KUSAMA will become the king of chaos. Not ‘just’ a canary network.
Polkadot and Kusama are fundamentally different to anything else we have seen in crypto. The substrate based design of a true layer 0 metaprotocol is what real innovation looks like, where the relaychain provides shared consensus and security to an entire network of unique and powerful parachains (layer1’s can live on Kusama as a parachain, e.g Cardano). Auctions create a democratic process of distributing the parachain slots, while creating significant “skin in the game” dynamics between both the community and developers, revolutionising the ICO concept by incentivising users to commit to longer term sustainable projects, and forcing builders to showcase the genuine value they add to the network. On-chain governance will allow blockchain communities to move closer to a real vision of Web3, and forkless upgrades will mean that we see the boundaries of innovation pushed more than ever before.
It’s common to hear that Kusama is the “wilder” more “chaotic” cousin of Polkadot, but what does that actually mean?:
Kusama was originally intended to be the “canary network” of Polkadot, and therefore it shares the same code and design. However, as Kusama started to spread it’s wings and fly from the nest, it was quickly realised that Kusama would grow to have a life of it’s own, as a unique and innovative network in it’s own right. In my opinion, it’s easier to understand their relationship when we instead consider Kusama as the “mainnet” and Polkadot as the “Prestige VIPnet”.
KUSAMA WILL DRIVE INNOVATION LIKE NO OTHER BLOCKCHAIN
Kusama is 4 times faster than Polkadot, making it a much more agile network and faster to adapt and upgrade. This is a significant point for teams that are focusing on bringing something new to the crypto world, where speed has a value in itself. To put it simply, Kusama runs so that Dot can walk. Whilst this might make Kusama relatively less secure than DOT, it’s important to remember this doesn’t make it INSECURE. The shared security and consensus of the relaychain still makes Kusama one of the most secure networks in the crypto market. One could also take the positive perspective that by Kusama being able to “run ahead” of Polkadot, it will bring it’s own following of excitement and demand as the community seek to use applications that are not live anywhere else.
One of the main differences for users is that the lockup period for crowdfunding on KSM is 1 year, compared to 2 years on DOT. Whilst this fits the purpose of DOT being an elite club of enterprise and institutional applications, it also means that there’s a much higher barrier to entry for teams wanting to deploy on the network. Bearing in mind that Karura raised over 500,000 KSM, it’s likely that launching on Polkadot will require a significant amount of capital for the foreseeable future. Again, this is great for Polkadot as it emphasises the point that it’s a VIP club that’s hard to get into, and at the same time it will drive more projects to the alternative of starting on Kusama. This is one of the reasons why I see the community growing significantly, as we see an exponential increase in more community-driven applications like exciting DeFi and NFT protocols that find a home on Kusama, whilst the wise elders hang out on DOT.
It’s important to bear in mind that the biggest projects wanting to launch on Polkadot, will be launching on Kusama first. Whilst the long term focus for these teams will likely be on Polkadot, it means that Kusama still has all of the features of some of the best DeFi, smart-contract, and web3 applications. Not only this, but all new and more experimental features of these projects will roll out first on Kusama, therefore always creating a distinct reason to follow Kusama even for teams that have Polkadot as their first priority.
This is a significant point — because it means that smaller teams that want to deploy on Kusama still have access to the world class tech that they otherwise wouldn’t be able to take advantage of, if it only lived on Polakdot. This will foster a strong environment for experimentation and innovation, where teams can constantly build and take advantage of what is already on the network.
This leads into the next significant unique use case of Kusama — After the first 1 to 2 rounds of auctions, we will likely start to see projects that want to build exclusively on Kusama. As I have eluded to above, Polkadot has the clear intentions of being the elite network that has the security, stability, and scale to rival anything else in the crypto market. The weaknesses of Kusama are the strength’s of Polkadot, and the weaknesses of DOT are the strength's of Kusama — creating a powerful and ever-evolving relationship between them both. (KSM also holds 10,000,000 DOT in it’s treasury… that relationship just got complicated)
WE’RE ALL READY TO DANCE, BUT THE MUSIC HASN’T STARTED
In a matter of weeks, Karura will launch their full DeFi platform on Kusama. Karura will bring to Kusama one of the most complete DeFi offerings we have seen in crypto: an AMM Dex, liquid staking, lending/borrowing, kUSD stablecoin, liquidity mining rewards, ETH/BTC bridges, and full EVM capability. Not only will this bring a significant amount of real demand to both networks, but it will also show the potential gains of investing into the crowdloans, with $KAR already trading at x7 it’s “break even” crowdfunding price.
Now that we have a live example to look at, it’s significantly easier to imagine the potential and opportunities that Kusama and it’s parachains will bring. Karura will be the solid foundation for DeFi on Kusama, and from that we will see various other parachains connect and take advantage of their products, for example as even non-defi related chains make use of the kUSD stablecoin. Moonriver will bring ETH smart contract compatibility, allowing the bridge of the most popular applications in crypto like Sushiswap, Balancer, and DoDo, all through the familiar interface of Metamask. Then we have Bifrost, and Genshiro, parachains who are planning to bring even more DeFi functionality to the Kusama eco-system. On top of this, we see teams like Basilisk who are already planning to work with existing parachains like Karura, to bring DeFi concepts that do not exist anywhere else in the crypto market.
On top of this, Basilisk are taking an even more unique approach, where they’re building on both Kusama and Polkadot, but with the intentions of 2 separate products that will later connect. Listening to these teams and understanding why they’re building on substrate, and why they see the value in both Kusama and Polkadot will give you a good insight into the future of the Dotsama ecosystem. The current world of fragmented layer1&2’s with slow and expensive TX fees will soon give way to a truly inter-connected universe, where application specific parachains push the boundaries of what is possible, all whilst having the shared security of the relaychain and the support of the entire Kusama community.
A FIGHT FOR AUCTIONS #6–10, AS CIRCULATING SUPPLY CONTINUES TO DISAPPEAR
With the next batch of auctions expected to start in 3–4 weeks time, the anticipation is building for what could be the first signs of proper competition to win a slot. Whilst the first auctions were exciting, the king pins of Dotsama received huge backing and therefore many smaller teams had no chance but to sit out and wait until Karura, Moonriver, Shiden, Phala, and Bifrost took their claim. However, we are going to see some fireworks as Basilisk prove they are hungry for a spot, whilst KILT, Genshiro, Robonomics, and Darwinia also show that they won’t go down without a fight.
In my opinion, this will give us a much more accurate insight into what the future of parachain auctions will look like, where smaller teams have to put serious effort into convincing the community to crowd-fund, which will not only act as marketing for the Kusama eco-system in general, but it will also likely drive demand for KSM since projects will have to up their rewards in order to incentivise backers. A dynamic that will benefit the community, and ensure that the projects have significant commitment to the long term future of Kusama.
If you have made it this far, thank you. It’s clear that like many others I can see a future for Kusama that is significantly more exciting and dynamic than being “just a canary network”. Whilst Kusama will continue to have a family relationship with Polkadot, eventually becoming inter-connected (that’s something for a whole new article), I am passionte and confident that Kusama will grow to have it’s own unique community that are focused on real innovation of the blockchain world.
EXPECT. CHAOS.
MarmiteToast — https://twitter.com/TLE_dot_com
