A definitive guide to Kusama parachain auctions powered by PromoTeam!
The historic moment for the whole Polkadot ecosystem has come: the first slot auctions for its Canary network Kusama went live. Why is it such an important milestone? The basic Kusama chain (and Polkadot too, but we’ll be talking about Kusama here) is a layer that provides security for the whole network. Aside from that, it has very limited functionality, because it was never supposed to work on its own. And now it’s finally going to be enhanced to its full potential by enabling parachains, each parachain adding new functionality to the whole network.
All parachains can interconnect via the Relay chain, thus in a few years, when dozens of parachains will get connected, we’ll see the true capability of Kusama. It will work like a web of blockchains with many projects using smart contracts of one parachain, storing data on another parachain, sending funds to other networks via the third parachain, and building new functionality by using all necessary parachains like bricks in the construction of a building or like libraries in software development. Thus the usefulness of the whole network will be growing exponentially with each newly added parachain. That’s why the event of connecting the first parachains to the Relay chain is a significant milestone.
To get a full understanding of what will be possible with all connected parachains, we have to look at every candidate and its features. But first, we have to discuss what’s the purpose of auctions, how they are conducted, what are their benefits and why every KSM holder has to participate.
Right now we have to make an important remark: while it’s called an auction, in fact, that’s a decentralized voting event. Of course, any project that has enough funding can set a bid for a slot right away and win it, but the amount of KSM that has to be reserved is enormous. Why is it so? Because pretty much every parachain candidate participating in the auction uses the crowdloan functionality to get support from their communities and raise large amounts of KSM tokens. We see it as impossible to win an auction without starting a crowdloan campaign, thus the whole parachain competition narrows down to decentralized voting.
We’ll break it down into simple points:
- Crownloan participants vote for projects by reserving their free KSM tokens
- Voting is handled by the native Crowdloan module on Kusama, there’s no need to send your tokens anywhere.
- Every parachain candidate will have its own index for the crowdloan.
- To vote with your KSM tokens you must send a special transaction with an index of the project you want to help win a slot
- The module will take your tokens and lock them in its vault. Your tokens have to be available for transfer, not staked or vested.
- If the project that you support wins the auction, your KSM tokens are locked for one year, until the slot leasing period is over. When it’s over, your tokens will be automatically returned to your address. If the project fails to get a slot, you get your tokens immediately.
- In return for such a long lockup period, you will get various rewards from the projects that you vote for. Usually, you get rewarded with tokens.
- If you use someone’s referral link, both you and the person that provided you with the link receive an additional token bonus, so be sure to use a link. We have provided our referral links in the text though.
- The first auction will be conducted from June 15th, 2021 to June 22nd, 2021. There will be 5 slot auctions, one per week. The last one will end on July 20th, 2021.
- The exact moment of the auction’s close is determined randomly and retroactively, thus the sooner you allocate the tokens, the better. Otherwise, the VRF module (verifiable random function) may not count your stake at all if you do it late.
Karura (Acala for Polkadot) is currently a number one candidate for winning the first slot in the auction. No wonder, as it’s one of the most polished projects in the ecosystem. An EVM-compatible DeFi platform that allows swapping, borrow, lend and stake liquidity. It will potentially become the backbone of all financial operations on Kusama because that’s the place where people will be able to invest their money and trade with low fees. Since it will be the first mover in the ecosystem, most likely it will keep the dominant position for a long time.
The platform has several modules:
- A trustless staking derivative, liquid KSM. The underlying HOMA protocol allows users to join a special staking pool, stake their KSM tokens to gain staking yield and get L-KSM to stay liquid. These L-KSM tokens can be used anywhere across all Kusama-connected chains and can be redeemed anytime for KSM. They can even be used as collateral or as fee tokens.
- A stablecoin kUSD. It’s based on the Honzon protocol, it’s very similar to MakerDAO and the way how it handles assets. Assets are locked in a CDP (Collateralized Debt Positions) upon a user’s request, after locking them the protocol mints new kUSD tokens. An automatic risk management algorithm checks CDPs all the time to make sure that the value of the collateral is bigger than the value of minted kUSD. The protocol accepts many types of tokens, including almost all tokens of the Kusama ecosystem and even BTC and ETH via bridges.
- A DEX with an Automated Market Maker.
The Karura platform accepts any token as a fee, and that fee is very small, compared to such giants as Uniswap, so we think that many users will move to it once it gets launched as a parachain. The native token for the platform is KAR, its max supply is limited by the number of 100 million, and it’s deflationary because all tokens received as fees for transactions, creating CDPs and penalties are removed from the supply by burning them.
Shiden (Plasm on Polkadot) is basically the most advanced platform for building smart contracts on Kusama and a hub for dapps, which is unique in the way it rewards not only network validators but also developers of popular dapps. It aims to incorporate a set of tools to use bridges between Kusama and Ethereum and to support all ETH Layer 2 solutions in the future.
Its main features:
- Supports both Ethereum Virtual Machine (EVM), native to Ethereum, and Web Assembly Machine (WASM), native to Substrate
- One of its core features, the X-VM (Cross Virtual Machine), creates a layer of abstraction that allows smart contracts to execute calls and read storage data from different contract engines (virtual machines) and languages within the same blockchain.
- Allows to write contracts in Solidity, ink!, Rust, C/C++, C#, Typescript, Haxe, and Kotlin.
- Natively supports Metamask and Remix.
- 50% of its network fees go to reward developers of dapps, the more popular the dapp is, the more its developer gers.
- It’s possible to change the dapp owner address in Shiden after deploying the contract..
- They will have an Ethereum bridge implemented in the near future,
- Optimistic Virtual Machine allowing dapp developers to use such Layer 2 protocols as Rollups. zkRollups are fully supported right now, more protocols to come.
- Already has a cross-chain DEX KwikSwap running on top of Shiden.
Shiden and Plasm are going to be among the most useful parachains for Kusama and Polkadot respectively. They were funded by Binance, OKEx and many VCs, Even while some of their competitors support EVM, Shiden takes it to another level, being the all-in-one solution for any smart contracts-related task. Incorporating multiple virtual machines, protocols and allowing to use them simultaneously with its X-VM, Shiden will defitely attract more developers creating cross-chain products. It may even connect to Ethereum as a layer 2 with all its L2 solutions ready to be used.
Its native token is SDN and its max supply is 70 million. Its main purpose is governance and paying fees. Some of the holders of the original PL already got this one too from the lockdrop, and now it’s the chance to get some during the crowdloan action.
Moonriver (Moonbeam for Polkadot) is one of the most advanced Ethereum Virtual Machines and a smart contract platform. It can literally run contracts written for Ethereum with a minimum required amount of changes to the source code.
The main features of Moonriver:
- Supports all Ethereum smart contracts written in Solidity and Vyper.
- It’s compatible with all Ethereum tools, such as MetaMask, Truffle and Remix.
- Cross-chain ERC20 token transactions. Moonriver can connect to Ethereum via the Kusama bridge and via ChainBridge and transfer tokens back and forth.
- Built-in integrations for oracles, such as ChainLink, Razor Network and Band Protocol.
- At the same time, it’s still a Substrate-based blockchain and it’s fully compatible with the whole Substrate toolset including block explorers, front-end development libraries, and wallets.
Moonriver is designed for several groups of developers. It can be used by Ethereum developers who want to migrate with their already existing projects to a more scalable and less expensive blockchain, or simply move a portion of their workload until Ethereum scales (which won’t happen in a near future). Some projects have the strategy to replicate on every possible chain, thus we already see some DEXes getting ported to Moonriver. Also, it can be good for those who want to benefit from using smart contracts, who need that functionality in their products, because the native Kusama Relay chain doesn’t have on-chain logic built-in.
Its native token is Moonriver (MOVR) with a genesis total supply of 10 million units and a 5% annual inflation rate. It’s used for smart contracts execution, as the network transaction fee, as the governance token and as a reward to operators running collator nodes. 20% of transactions fees go to Treasury, 80% of transaction fees get burned.
Currently, Moonriver has second place in the crowdloan campaign, right after the Karura platform. We think that it will take the second slot because smart contracts are crucial for any large blockchain ecosystem and finally enabling them will attract many developers to Kusama and then to Polkadot.
Bifrost is a serious DeFi project featuring KSM and DOT staking and providing DeFi liquidity. It’s the 1st interoperable money market on Polkadot comprised of a lending platform and a professional-grade cross-chain DEX. The Bifrost team is building bridges with EOS, ETH, and has many other platform bridges and additional features in the plans. With the active development, it could become a significant part of the infrastructure of Kusama and Polkadot. Unlike Akala and Plasma, Bifrost doesn’t have a separate network for Kusama, and all Bitfrost auction participants on Kusama will get the same tokens as they will get in the future Polkadot auction.
Khala Network (Phala Network on Polkadot) is a lightweight, powerful and secure platform for creating confidential smart contracts and services built on this technology. The platform uses TEE (Trusted Execution Environment) hardware that will allow Khala to become the new decentralized cloud for confidential computing. It has a good chance to connect to Kusama, thanks to its well-thought tokenomics, several projects that are already using Khala to build services on top of this blockchain, and an enthusiastic community.
Crust Network is a decentralized cloud storage for Web 3.0, also with good prospects to become a parachain after the first auction. It has successfully passed a series of testnet launches, has a ton of real use applications and collaborations with two dozen ecosystem projects. In fact, this is an IPFS infrastructure for the Kusama ecosystem, a strong competitor to Filecoin.
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