What is Ponzi Scheme?

Relay Chain can be thought of as <strong>the core of Polkadot.<\/strong> Essentially, it connects different parachains. Parachains, on the other hand, are similar to <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-plasma/">Ethereum Plasma chains<\/strong><\/a>. Basically, they can conduct transactions without relying on the Relay Chain. As a result, parachains can significantly <strong>improve blockchain scalability.<\/strong><\/p>\n<p>Parachain projects need to lease a slot for their parachains through the <strong>Parachain Slot Auction<\/strong> if they want to connect to the Relay Chain. Projects stake <strong>DOT<\/strong> tokens to bid for a spot in the auction. The ones that stake the biggest amount of DOT tokens become the parachains of Polkadot. They can lease a slot for around 3 to 22 months.<\/p>\n<p>The staked DOT is locked into the project's slot auction bid once the users engage in the crowdloan. The tokens stay locked in the parachain slot until the lease of a slot ends.<\/p>\n<p>You might be wondering how to get the DOT tokens. <strong>This is where Polkadot Crowdloan comes in <\/strong>since it can be used to obtain these tokens. Essentially, crowdloan is a <strong>crowdsourcing system.<\/strong> In a crowdloan, users stake DOT to support the parachain projects they favor. For doing that, they get various rewards, including tokens from the parachain they support.<\/p>","definition":"the process of staking DOT tokens in the Polkadot Slot Auction to support specific projects.","status":"published","meta_title":"What is Polkadot Crowdloan? Definition & Meaning | Crypto Wiki","meta_description":"Polkadot Crowdloan meaning: Polkadot Crowdloan - the process of staking DOT tokens in the Polkadot Slot Auction to support specific projects.","meta_keywords":null}" :model="{"id":607,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Ponzi_Scheme","level":"easy","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2023-11-21T14:29:58.000000Z","slug":"what-is-ponzi-scheme","title":"What is Ponzi Scheme?","section":"P","keyword":"Ponzi Scheme","content":"<p>A Ponzi scheme is a <strong>deceptive financial scam<\/strong> that promises investors <strong>high returns<\/strong> with <strong>little risk<\/strong>. It also <strong>produces rewards for earlier investors<\/strong> by taking money from <strong>subsequent investors<\/strong>. It is comparable to a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-pyramid-scheme/">pyramid scheme<\/strong><\/a> in that they both <strong>rely on new investors' contributions to pay off previous supporters<\/strong>. Organizations that participate in a Ponzi scheme <strong>devote all of their efforts to enticing new clients to invest<\/strong>.<\/p>\n<p>&nbsp;<\/p>","definition":"is a fraudulent financial operation that offers investors enormous rates of return with low risk.","status":"published","meta_title":"What is Ponzi Scheme? Definition & Meaning | Crypto Wiki","meta_description":"Ponzi Scheme meaning: Ponzi Scheme - is a fraudulent financial operation that offers investors enormous rates of return with low risk.","meta_keywords":null,"author":{"id":1,"user_id":1,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2023-05-11T07:18:20.000000Z","title":"Editor-In-Chief","slug":"aaron-s-editor-in-chief","description":"<p>Having completed a Master&rsquo;s degree on Economics, Politics &amp; Culture for the East Asia region, Aaron has written scientific papers with a comparative analysis of the differences between US&rsquo; Western and Japan&rsquo;s Collective forms of capitalism, 1945-2020.<\/p>\n<p>With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He&rsquo;s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain &amp; Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? 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Mining?","status":"published","modified_content":null},{"chapter_id":9,"order":3,"slug":"what-is-staking-crypto","title":"An Advanced Look into What is Staking Crypto","status":"published","modified_content":null},{"chapter_id":9,"order":4,"slug":"what-is-proof-of-stake-vs-proof-of-work","title":"Proof-of-Work VS Proof-of-Stake: The Differences That Matter","status":"published","modified_content":null},{"chapter_id":9,"order":5,"slug":"what-is-crypto-mining-rig","title":"Crypto Mining Rig: What It is and How to Build One?","status":"published","modified_content":null}]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/crypto-101-glossary.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}]" current-chapter="P" current-section="what-is-ponzi-scheme">