What is Kusama (KSM)?
Kusama (KSM) is the native token for the platform of the same name. It’s often referred to as the canary network for Polkadot, meaning that it’s used for testing and development. It’s a permissionless and decentralized blockchain that offers high interoperability and scalability.
Kusama acts as a decentralized testing environment for blockchain developers to build applications and launch their own networks. It provides support for parachain development and integration. Kusama is notable for its development speed and fast-paced governance operations.
Who is the Team Behind Kusama?
Kusama was developed by the team behind Polkadot. One of the key figures in Kusama’s development is Gavin Wood. He’s one of the Ethereum founders and one of the programmers behind the Solidity language. Wood is also the founder of Parity Technologies and the non-profit Web3 Foundation.
Other founding figures include Peter Czaban and Robert Habermeier. Czaban is a machine learning specialist. He’s also been involved with the development of the Aura consensus mechanism. Habermeier is a developer who has made significant contributions to the creation of Substrate.
The idea behind Kusama was to provide developers with a digital open space to develop, test, and deploy projects that aim to be launched on Polkadot in the future but require more tweaks and adjustments. Kusama was developed to be a low-stakes environment that would pose fewer risks regarding bugs and system failures.
Kusama was launched in 2019 as an early development version of Polkadot. At the time of launch, the Kusama price balanced under $2, showing some volatility. It uses the Substrate blockchain framework which was created by Parity Technologies.
The Kusama crypto platform uses heterogeneous sharding to improve network efficiency. Kusama tokens became available as an airdrop for the Polkadot (DOT) token sale participants.
Although Kusama’s code is based on Polkadot’s, the two networks offer different functionality and focus on enhancing different blockchain aspects. Kusama acts as a tool for developers to experiment and test their projects while Polkadot is a layer 0 protocol that enables blockchain interoperability.
Market fluctuations became more frequent over time, particularly after the launch of Polkadot in May 2020. A significant peak was reached days before Polkadot’s launch when the KSM price exceeded $623.
What Are the Features and Uses of Kusama?
KSM does not have a hard cap for the maximum token supply. Instead, the number of assets increases over time. The inflation rate was set at 10% each year. This ensures that the Kusama price does not rapidly decline and the availability of the assets is maintained stable.
Initially, Kusama used the Proof-of-Authority (PoA) consensus mechanism. However, in October 2019 it switched to Nominated Proof-of-Stake (NPoS). Token minting and distribution proportionally depend on the amount of staked KSM assets at a given time. In turn, token distribution and general market trends can affect the KSM price.
There are four components that make up Kusama’s structure:
- Relay Chain – the main chain of the system. It’s the core of the entire infrastructure, providing network security and interoperability;
- Parachains – short for parallel chains. They’re various individual chains that connect to the Relay Chain and can have their own tokens and utilities;
- Parathreads – although they function similar to parachains, they use a pay-as-you-go model. The KSM price value for the parathread can depend on the developer’s demands. Parathreads connect to parachains via bridges;
- Bridges – purpose-built parachains that enable connectivity between parachains or parathreads and other external blockchains. Bridges also connect Kusama directly to other chains.
Since Kusama was built using a multichain design, the platform is able to provide cross-chain message passing (XCMP) support and allow different parachains to be in contact with each other.
Kusama essentially functions as a sandbox for blockchain developers. It offers high technical flexibility. Although Kusama does not provide native support for smart contracts, developers can still build decentralized apps (dApps) on the platform thanks to the toolkit provided. The projects on Kusama are unaudited, allowing for more freedom.
There are multiple uses for the KSM token, as it’s Kusama’s main utility asset. The main features include staking, governance, transactions, and participation in parachain auctions. Users can take up one of the three roles within the network – builders, maintainers, or end-users.
Builders are network developers. They use Kusama’s services to build new parachains, bridges, and apps. End-users are blockchain members that utilize the parachains within the Kusama ecosystem.
Maintainers are responsible for system maintenance and seamless blockchain functionality. A maintainer can take up one of the four roles based on the principles of NPoS:
- Validators – members, or nodes, of the Kusama network that are nominated to produce new blocks on the Relay Chain. Prospective validators must meet technical requirements and possess a predetermined amount of KSM coins;
- Nominators – nodes that contribute to the Kusama network by staking their assets. This grants them the ability to nominate new validators and reinforces blockchain security;
- Collators – nodes that are responsible for maintaining the security and functionality of the parachains;
- Governance participants – users that participate in protocol management.
The KSM token is used for network governance. According to the protocol, Kusama is fully decentralized and is owned by the token holders. Therefore, they can utilize the assets in their possession to propose and vote on protocol changes. They also determine the importance and urgency of all proposals.
The governance members can take up one of the three roles by being part of either the referendum chamber, council, or technical committee. All token holders are considered to be members of the referendum chamber. Passive stakeholders are part of the council. The council elects the members of the technical committee.
The chamber members propose new protocol changes by depositing a set amount of KSM tokens, and approval is granted by other members that put their assets forward. Therefore the importance of the proposal can be determined by the Kusama price value put forward by all members.
Additionally, Kusama is used to pay for the messages that are transmitted via the different interconnected parachains. Cross-chain transactions are managed using the Merkle tree queuing system for efficiency and security.
The network also offers a feature known as Kusama Gifts. It allows users to send their KSM assets to non-users for easy onboarding. It also enables users to forward tokens to each other without knowing the exact wallet address. Creating Gifts for crowdloans can impact the funding process regardless of the KSM price at the time.
How Do Parachain Slot Auctions Work?
The Kusama network and, by extension, Polkadot, are constructed using multichains that are better known as parachains. To connect to the Relay Chain, the parachains must first lease a slot. These slots can be earned by taking part in the parachain slot auction.
The teams behind parachains must put forward a specific amount of KSM to participate in the auction. If they lack funds, they can use a parachain loan offering. Like many other blockchain-based offerings, they enable public fundraising to earn the required amount.
Once the parachain projects have sufficient funds, they must lock them. Participation in the slot auctions is incentivized with various rewards, such as offerings of the parachain’s native utility tokens. The Kusama price value can be used to determine the value of the new parachain project submissions.
What Is the Link Between Kusama and Polkadot?
Kusama and Polkadot share many similarities, as they both use a similar codebase and the same blockchain architecture. Kusama essentially works as a preview of Polkadot’s future updates. It contains features that haven’t been implemented in Polkadot yet to ensure they work seamlessly and do not obstruct network operations.
Although Kusama and Polkadot were founded in 2016, the networks launched in 2019 and 2020, respectively. Both Kusama and Polkadot are used by developers that are working on parachain projects. The platforms can be used to build and deploy new parachains. The consensus mechanism on both networks is Nominated-Proof-of-Stake.
As stated on the Kusama website, the canary network refers to the platform as Polkadot’s “canary in the coal mine”. It’s used as a testing ground for new Polkadot features as well as other third-party parachain projects. Kusama is the preferred network for early-stage test launches while Polkadot targets higher-value applications.
During the launch of Kusama, Polkadot users were eligible to receive the same amount of KSM tokens as they held DOT. However, the Kusama price was not equivalent to Polkadot’s. KSM has been considered the rarer and more valuable asset by some due to the network’s niche utility.
Kusama acts as an unofficial security barrier for Polkadot. As all updates go through Kusama’s network first, this ensures that Polkadot-based launches are secure and reviewed. Despite this link, both networks run independently of each other and are fully self-sufficient.
The Kusama crypto governance stands out for maintaining faster rotations than Polkadot. After submitting proposals and requests, KSM token holders vote on which projects should be implemented. This process can take up to 15 days to ensure the projects are streamlined efficiently and with fewer delays, compared to Polkadot’s 28 days.
Polkadot has strict rules for project auditing pre-launch. While Polkadot provides customization, it’s more restrained than Kusama. KSM allows more creative freedom and makes the process of launching test projects simpler.
The token supplies of Polkadot and Kusama are not capped, although they can be subject to protocol changes in the future. Both assets are notably volatile. However, the KSM price has seen higher increases, sometimes being more than eight times higher than DOT on a given day.
