Explaining Litentry Parachain Auction (I) — Polkadot vs Kusama
The first-round Polkadot Parachain Auction is coming. Litentry will also participate in it, so I will write a series of articles to explain i) Why we join the Polkadot parachain auction, ii) How we use crowdloan to bid for a parachain iii) What are the next steps after becoming a parachain. This is the first article about the rationale behind being a Polkadot parachain.
Connecting to a relay chain and getting to be a parachain for Litentry means shared security and interoperability. The former makes our network more resilient, and the second allows us to provide identity solutions to all parachains with ease. It is the advantage of using the Substrate framework. As a fundamental ecosystem player, Litentry will of course aim to connect to a relay chain as early as possible, which means, becoming a parachain and benefitting from its shared security and interoperability.
Why we choose Polkadot over Kusama
It’s commonly known that Kusama and Polkadot are cousin networks. Kusama is now worth 3.4 billion and Polkadot is worth more than 40 billion. Though Kusama and Polkadot are based on the same technology provided by Parity Technologies, these two networks are fundamentally very different. As in, they have different focuses, independent councils and are designed to go in separate paths.
Kusama provides a non-audited and risk-taking environment that leaves a less economical impact on the project and its community. It is a breeding ground for experimental ideas and projects. For example, to create a new council, to launch a new pricing strategy, or to test experimental features, etc. Besides, Kusama Network’s experimental continuous auction has just started, which aims to onboard 48 parachains in the next 48 weeks.
We see the benefits of having a separate network on Kusama. However, frankly speaking, considering 1) the preparation work for the Kusama auction is on a comparable scale to Polkadot, and 2) the auction will also involve an independent parachain token economy. It’s impossible for us to regard a network on Kusama as merely a testnet. Since Litentry has rapidly grown into a relatively mature parachain with ongoing use cases and product lines, a network that prioritizes stability and security is our best bet.
More importantly, our protocol closely aligns with Polkadot’s value, which is to elevate cross-chain. Litentry’s focus is to provide solid identity solutions, to create an innovative aggregated identity protocol for the whole Web3. We already have collaborations with not only Polkadot and Kusama ecosystem teams, but also with Ethereum, BSC-based projects, as well as other ecosystems like Solana, Elrond. Polkadot’s scalable, heterogeneous multi-chain network is a rather reasonable, if not optimal, choice for meeting Litentry’s need to facilitate aggregated identities and transact cross-chain. As such, if we were to gain adoption in Web3 as widely as possible, Polkadot would be the ideal ecosystem for the Litentry Protocol.
Why we skip the Kusama Parachain Auction
It’s about cost and time efficiency. We expected to attend the Parachain Auction on Kusama in September. However, as the Polkadot auction is coming in November, which leaves a fairly short interim period after Kusama, we quickly re-evaluated the plan considering the following points:
- More traffic on Polkadot. The Polkadot crowdloan auction will be extremely hot for the first round. We also expect even more attention, resources and traffic will be drawn to the Polkadot auctions related to the Kusama auctions.
- Accelerate LIT use cases. It’s guaranteed that LIT will have pragmatic use cases in the ecosystem when we’re on Polkadot. It’s highly undesirable to delay deploying LIT use cases again and we want to let our community members use LIT in the ecosystem as early as possible.
- Priorities and resource allocation. Preparation of Kusama parachain auction will greatly consume resources of our team, not only because we are a team building various products to thrive in the ecosystem, but also because there are tons of external collaboration that need to be made for the launch of a new network. If we first go for the Kusama Parachain auction, our attendance in the Polkadot auction will probably be delayed.
- Avoid LIT value dilution. Participating in the Kusama Parachain auction will significantly dilute the value of LIT when we provide LIT rewards for KSM supporters, which will subsequently lower the value we are able to provide for DOT supporters.
To summarize, the crowdloan for a relay chain requires a lot of resources, and we know what our ultimate goal is (Polkadot). Considering all the above points and the timeline, we switch our plan and finally, we are here, on the first round Polkadot parachain auction, with well-prepared products and collaborations.
Our pros and cons compared with parachains already on Kusama
In the Polkadot auction, we will see the project who already onboarded Kusama to start a new crowdloan on Polkadot. Here are the pros and cons in terms of the competitiveness of our project compared with these Blockchains.
The main concern why we skip Kusama parachain auction is resource allocation. Supporting two parachains will involve extra work in terms of development and community. For example, the developer team needs to keep track of the runtime update on both Kusama and Polkadot; the community needs to set up two councils, etc. These issues all need to be considered and solved by our team. However, this does not mean that Litentry is too small to afford two parachains. On the contrary, Litentry has a top team in the ecosystem with 30 people, where two-thirds are developers, such that we are crystal clear about the difficulties involved, that functionality is of top priority, and that more meaningful work and resources should be allocated to one parachain.
Missing a Canary Network
Kusama is probably the most special network in the blockchain industry. It is a canary network with real value. Parachains on Kusama are definitely pioneers in building a multi-chain ecosystem and gaining the experimental canary ecosystem.
However, we can not build up too much expectation for the canary network. At this moment, most of the networks on Kusama are in the very early stage. For example, it normally takes about 3 months to enable token transferring functions on Kusama. Specifically, for teams who want to have two parachains, it is not easy for them to design a new network specification/environment, either for an experimental chain or for a more formal chain. The team will certainly need feedback from the existing chains, and figure out the functional purpose of the chain.
If two parachains are onboarded simultaneously or within a short period of time, the project won’t be able to take the advantage of having an experimental field because all features are the same on Kusama and Polkadot. Then the second auction will become a pure marketing activity, and it probably dilutes the value of the first released token.
It is common to mix the concept of a canary network and a test network. As we discussed, the canary network already has its value, it is not a testnet. For testing issues, Parity Technologies offers two separate chains, Westend and Rococo, Litentry has made full use of the two relay-chain, and as you can see. In April 2021, Litentry already tested the crowdloan and successfully onboarded on Rococo. Internally, we also have two testing environments for the front-end and runtime teams, which is the reason why we are confident in the development and onboarding process without Kusama’s experience.
Are we sidelining Kusama parachain auction forever?
While we’re focusing on the Polkadot auction at this moment, It does not mean that we are steering ourselves away from the Kusama Ecosystem. Meanwhile, we are discussing with major Kusama ecosystem players how LIT can be used in cross-chain transactions in Kusama.
More importantly, we are not against the idea to have a new community-driven network on Kusama, but we will need to have a new network design, which must be different from the parachain on Polkadot. Being said, we’ll have to consolidate the experience from Polkadot and expand the team. As a consequence, we will have the current focus on Polkadot and probably won’t see Litentry as Kusama Parachain in the next 6 months.
That’s a wrap. In the next articles, we will take a look at the rationale behind the design of Litentry’s crowdloan campaign, which will clarify the most concerned topics, like the size and distribution of the crowdloan rewards. Thank you for reading.