Polkadot forum that they had acquired a significant majority of available Core units on both Polkadot and Kusama. They claimed to have legally secured 73 of 94 Cores on Kusama and 9 of 18 on Polkadot, which makes them the largest holder of Coretime resources on both networks. The group insisted their actions were compliant and aimed to draw attention to flaws in the Coretime pricing model and the lack of a proper secondary market.

Their initial purchase costs were minimal, with just 0.0009 KSM per Core on Kusama and 9.2 DOT per Core on Polkadot. However, they later set resale prices as high as 50 KSM, and during renewal negotiations with Mythos and Xcavate, they reportedly demanded 3,500 DOT per Core. Using this as a baseline, they began negotiating with several other projects. While the group insisted that their actions were not intended to manipulate the market, many community members viewed it as monopolistic behavior, a centralized control of scarce resources with prices set through private negotiation, disrupting the intended openness of the Coretime market.

To be fair, the group may have had good intentions. Polkadot’s Coretime system currently lacks a formal secondary market for Core resales, and they claim to be filling that gap. However, their current approach on direct pricing and off-market negotiation, has raised serious questions about price fairness. There is a real concern that prices could be arbitrarily set or intentionally inflated. The group also stated that they plan to use their Core holdings to help new projects onboard into the ecosystem. They’ve registered parachains on various relay chains and allocated unsold Cores to these parachains. Their next step is to offer a new sales model, “bundled Core sales”, which involves selling fully registered parachains that include multiple Cores. Meanwhile, they continue acquiring additional Cores.

This situation remains controversial and under scrutiny. If their goal is to address the lack of a resale market, is their strategy sustainable? In reality, probably not. Unused Coretime expires, and prices rise with demand. In urgent scenarios, projects might face outages or be forced to seek emergency intervention from OpenGov, which disrupts the network’s decentralized governance and operational order.

2. Parachains in Trouble After Missing Coretime Renewals

A more unexpected incident raised even greater concern. Two parachain teams — Mythos and Xcavate — accidentally failed to renew their Coretime in time, leading to an abrupt halt in block production. Because they missed the renewal window, the system automatically released their resources back to the public market. These Cores were quickly purchased by the same entity mentioned earlier. When the teams and the Polkadot Fellowship attempted to buy them back at 200 DOT per Core, they were quoted a staggering $15,000 each.

The current Coretime system does not include features like auto-renewals or renewal reminders. If a parachain team fails to manually renew their Coretime at least one week before expiration, the slot is immediately released and made available for sale. That’s what happened to Mythos and Xcavate; they lost access before even realizing it, and by the time they tried to act, the resources were already gone.

To prevent these ecosystem-critical projects from going offline indefinitely, the Polkadot Fellowship submitted an emergency proposal. It temporarily increased the number of available Cores on the Polkadot Relay Chain from 62 to 66 and granted free Coretime to both projects for two months. The proposal was approved by a community referendum.

Still, the decision sparked debate. On one hand, the emergency allocation helped maintain the network’s stability. On the other hand, it raised questions about the integrity of decentralized market mechanisms and whether such governance interventions might set an unwanted precedent. These events highlighted a lack of human-centric design and fail-safes in the current Coretime system.

A Proposed Redesign from Web3 Foundation’s Research Team

These recent issues show that the early Coretime market design, while innovative in theory, has proven problematic in practice. In response, Jonas, a research scientist from the Web3 Foundation, has proposed a full redesign of the Coretime system.

Read the full RFC here: https://polkadot-fellows.github.io/RFCs/proposed/0017-coretime-market-redesign.html

Additional Thoughts on the New Coretime Market Design

While the redesigned Coretime model addresses several issues, there is still room for further refinement. To help the system mature more quickly and effectively, we propose some additional ideas worth exploring.

1. Auto-Renewal for Coretime

Currently, project teams must manually renew or bid for Coretime at regular intervals. This process can be time-consuming and stressful, and it doesn’t align well with the principle of blockchain systems running continuously without interruption. A potential solution would be to develop an economic model that automates the collection of DOT and handles Coretime renewals on behalf of projects. Ideally, if a Rollup is performing well, the system could automatically gather enough DOT to secure future Coretime, making Rollup (or Parachain) operations on Polkadot much simpler and more sustainable.

Of course, this may require the project party to optimize the economic model to match the Coretime market of Polkadot.

Specifically, the following design can be considered: a portion of the transaction fees generated by a Rollup could be allocated to a pool (for example, Coretime Treasury Pool). This pool would be paired with DOT through a trading pair on Polkadot Hub. Using a DCA strategy, the pool would gradually convert its native token into DOT and automatically participate in Coretime auctions. In theory, as long as the Rollup is successful, the pool should consistently accumulate more than enough DOT to cover renewal costs, creating a sustainable feedback loop.

Note: While Polkadot does implement a penalty for passive renewals to encourage active participation in auctions, this proposed system is proactively automated, a universal mechanism any project could adopt to sustainably and autonomously renew their Coretime using real activity-based incentives.

2. A Secondary Coretime Market for Broader Access

The current Coretime market only considers a relatively common scenario, but this is still not friendly enough for some new projects that want to join Polkadot, and there is no additional Coretime for temporary adjustments for some emergencies.

In this regard, I suggest building a secondary Coretime market to provide it to teams that do not have such a high demand for the Coretime market and do not have so much operating funds, and to reserve some Coretime as a system to deal with some emergencies, instead of having to issue additional Cores every time.

One possible design would be as follows: for every 10 Coretime units on Polkadot (with 10 being an adjustable parameter), one Coretime would be selected and further subdivided. This 100% capacity Coretime would be split into eight smaller units with 10% capacity each, and one unit with 20% capacity. The eight 10% units would be auctioned off in smaller-scale auctions, similar to the previous parathread model, to determine their new ownership.

The remaining 20% Coretime would be reserved as emergency resources, governed by the treasury. A portion of this reserve (for example, 15% out of the 20% total, the exact ratio can be adjusted) could be awarded to hackathon winners or promising early-stage teams, helping lower the barrier to entry for developers. More importantly, this emergency pool would serve as a safety net for Rollups. If any Rollup fails to renew its Coretime, a portion of this 20% reserve (say, the remaining 5%) could be allocated to keep that Rollup operational. If five Rollups encounter this issue simultaneously, they could share this 5% Coretime proportionally. While each would receive only a small fraction, it would still allow them to continue producing blocks, which is far better than going offline.

The goal of this design is to ensure that any project on Polkadot can continue producing blocks in all situations. Instead of going offline, they would always have access to some level of Coretime, which is 10% Coretime. This will reduce their block production speed, but will not shut down. In more severe cases, where a Rollup fails to renew on time or encounters unexpected issues, the system would automatically allocate emergency Coretime. This fallback ensures continued operation, even if only at minimal capacity, rather than halting block production entirely.

If combined with the “automatic renewal of the Coretime market” mentioned in the first point, it can be completely ensured that the Rollup project can continue to generate blocks regardless of whether it develops well or not, and it can also avoid the dilemma that after some Rollup teams stop operating, the application teams that originally operated on them will also have to shut down. Because of the existence of these two mechanisms, even if the Rollup project party does not operate, as long as the application team on it develops well, it can provide a large amount of handling fees for the Rollup, and can automatically renew Coretime to ensure that these Rollup application teams can also continue to operate.

Looking Forward

The introduction of Coretime marks a major innovation for Polkadot. At the same time, it is an ongoing experiment that continues to evolve. As discussed earlier, the current model still leaves room for improvement in areas like price discovery, renewal processes, and speculation resistance. A healthy blockspace market should be fair, stable, and easy to use. The suggestions we’ve put forward are just a starting point. We’re also seeing many brilliant ideas from the community, and we hope even more proposals will accelerate the maturation of the Coretime market and strengthen DOT’s value in the process.

While Coretime costs remain relatively low for now, demand is expected to grow significantly as the Polkadot ecosystem expands, with more parachains and broader application use cases. Over time, the number of supported Coretime units may reach into the hundreds. As a result, millions of DOT could be burned through Coretime purchases, permanently reducing the supply.

This model has the potential to create a powerful flywheel. As the ecosystem grows, so will the demand for Coretime. Revenue from Coretime sales will be burned, enhancing the value of DOT. As DOT appreciates, it will attract more participants to build on Polkadot, further fueling growth. Eventually, the Coretime market could become one of the ecosystem’s most important economic engines.

Ultimately, the ideal ecosystem is not defined by a specific technical design. It emerges when all participants find the most practical solutions through real-world interaction and experimentation. Polkadot is on the right path. The next step is to walk that path with greater stability and reach even farther.

Disclaimer:

The information provided by the Polkadot Ecology Research Institute should not be interpreted as investment advice. The views expressed in the articles are solely those of the authors and are intended for informational and educational purposes only.

📢 Stay Connected! ❤️

Follow on X for daily updates:

https://x.com/Polkadot_ERI

Join the Telegram group:

https://t.me/polkadot_eri