Karura’s Approach to the Crowdloan and Parachain Auction on Kusama
Karura, the sister network to Acala and DeFi hub of Kusama, will soon begin its Crowdloan to garner community support for the first Kusama parachain auction
Karura, built as a sister network to Acala with virtually the same code, is a new blockchain network dedicated to serving the Kusama community as its primary decentralized finance (DeFi) hub. Karura’s cross-chain DeFi hub will provide a stablecoin (kUSD), staking liquidity for KSM called L-KSM, DEX capabilities, borrowing, lending, among other applications.
Any chain, like Karura, planning to connect to Kusama’s ‘layer zero’ multi-chain network for interoperability and plug-and-play security is referred to as a parachain. Kusama plans to have 100+ parachain slots available in the future, but the network is still in its early stages. Hence, the network, built by Polkadot Founder, Dr. Gavin Wood, is starting with a very limited number of available parachain slots. In order to gain access to a parachain slot, any hopeful team must participate in and win a candle auction using Kusama’s native token, KSM, which is subsequently locked for the duration of the parachain’s lease.
Karura plans to host the first Crowdloan on Kusama and participate in the first round of parachain auctions (details on parachain auctions here). Parachain auctions can be approached in many different ways, and we’ll take a minute below to explain Karura’s approach. Those who would like a deep dive on the process for obtaining a parachain slot on Kusama or its ‘cousin network’ Polkadot should read the Polkadot blog’s detailed overview.
Karura’s Roots
Karura is Acala’s sister network, focused on bringing DeFi to Kusama just as Acala is bringing DeFi to Polkadot. The origins of the name Karura comes from a divine creature in Japanese, stemming from a race of birds in Hinduism. According to Japanese mythology, the karura is said to be an enormous, fire-breathing bird, which fit perfectly with the Karura network’s bold and powerful intentions. Representing the Karura brand is a Phoenix, a fiery bird that shows its resilience through continual rebirth and reinvention.
DeFi Features and Improvements from Karura
The future will be determined by the open source 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 ‘layer 1’ 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 outlined in this previous blog post below. You can also try it now on Karura and Acala’s testnet, called Mandala. Also, check out the full overview of Karura’s benefits to users in a recent blog post:
Karura’s Approach to the Crowdloan and Parachain Auction — Introducing the Paradrop
Karura plans to bid for the first parachain slot on Kusama and be the pioneer in the new crowdsourced network security paradigm: the Crowdloan. Karura will run a trustless campaign for the Kusama community, in order to lobby for support from KSM holders. The Crowdloan involves these supporters will bond their KSM on Kusama in support of Karura’s bid for a parachain lease in the Kusama parachain auction. Below is an 8 minute overview of the crowdloan and parachain auction process that will help give context in addition to reading the information below:
KAR Distribution: In return for KSM holders’ support, KAR (Karura’s native token) will be distributed to participants. In the event Karura succeeds in its auction bid and secures a Kusama parachain lease, and network genesis of Karura occurs on Kusama, Karura will distribute KAR to the accounts used to bond KSM in support of Karura’s parachain auction bid. The distribution will be sent all in one batch, but will unlock over the duration of the lease via a vesting schedule. This means Karura supporters can utilise the KAR received to participate in governance and staking, while the vesting schedule is realised.
Bonding Periods: The KSM would be bonded, or ‘locked’, in the Kusama Relay Chain for the duration of Karura’s parachain lease (likely 1 year). This means all KSM support is locked on Kusama to support the project’s parachain auction bid. Winning this auction then allows the project to access Kusama’s plug-and-play Proof of Stake security, but all KSM are inaccessible to the project team.
Any KSM bonded on Kusama in support of Karura’s parachain lease auction bid will be returned in full at the end of the parachain lease (in the event the auction bid is successful), or used in an additional auction (if the first auction bid was not unsuccessful). This means the project team will be motivated to focus on ensuring that the project and its associated network are delivering the intended utility and have real usage in terms of users and transactions.
KAR Distribution Amounts are Unpredictable: The exact level of support that Karura will require to emerge as the winning bidder amongst other competing bidders is unknown, and the duration of the parachain lease that Karura will bid for is presently undetermined (but likely 1 year). With this said, the exact amount of KAR distributed to Karura supporters in recognition of their support for the upcoming Crowdloan will be unknown till the end of the auction. However, Karura will soon provide estimates for your reference. In a completely hypothetical example, a Karura supporter bonding X amount of KSM for Karura’s successful bid for a 6-months parachain lease would be recognized by a distribution of 5 KAR for her support; the same amount of KSM bonded in support of a successful bid for a 12-month parachain lease would be recognised with a distribution of 10 KAR given the extended duration of support.
Next Steps and Getting Involved
The Karura Crowdloan and auction are rapidly approaching. The best way to stay in the loop is to join the Acala/Karura Discord, follow Karura on Twitter, and follow Acala on Twitter. You can also visit Karura’s new website to learn more.
Interested in learning more about the crowdloan and parachain auction process? Watch out team explain:
About Karura
Karura is the all-in-one DeFi hub of Kusama. Founded by the Acala Foundation, Karura is a scalable, EVM-compatible network optimized for DeFi. The platform offers a suite of financial applications including: a trustless staking derivative (liquid KSM), a multi-collateralized stablecoin backed by cross-chain assets (kUSD), and an AMM DEX — all with micro gas fees that can be paid in any token.
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