Kusama (KSM), the experimental network parallel to Polkadot (DOT)

Kusama is an independent network acting as an experimental version of the Polkadot network. These two protocols are closely related and were both developed by the same organizations. Kusama offers a faster and less expensive environment for developers wishing to experiment with their applications before a possible deployment on Polkadot, and this is in real economic conditions. Zoom on a surprising project nicknamed the canary network.

What is Kusama?

Kusama (KSM) is a blockchain network developed by the creators of the Polkadot (DOT) protocol, of which Gavin Wood, the co-founder of the Ethereum blockchain, is a part. Launched in May 2019, Kusama is a parallel network to Polkadot, which serves as an experimental network for the latter, among other things. They are what is known as layer 0.

These two projects are closely related and to better understand Kusama it is necessary to know more about Polkadot, so we invite you to read our information sheet on Polkadot.

Kusama is very cleverly nicknamed the Canary Network. In the 1800s, it was common to find canaries at the bottom of coal mines. They were used as a reference tool for miners to detect poisonous gas fumes in the mines since canaries would faint or die when they were present.

What does this have to do with the Kusama network? It acts as a canary for the Polkadot protocol, warning developers of possible problems or bugs, dangers, and vulnerabilities in the code.

In practical terms, the architecture and operation of the two projects are very similar, as Kusama was designed to be an experimental version of Polkadot.

Experimental version since Kusama is an unaudited version of Polkadot, whose purpose is to be used to test new features before deploying them on Polkadot.

But the experimental version does not mean testnet, because Kusama is a blockchain network that uses a native token, the KSM. The latter do have their value, whereas, in a testnet, the tokens used have no value. It is crucial to make the distinction here.

The Kusama network benefits from the latest technologies from Parity Technologies and the Web3 Foundation before the Polkadot network, while being much faster than the latter. Development teams can therefore use Kusama to try out new technologies, innovate or take risks since Kusama allows for rapid growth at a lower cost.

Kusama is based on Substrate. It is a development kit developed by Parity Technologies comparable to Cosmos SDK. It allows developers to create blockchains by simply combining pre-built modules. Polkadot was also created with Substrate, which attests to the high level of performance, flexibility, and robustness of this kit.

Kusama and Polkadot, similarities, and differences

As we have seen, these two projects share many similarities. However, Kusama and Polkadot are indeed two independent networks with very different objectives.

While Kusama is fast and particularly suited for experiments and early-stage deployments, Polkadot is more conservative, focusing on reliability and stability.

We will see here what the two networks have in common, then their differences.

The common points between Kusama and Polkadot

The Kusama network being the canary network of Polkadot, both share the same underlying technology. They are both multi-chains based on a Nominated Proof of Stake (NPS) consensus. Kusama uses a sharding model with para-chains.

They both have nominators, validators, collectors, and governance actors. Both have a Relay Chain, the main chain of the network that coordinates the consensus and communication between the parallelizable chains, the secondary chains, via the protocol bridges.

The latter can have their economies and tokens. The particularity comes from the fact that parallelizable chains are auctioned, which means that operating a parallelizable chain has a certain cost.

Both projects have a very high level of development activity in 2021.

The governance of both projects is designed to be decentralized. By owning the network’s native token (DOT for Polkadot or KSM for Kusama), it is possible to influence governance decisions. For this reason, over time, Kusama and Polkadot are gradually evolving independently since each network has its governance and its token.

The differences between Kusama and Polkadot

Both projects have their native token as seen before, and they also have a different outstanding offer.

The main technical difference comes from the governance parameters. Indeed, Kusama gives the possibility to update its product 4 times faster. KSM token holders have only 7 days to vote a referendum, and 8 days are needed for implementation.

On the Polkadot side, votes last 28 days and are followed by a 28-day implementation period. 56 days in total versus 15 days for Kusama.

This is what is implied when we observe that Kusama is faster. It’s not in terms of transactions per second or terms of block production since they are equal in that respect, but it has to do with governance. So Kusama offers an environment that can adapt and evolve faster.

If you have our Polkadot file, you know that for development teams wishing to operate a para-chain, it is necessary to store tokens: this is called bonding. The system works in the same way on Kusama, although the requirements are lower than on Polkadot.

Therefore, developing Kusama gives the possibility to experiment on a completely decentralized and community-governed network under real conditions and with lower risks in case of problems. This is where the strength of the project lies and why many projects maintain para-chains on both networks at the same time.

Finally, here is an overview of the benefits and use cases of each network.

The Kusama Ecosystem

The Kusama ecosystem is governed by the actors in the network governance.

KSM token holders can propose and sponsor public proposals regarding the governance of the Kusama network. The most sponsored proposals are periodically selected for a referendum, which will be voted on.

Proposals may also be submitted by the Board, and by the Technical Committee in case of emergency. If a majority of KSM holders vote in favor of the proposal, then it will be implemented in the Kusama code.

The Board

Through an election, 13 members are elected to serve on the board.

The board’s roles include responsibility for electing members of the technical committee. They also have veto power modeled after the United Nations Security Council. Council members can veto any proposal on the Kusama network.

Finally, like the technical committee, they have the power to expedite the submission of a referendum in case of emergency.

The Technical Committee

Elected by the Board, the members of the Technical Committee are the development teams. They must have successfully deployed products on Polkadot and Kusama as a prerequisite. They are responsible for determining whether a submission is urgent or not, and if it is, then they have the authority to expedite its integration with the board.

The Kusama Treasury

It consists of funds collected through transaction fees, lost bonds, ineffective network staking, and penalties.

A particular type of proposal may be submitted to the board for funding from the treasury. If it is approved by more than 51% of the Board, then the development team will be funded with the funds.

To submit a proposal to the treasury, it is necessary to post a 5% bond of a prerequisite amount, or 0.066667 KSM, to avoid spam. If the proposal is passed, the deposit is returned, otherwise, the deposit will be lost and redirected to the treasury.

There is also a tipping mechanism to reward community members involved in development.

Unused funds from the treasury will be burned, to encourage the board to spend all available funds. So there is a mechanism to burn the KSM token through this.

Karura, the all-in-one DeFi on Kusama

The Karura network is a project developed on the Kusama network and with the Substrate development kit.

Similar to the Acala network on Polkadot, it is a network that offers a decentralized exchange with Karura Swap. Its goal is to create a scalable network compatible with the Ethereum Virtual Machine (EVM) and optimized for the deployment of applications of decentralized finance.

It was the first project to be granted a para-chain slot on the Kusama network, having locked in 500,000 KSM tokens for it, equivalent to $100 million at the time.

Launching in June 2021, Karura’s app offers services for Defi and uses a native token, KAR.

The project also benefits from its governance and is a perfect example of the independence a para-chain can enjoy in Kusama.

The other para-channels of the Kusama network

There are of course other para-channels deployed on Kusama, we could mention Moonriver which is essentially the Kusama version of the Moonbeam network deployed on Polkadot.

The new features of Moonbeam are first deployed on Moonriver, to test the code in real economic conditions on Kusama. Once all the tests are done, these new features are deployed on Moonbeam on the Polkadot network.

In the same way, Shiden Network on Kusama is the canary network of the Plasm Network on Polkadot. There are other para-channels on Kusama like Bifrost, Khala, Kilt Protocol, or Statement.

What are the roles of the KSM token?

The native token of Kusama is KSM and it has multiple roles within the ecosystem.

Thus, KSM token holders can use it to participate in the governance of the network. It is possible to submit, sponsor and vote on proposals submitted by others, nominate validators by staking KSM tokens, or become a validator.

The KSM token is also essential to deploy a para-chain on the Kusama network. Indeed, to do so, it will be necessary to lock many KSM tokens throughout the lifetime of the para-chain. This mechanism is called bonding and we have mentioned it in particular in the deployment of the Karura para-chain.

Finally, the KSM token is used to pay the network’s transaction fees.

Tokenomics of Kusama

Kusama has not benefited from any fundraising. At launch, investors who participated in the various Initial Coin Offerings (ICOs) and Polkadot Private Sales (DOTs) received an airdrop of KSM tokens at a 1:1 ratio with DOT tokens.

Investment funds such as IOSG Ventures, LongHash Ventures, or Fabric Ventures have also received an airdrop of KSM tokens.

The KSM token is inflationary, at a rate of 10% per year. There is no maximum supply in circulation like the DOT token. At the time of writing (May 2022), there are 9 million KSM tokens in circulation, which explains its higher unit price than DOT.

Each year, therefore, 10% of newly issued KSM tokens are allocated to Kusama’s validators and treasury. The percentage of KSM tokens staked governs the allocation of these tokens.

If more than 50% of the outstanding supply is staked, validators will receive all of the newly issued tokens. Otherwise, these rewards will be shared between the validators and Kusama’s treasury.

Written by mbenfoddil

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