A definitive guide to Kusama parachain auctions 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.
What about its features?
We’ve designed the functionality to be as simple and straightforward as possible.
- share projects and terms of participation there with your friends;
- add projects to your favorites;
- see instructions on how to participate in a crowdfunding campaign.
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 DeFi platform that allows the creation of cross-chain derivatives. It addresses a new problem — users don’t know what to choose in general, staking on PoS chains, such as Ethereum 2.0, Polkadot and Cosmos, or providing liquidity to staking pools on Uniswap, Kava or Balancer. If they choose DeFi yield farming, that means that fewer people stake PoS tokens, and the security of PoS networks decreases. If they choose to stake, they make less money. At the same time, the more PoS tokens are staked, the less of them are traded on crypto markets, and their liquidity greatly suffers, causing insane price swings.
Bifrost’s solution is pretty simple — instead of staking PoS tokens on their own, token holders can allocate them to a Bifrost staking pool, and stake them there. After locking up staking tokens, Bifrost creates the same amount of derivatives tokens and sends them back to users. For example, users currently can stake ETH and get vETH for it for DeFi operations. These vETH tokens also can be staked in a pool or used in any other way, thus Bifrost users can get double profit both from staking and DeFi yield farming. Also, it features KSM staking, DOT staking is planned in the future.
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. The main difference between Bifrost Finance and all the other projects, participating in the auctions is that Bifrost doesn’t have a canary network. it will connect its main network to Kusama in case it wins a parachain slot. It will start participating from the second parachain auction until it wins.
In addition, Bifrost has a working solution for parachain crowdloans, called SALP. The idea is the same as with staking. In the nutshell: users send KSM tokens to the SALP module to support a certain project, the module generates vsKSM and vsBond tokens and sends collected KSM tokens to the project, and in case of auction success users can trade these new tokens while their original KSM are locked during the slot leasing period. SALP can be used to participate in any crowdloan on Kusama, thus it’s one more reason for it to gain more users.
Bifrost allocates 3 million BNC as a reward for Kusama auctions, which is 3.75% of the whole BNC supply (80 million). The current ratio is 11 BNC for 1 KSM.
If you want to participate in the crowdloan, feel free to use our link, it will give you additional rewards
Phala tries to bring a totally new class of smart contract to the blockchain space — private smart contracts. While smart contracts, in general, are pretty secure, if they are properly written and audited, they lack a very important trait that makes a difference for all commercial companies out there, wanting to use blockchain smart contracts but unable to do it because of their lack of privacy. Total transparency is great for idealists and for government-associated initiatives with nothing to hide, but for commercial operations, it’s crucial to keep many things secret, because competition in all areas is very high. Phala can be the solution to this problem.
Confidential smart contracts rely on the TEE (Trusted Execution Environment) technology. a special chip included in pretty much every computer, which allows executing code inside a special enclave, independent of an OS or the other hardware, and is 100% hack-proof, that’s why it’s possible to run encryption procedures inside it. The results obtained from the TEE are absolutely trustworthy, given that the node which provides these results can also prove them with the signed attestation. Khala Network supports Intel chips, so it uses Intel services for validation. Execution of smart contracts in such a way doesn’t require any sort of consensus, so one node can successfully run a contract on its own.
The network has two main types of nodes, gatekeepers and miners.
Gatekeepers have to stake a lot of Khala’s native tokens and get elected dynamically. They get rewards for keeping secret root keys for encrypting contracts, sharing them when needed with a chosen miner node over a secure TLS channel.
Miners execute confidential smart contracts. They get rewards for providing their TEE hardware to the network, running a special program pRuntime inside it. They get the encryption key from gatekeepers every time a new confidential smart contract is deployed and gets randomly assigned to a miner node. Every miner can join and leave anytime, they backup the current state of the contract from time to time, so it can be picked by another miner and recovered to be continued. The more tokens they stake, the more tasks they receive.
K-PHA will be the native token of Khala Network. Later it will become swappable with the native token of the main Phala Network which is going to be connected to Polkadot. There will be 1 billion PHA tokens, and 150 million of them will be distributed as K-PHA during the Kusama parachain auction, 1 KSM = 100 K-PHA. These tokens could be used as a fee for miners and gatekeepers, for deploying and executing confidential smart contracts.
Khala Network is a really good technology and it actually can bring commercial companies into the Kusama and Polkadot ecosystems. It has private smart contracts which can be deployed by any user, and these smart contracts are interoperable, meaning they can connect to each other! That was the biggest downside of using TEE in blockchain-based systems, and now it’s solved. It has a good chance to connect to Kusama in the 4th or 5th auction, 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 Shadow (Crust on Polkadot) is a decentralized cloud storage project, supporting the TEE and IPFS technologies. It’s the perfect candidate to be used by Web 3.0 applications and all the other Kusama and Polkadot parachains. What makes it stand out among all the other storage projects is the fact that it doesn’t require expensive hardware resources, high-CPU and GPU. One of its main components, the work inspector, runs inside the TEE, in a similar fashion to Phala Network, and that’s why a Crust node can be launched even on a home computer.
The architecture of Crust has three layers: MPoW, GPoS and the Decentralized Storage Market.
- MPoW is the layer for storage nodes. To be able to join the network, every Crust node has to verify itself. The node provides information about its free disk space and stored files, that information gets verified by its TEE, and goes to the second layer, to be written to the blockchain. The work inspector in the TEE updates that information every 30 minutes, and if something changes, the node has to pass the verification again, because it can’t be trusted anymore. When a new order for storing a file is submitted, storage nodes download it from an IPFS network, encrypt it with the TEE and submit it to the second layer. Storage nodes get 20% of the fee paid for file storage.
- GPoS is the layer for stakers. Stakers pack all information, including storage node addresses, file IDs, and verification data, into blocks. The node that stakes a larger amount of CSM tokens has a higher chance to generate blocks. Staking nodes receive 80% of the network fee for file storage, but there’s a twist. Every staker node has its staking quota, and this quota can be increased only by providing more storage, so only the largest storage providers can become the biggest stakers. However, those who don’t have enough staking quotas or enough tokens to produce blocks can delegate them to larger nodes and receive their part of staking fees.
- The Decentralized Storage Market is a place to submit storage orders. Any user can upload a file onto a standard IPFS public network with the Crust client or even with standard IPFS tools. After uploading a file, its content identifier ID (CID) has to be submitted with the order. Then storage nodes download it, encrypt it, and submit the proof of its storage to the blockchain. Then the user pays a fee for storing it.
The native token of Crust Shadow is CSM, The total initial amount of CSM is 200 million, and it will be allocated to the community. There’s a very low chance of Crust Shadow winning one of the first slot auction, but despite this, we see a very bright future for Crust ahead. Crust is a cheap storage network that can become one of the most widely used parachains of Kusama and Polkadot. It can be used to store content for NFTs, games, or even host decentralized websites, so it will definitely be very popular.
What is PromoTeam?
PromoTeam — is the international team of Polkadot fans with experience and professional abilities: We excel in community growth, business communications and strategy, promotion, advertising, mathematics, programming, entrepreneurship, and many others areas. Our main goal is to increase adoption and the value of the Substrate ecosystem. By nurturing a grassroots community and involving as many people as we can. Our mission is to give the Polkadot and Substrate community the utility it needs to promote a Polkadot ecosystem.
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