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Kusama analysis and investment opportunities

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Written by   14
1 year ago

Kusama is an early experimental version of Polkadot, which exists as a separate chain. More importantly, the development team behind the project is Polkadot.

Kusama and Polkadot both use the same "substate technology" to enable developers to build application specific blockchains, which are also known as parallel chains, but have not yet been put into production for deployment.

Different from other blockchain main networks, Kusama test network still exists after Polkadot's main network is online, acting as the leading network. Kusama's token KSM is also retained, with similar functions as dot. Functions with risks will run on Kusama network before going online to the main network. For example, the auction of parallel chain card slot that will be launched will be launched on Kusama for actual test before it is launched on Polkadot.

In fact, this means that everything that will happen on Polkadot will happen first on Kusama, and the projects planned to start on Polkadot will also be launched on Kusama first - many people don't realize that Kusama is not only a portal to Polkadot, but also an independent network with its own advantages, including:

Kusama can speed up the upgrade;

The cost of Kusama network is lower;

Polkadot plans to become a network for deploying enterprise applications, so transaction security needs to reach the bank level, which leads to a long deployment time. Kusama is more flexible, cheaper and can be put into operation quickly. Therefore, there is a great opportunity to become a "true Polkadot".

In terms of governance settings, Kusama is faster than Polkadot, and can be deployed within 7 days after the proposal on Kusama is approved. Due to the early online and short governance time, the number of proposals and verification nodes on Kusama is more than that of Polkadot main network.

As the development team behind Kusama said:

"Kusama is growing fast and a little wild, which is very suitable for bold attempts and early deployment, while Polkadot is more conservative, putting stability and reliability first. "

Gavin, founder of Polkadot, once mentioned that Polkadot is more suitable for enterprise applications in the future, and Kusama is suitable for innovative experiments or start-up teams.

With the launch of the new parallel chain, Kusama network will play a role. Many projects have clearly indicated that they intend to launch their own parallel chain on Kusama, including:

Acala - this is a cross chain difi hub and stable currency project;

Chainlink - this is a decentralized Oracle network;

Phala Network - this is a confidential data exchange protocol;

Polkaswap - this is the first automated market maker exchange on the Polkadot blockchain (similar to uniswap);

Moonbeam - a decentralized smart contract platform that supports DAPP.

Investment opportunities for Kusama

Since Kusama's card slot auction will be launched first, Kusama test network will pay no less attention than Polkadot main network in the near future.

Given the limited number of items and slots to be a parallel chain (initially maybe only a few), the demand for KSM tokens is likely to be high. Parallel chain n slots will be auctioned in a license free candle auction. In order to obtain slots, the project side must lock (bind) a certain number of KSM tokens for 6 to 24 months (the deposit will be returned at the end of the ranking period), which means that the rental cost of each slot will depend entirely on the market supply and demand. However, due to the large number of project parties who want to participate in the auction, the demand is bound to be large.

For those who do not have enough funds but want to participate in the auction, they can raise funds through the initial parallel chain offering crowdfunding module, and KSM token holders will provide loans for these project parties. In other words, quasi parallel chain candidates can ask retail investors to provide financial support for specific projects, and their KSM investment will become a token bond.

This model may trigger Kusama's "first parallel chain issue" wave, which feels very similar to the first token issue on Ethereum in 2017. In fact, one of the biggest functions of a limited number of slots is the ability to filter out items that do not bring any value to the ecosystem.

Generally speaking, the introduction of parallel chain not only enables Kusama to become a "functional network" with extensive network functions, but also helps to reduce the circulation supply of KSM tokens.

At present, Polkadot's market value is about $4 billion, while Kusama's market value is only about $300 million. Such a huge difference shows that the market underestimates the value of Kusama.

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