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Introducing Karura: Acala’s DeFi Parachain on Kusama

Karura will be the decentralized financial hub of Kusama and plans to be one of the first parachains to launch on the network

The Phoenix has symbolized rebirth, renewal, and reinvention as a recurring theme throughout human history. Humans have long revered these stories of hope, helping calm their fears and assuring them of a brighter, better future. Over centuries of time, the Phoenix has emerged in ancient texts symbolizing concepts like rebirth, immortality, grace, resurrection, power, and prosperity in cultures ranging from Greek to Persian to Chinese. The Phoenix has solidified herself in time as a symbol of our ability to rise from the ashes time and time again.

The origins of the name Karura comes from a divine creature in Japanese, stemming from a race of gigantic birds in Hinduism. According to Japanese mythology, the karura is said to be an enormous, fire-breathing bird which aligns with the Karura network’s bold and powerful intentions. Representing the Karura brand is the Phoenix. Built as a sister network to Acala with virtually the same code, Karura will be a network constantly reinventing itself and evolving as the latest technologies are deployed in the Acala ecosystem. Just like Acala’s purpose on Polkadot, Karura will serve the Kusama community as its primary decentralized finance (DeFi) hub. Going forward, Acala and Karura will continue to operate in parallel and serve the users of the Polkadot and Kusama communities. Once Kusama is bridged to Polkadot, Karura and Acala will also be interoperable with each other.

Now a little about why we chose Kusama for Karura. Kusama is an industry-leading, multi-chain “layer zero” network, on which many parachains, including Karura, will be built in order to inherit plug-and-play security from the network’s validators and to experience interoperability with all blockchains on and bridged to Kusama. Users and builders are searching for a DeFi platform that allows them to begin building and using DeFi applications that can scale, don’t have exorbitant transaction fees, and can communicate data and value between other chains instead of operating in isolation. Karura plans to step into this role for the Kusama community as Acala takes on this role for the Polkadot community.

As far as capabilities, the possibilities will be up to the community of builders, paving the way for new use cases and applications on Karura and Acala. Karura will begin with many ready-to-use applications, and since Karura is a blockchain platform, many developers will also deploy Apps on top of Karura’s infrastructure. Karura will begin its life on Kusama with the apps and use cases below. You can try it now on Karura and Acala’s testnet, called Mandala.

  1. Staking derivative L-KSM (Liquid KSM to release liquidity from staked KSM for DeFi use cases)
  2. Stablecoin credit facility (KSM and L-KSM used as primary collateral asset)
  3. Earning yield and interest
  4. Trading on decentralized exchange
  5. On-chain governance
  6. On-chain treasury
  7. Native oracle price feed

Karura and Acala will bring significant change to the status quo with which the DeFi community has been forced to become accustomed. Karura will bring to users the ability to:

  • Unlock staking liquidity: Trustless staking derivatives will allow users who are staking KSM will be able to issue LKSM (liquid KSM), which can be used in any of the DeFi applications mentioned above or elsewhere in the cross-chain ecosystem.
  • Unlock cross-chain liquidity: Users will be able to bring BTC and ETH into Karura through bridging solutions and pay fees in those wrapped tokens. This removes the need on legacy networks to pay fees in the network’s native token, such as ETH, instead of allowing users to simply pay fees with the token they’re moving. No more requirement to use the network’s native token for fees.
  • No more unbonding period: Karura will remove the need for users to wait 7 days on Kusama for unbonding KSM, just as Acala will do the same on Polkadot.
  • Latest technology releases: Being the bold and risk-taking sister network of Acala, tech releases will always go to Karura first. Karura users will always be getting the latest tech in their hands from the Karura and Acala ecosystem.

Developing on Karura

Kusama has been said to be a ‘cypherpunk heaven’ for developers looking to move fast and push the limits of what’s possible. Karura plans to integrate into this vibrant developer community, providing Kusama and Substrate developers with world-class tools and platforms for financial applications. Developers will find many new features, including a few below:

  • Solid User Base and Building Blocks: Kurura offers a multi-collateral stablecoin, Liquid KSM (LKSM) liquidity, and a DEX as primitives (aka building blocks) to build on top of. Karura will also have access to Bitcoin, Ethereum and other networks through bridges. As a parachain connected to Kusama’s Relay Chain, Karura will have the ability to tap into Kusama’s cross-chain ecosystem.
  • Sophisticated Customization: Using the blockchain-building framework, Substrate, with which Karura was built, developers can build independent economic models and incorporate your own token as a fee token.
  • Optimized for DeFi: Developers will have quality of service from the native oracle price feed built into the code, can build independent economic models using Substrate, and can use Karura’s flex-fee capability to have fees paid in any token.
  • Scalable Cross-chain Liquidity: Karura offers high capacity and throughput and liquidity from any chain bridged to the network. We expect Karura will be bridged initially to Polkadot, Bitcoin, and Ethereum.

What’s next for Karura

Karura will be launching a Crowdloan on Kusama in the near future. This process will be carried out using Kusama’s native token, KSM, in order to gather KSM holder support to bond for the parachain slot via an auction on Kusama’s network.

Read more about the Crowdloan and auction process here:

🔥 We’d love to meet you! Come say hello and ask any questions you have about the future of Karura by joining Karura’s Discord channel and following Karura on Twitter.

About Karura

Karura is the decentralized financial hub of Kusama. The network is built as Acala’s sister network with nearly the same codebase, enabling a scalable, user-friendly, and fast cross-chain DeFi platform. Karura’s parachain is a fast-moving and powerful platform that enables efficient, inexpensive, and sophisticated financial applications, improving trading effectiveness and saving time. The platform offers a suite of financial primitives: a multi-collateralized stablecoin backed by cross-chain assets like Kusama and Bitcoin, a trustless staking derivative, and a decentralized exchange to unleash liquidity and power financial innovations.

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Dan Reecer

Dan Reecer

Chief Growth Officer @ Acala and Karura. Previously launched Polkadot and Kusama @ Web3 Foundation.