I wasn’t even born in 1968 when Dick Fosbury won a gold Olympic medal for the highest jump in Mexico City. But I remember how fascinated I was when I heard the story about that competition for the first time.
What made Dick’s name written in history wasn’t a gold medal, but the way he jumped that day. Until then, every high jumper rolled over the bar with his face down. When it was Dick’s turn, he showed an entirely new approach. He jumped with his face up and his back close to the bar, and the history was made. Today we call this jump Fosbury Flop.
Dick challenged the dominant idea and found a different approach.
He looked at things from a different point of view.
He did something that nobody else did before.
The Initial State
Last year, while Polkadot was in development, Parity – the team behind it, wanted to publish something that will give users the best possible insights about the work they did so far. The idea was to create a new network with almost the same code base and use of the Substrate framework in Polkadot.
Of course, this would be an excellent test for the system. The best way to see if something really works is to give it to the people and let them play with it. And on the other hand, participants could explore the features of the network and learn about it before the main net launch.
But that wasn’t enough. The network would attract blockchain enthusiasts for sure, but there had to be a way to bring it to the next level.
To incentivize innovation.
To enable 3rd party integration.
To encourage the creation of new business models on top of it.
And to persuade users to participate in governance.
That’s exactly what they achieved with Kusama. Let’s see how…
Economic Sense for New Business Models
One of the first unique things you could notice when you start exploring Kusama is the token model. The network has its own native token, named KSM, which can be gained in several ways. First of all, the Polkadot public crowdsale participants got Kusama tokens for the same amount they had DOT’s, Polkadots native tokens. So the genesis distribution was the same as for DOT’s. Secondly, the Web3 foundation reserved a particular amount of funds for a frictional faucet for all of those that don’t possess DOT’s.
And lastly, you can get a KSM token by participating in the grant program of the Web3 Foundation.
At the beginning of the token distribution, a way to add value to the tokenization model had to be figured. The idea was that one percent of DOT tokens at Polkadot genesis should be reserved as an eventual incentivization grant to Kusama’s stakeholders and community.
By doing this, the network developed its economic model, where the participants have an interest in the contribution.
The token got listed on crypto exchanges, which showed that it began to have a life outside of the network itself. But more importantly, by developing such economic meaningfulness a space for a new business model was created.
Until now, we have four primary use cases for the token itself:
- Transaction across parachains
- Bonding parachains
For the staking model, an entire ecosystem of projects offering their services has been developed, and all of them managed to find a path to the sustainable business model.
Governance Run the Show
One of the questions that bother a lot of people in the blockchain world, is could a business be run by a DAO (Decentralized Autonomous Organization) or are we decades away from that utopia?
Maybe Kusama could give us an answer to this question. The network started as a Proof of Authority. A couple of months later it was upgraded to nominated Proof of Stake ruled by a decentralized governance mechanism. From then on, the community of KSM holders votes for every proposal and chain upgrades that define the direction of the network.
Kusama right now has one of the most stacked DAOs in the space, with more than 150000 KSM in the treasury. The community governance is very active with proposals and can give a broad perspective in which direction Kusama could go. Examples of crucial referendums would be enabling KSM transactions, defining validators structure, defining identity on Kusama, etc.
You can check out the active proposals and their status here.
Another way how the network tries to set a stage for as many experiments as possible is by cutting the time of governance proposals and voting, which leads to faster decision making and frequent upgrades.
No promises. Just incentives
Kusama’s primary purpose (to incentivize innovation) has been achieved with an environment that is as much as possible equivalent to the mainnet. By doing so, Kusama becomes a pre-production environment for Polkadot new features where you can see how your product behaves in real conditions. We saw a lot of those in the past.
One of the most recent is a social key recovery, which allows users to recover their accounts if their private key or other authentication mechanism has been lost. You just need to specify the set of users allowed to give you access to your account again.
When you create such an environment where a reset of the chain is not an option, developers become motivated to maintain the system and fix things on the run.
Such an event happened at the beginning of the year due to a naming issue related to an upgrade. The new runtime was incompatible with the Kusama client code. The consensus stopped producing blocks, and Kusama became bricked.
In the end, the solution was to roll back the time of the chain to one block before the problematic upgrade and then reject it. You can read more about it here.
One more thing that could attract developers and other blockchain projects to integrate with Kusama and start experimenting with it, is a low entry barrier regarding costs, which is notably smaller than how it’s going to be on Polkadot mainnet blockchain.
This opens the door for third party integrations experiments.
One of the integrations that could bring a lot of value happens with Chainlink to enable their oracle smart contract system on Kusama, which would open the door for many other partnerships to occur.
The level of blockchain
Knowing all of this and adding the fact that Westend chain launched recently, as a classic testnet. So we have three networks under the Parity and Web3 Foundation umbrella. Where each one of them not only gives a certain level of security and control to the end-user, they also differ in the value of the token. Maybe we are at the beginning of a new way of providing blockchain services to our users, where they can choose the option that fits them the best. That depends on the phase of the project and the level of scalability needed.
It wouldn’t be surprising to see this kind of offering in future blockchain provider’s web pages.
We can already say that Kusama will continue to operate after Polkadot launch and probably become one of the first bridges on it. The coexistence of both chains at the same time will provide more options for users to choose what works for them. And obviously, a typical scenario would be starting with Kusama and then scaling up to Polkadot when the project becomes more mature. Of course, considering the privileges of Kusama, such as the speed of rolling up and lower bonding costs, Polkadot has to bring concrete benefits to users, so they are incentivized to relocate to the main chain.
While listening to Gavin Wood’s explanation on Kusama when he announced the launch of it on the Berlin blockchain week, I was pretty confused. Is it a test net? Why do the tokens have value? Should we wait for Polkadot? Can we deploy on Kusama right now?
But from this distance, everything has sense.
It’s hard to tell if other blockchain platforms in the future will use the same path as Polkadot. We have to be aware that this is a specific project, and most of the startups in our space couldn’t manage this kind of solution.
But what we can say for sure is that they looked at things from a different perspective.
They challenged the existing standards.
They made something that nobody else did before — the Kusama approach.