The blockchain industry keeps evolving, and new and advanced use cases come with this. Blockchain technology has advanced from being a secure system for crypto exchange into other industries such as finance, healthcare, welfare, art, gambling, insurance. Nonetheless, a huge part of small entities still relies on big tech to facilitate their day-to-day activities. Technology enthusiasts are still seeking ways to give small companies the power to run their operations without over-reliance on large greedy startups.
As blockchain startups keep popping up, the need for a space to allow developers to experiment and test these new startups has come up. The rise in demand has birthed sophistication among businesses and has led to the emergence of networks like Kusama. Kusama is a public pre-production environment for Polkadot. Here, users can test out their blockchain-related innovations to ensure they fit the mainnet.
What is Kusama?
Kusama was founded in 2016 from similar substrates and codes like Polkadot. It is a dynamic multi-channel system meant to facilitate Polkadot’s audit system.
The Kusama sandbox offers developers a realistic, live environment for testing early versions of Polkadot projects. Kusama serves as a “Canary Network” for DOT. Hence, it allows significant updates and code releases to be thoroughly tested before being released to the public.
Because Kusama employs its blockchain technology to operate the network, its native coin, KSM, is not an ERC20 token. Kusama has a token used for governance, staking, parachain, and utility tokens. After learning about Kusama and KSM tokens, we can dive into the primary use cases.
Kusama Use Case: Network Governance
Kusama’s governance lies in the hands of the council, the technical committee, and the reference chamber. The referendum, which lets KSM holders vote on amending the chain, is the most critical part of Kusama governance. Any referendum contains a proposition intended to make a concrete change to the chain.
After 28 days, the launch period, the top proposal through the stakes made, becomes a referendum. Note that the process alternates between public and council proposals. To put it another way, Kusama will tailor each launch time to choose the most popular public or council proposition for a vote.
As the proposal becomes a referendum, users with a stake(KSM holders) can vote for the project. Once passed, the project team enacted it 30 days later.
When the project holds a public referendum, there is a positive turn-out bias, meaning the vote is biased towards not passing. However, a council referendum will have a negative turn-out bias when all votes are unanimous to vote on the proposal. It means that it will have a predetermined outcome.
Kusama Use Case: Parachains and Parathreads
Technologically, a parachain and parathread have a slight difference. A parathread can become a parachain and vice versa. From an economic perspective, parachains are stand-alone blockchains. They have custom tokenization and functionality tailored to specific use cases. The project guarantees throughput throughout the system due to the parachain connection to the relay chain.
In contrast, a parathread is a unique parachain not constantly tethered to the relay chain. During the development of Kusama, the project developed an operating system that organizes several blockchains for various purposes into a network of parachains.
The Kusama Relay Chain utilizes a variation of proof-of-stake consensus(PoS), nominated proof-of-stake(NPoS). Through the system, users can stake KSM by locking the crypto in a designated contract.
Users can either be validators or nominators. Validators validate data in parachain blocks and participate in consensus and voting. On the other hand, nominators secure the Relay Chain by picking out validators. They can also credit their staked KSM tokens to validators, entitling them to votes.
Kusama Use Case: Kusama Treasury
The funds in Kusama’s Treasury come from transaction fees, lost deposits, betting inefficiencies, and penalty reduction. Holders of KSM tokens can propose an expense by depositing 5% of the amount they want to spend with the Treasury. The Kusama network benefits from these funds. Notably, the community must decide how to utilize the cash flow funds.
A proposal must receive a favorable vote from at least 60% of the board to be adopted. If the proposal gets refused, the deposit will be forfeited. The project will repay the deposit if the proposal is accepted. This procedure recurs every six days.
Kusama Use Case: Network Maintenance
With Kusama (KSM) being permissionless, any KSM holder can use it and interact with all the network’s features. These features range from governance, parachain auctions, transfers, and others. In this reference, Polkadot sale participants can also claim a pro-rata amount of KSM, utilizing the Kusama claims process.
The platform’s operations and maintenance are the responsibility of the network maintainers. Users in this category include collators. They get data from parachains and pass it on to validators through new blocks for validation. In addition, these maintainers can engage in future network activities such as consensus.
Kusama and the Future
As DeFi grows in popularity, the demand for credible testing platforms like Kusama is more significant than ever. Kusama was designed to assist the burgeoning Web 3.0 environment and shares many similarities with Polkadot. It’s fascinating to observe how the protocol operates independently of the Polkadot network. At the same time, it still compliments Polkadot’s expanding structure.
The network’s only way out is for KSM holders to elect to shut it down, which is highly unlikely. Meanwhile, Kusama could connect to Polkadot via a bridge or as a hierarchical sub relay chain in the future.