What is Kusama (KSM)?

Kusama (KSM) is Polkadot's Canarian or test network, and is focused on offering the latest technology that the Polkadot development team can offer through Substrate. 

UOne of the most recent and curious projects in the world of cryptocurrencies is Kusama (KSM). Kusama is actually a "test project" of Polka dots (DOT), one of the most valued projects today. And when we talk about tests, we talk about Kusama actually being a "testnet”From Polkadot, and despite this, his token has enormous value within the community.

But how is this possible? How does a testnet have such a valuable token? Well, you will know this and more below.

The origin of Kusama

Kusama (KSM) is known as a "canarian network" or "test and alert network" for the Polkadot project and its great objectives. The idea is simple: Kusama would be the testing ground for all the technologies that Polkadot would launch on the main network. In this way, if something goes wrong in Kusama, it is fixed and after being stable enough, that characteristic becomes part of the final protocol, Polkadot. An interesting idea that eliminates unnecessary risks on Polkadot and allows accelerated development.

In any case, the birth of Kusama began on July 16, 2019, when Polkadot presented on his blog the first experimental version of his new protocol called Kusama. This protocol was designed for real economic conditions. In other words, Kusama allowed us to do everything that Polkadot allowed us to do, in real conditions, which is ideal for testing projects under those conditions.

However, Kusama quickly became more than a "testnet" and many projects opted to use its features as "early adopters". Outcome? The project began to grow, and in a short time, its value as a project skyrocketed impressively. In fact, today a KSM token, the platform's native token, has a value of hundreds of dollars, which is curiously 10 times more valuable than a DOT token ($ 22, as of the same date).

This on the other hand is a signal to Polkadot users and holders: the value of the Polkadot DOT token may increase dramatically as the network completes and the parity with the current Kusama is completed.

How does Kusama work?

As we already mentioned, Kusama (KSM) is a test network of the Canarian type, that is, it is a network designed to tell Polkadot developers if there is something wrong in the development of the technology that in the future will be integrated into Polkadot. The intention with this is to debug the code and prepare it for operation in real working and production conditions.

Of course, this does not mean that Kusama is a network riddled with bugs and features that don't do their job, just that Kusama is a sandbox for technologies that are not yet considered fully polished. At this point, the Polkadot developers care is extreme, especially understanding that they want two things:

1. Create functions that do what they are supposed to do (especially parachains and parathreads).
2. That nothing stops working due to a programming error in a production environment.

However, something curious happens in Kusama. First of all, being a network with a "sandbox" label, many projects and users have pounced on it. Which has led to a second condition: the value of your token is very high. The latter breaks with the idea that testnet tokens have no value (as is the case with Bitcoin, Ethereum and other projects). Which makes Kusama practically unique in the blockchain world.

But beyond this, how does Kusama really work? The answer is: it works almost the same as Polkadot. In fact, the Kusama protocol is an almost exact copy of the Polkadot protocol, where we can use some advanced functions that are not yet available in Polkadot. We can summarize Kusama as an unaudited version, with experimental Polkadot features, but with some changes.

One of those changes in Kusama, we see it the governance and update system of the network. In Polkadot, this occurs in a 28-day voting period. However, in Kusama that period is reduced to 7 days. This means that the changes in Kusama happen much faster than in Polkadot.

There are also other parameters that are different from Kusama. First the epoch and the sessions last 1 hour (4 hours in Polkadot). An era or epoch in Kusama lasts for 6 hours, while in Polkadot it lasts 24 hours. And the slot (block generation time) is kept at 6 seconds in both networks. These changes in the parameters have a strong impact on the generation of KSM tokens, as we will see later.

However, beyond this, Kusama and Polkadot are the same. They have the same consensus system, the same block production time, and the same tokenomic policy for the system.

Token KSM, the curious case of Kusama

But if we talk about tokenomics, perhaps the rarest case is seen in the native token KSM. First, the initial distribution of this token respects the same DOT token distribution. That is, if you participated in the DOT ICO, you have access to the same number of KSM tokens as you bought in the DOT ICO. This alone is not uncommon, given that they are almost the same projects.

In fact, this served to encourage users to make use of the network, Kusama and help the team in its development. However, perhaps the biggest change in Kusama is related to the generation of tokens through the rewards of the network. This is possible because in Kusama the generation of rewards has been sped up by 4 times, due to the changes in the duration of the epochs and the eras of generation of blocks and rewards.

Put more simply: Kusama is set to generate more inflation. However, the on-chain data from both networks tells us otherwise. This fact can confuse anyone for a simple reason: Kusama has about 11 million tokens in circulation, while Polkadot has 100 times that amount. How do you explain this? Well, let's remember that, in August 2020, Polkadot decided to change the economic relationship of his DOT token, making the staker have 100 of the new DOTs for each (old) DOT token. This small change explains the on-chain discrepancies between the amount of tokens in the two networks. But, it also explains the difference in value between the tokens (Polkadot has a very diluted value due to its large issuance).

Not only that, it also explains the level of rewards generation between the two networks, being that Polkadot has a higher generation of rewards. The reason for this is simple: the generation of rewards in Polkadot and Kusama is dynamic, and is related to the level of Staking that the validator performs. At this point it is easy to understand the relationship: in Polkadot there are more coins, and therefore validators have a lot of coins to hold via Staking, leading to higher rewards. In Kusama, however, they are more limited and therefore do not generate as many rewards. Despite this, the inflation trend between the two networks is quite similar.

Beyond these changes, the KSM token is identical in operation and capabilities as the DOT token, which denotes the clear closeness between both projects.

Kusama (KSM), a network for innovators

Kusama since its inception has been a network for innovators and those looking for the newest at all times.

On January 4, 2020, an update to the network led to the complete breakdown of the network, which led its developers to rollback the network. The restart of network operations took 8 days, and during that time, one of the strangest blockchain recovery operations you can imagine took place. Because, if Ethereum's rollback to reverse The DAO hack was incredible, what they did at Kusama far outweighs it. In fact, Gavin Wood, the developer of Polkadot and Kusama, calls it "The First Great Adventure of Kusama" and in summary what was done was the following:

The network was stopped, and work began on a solution. Once the solution was ready (return everything to its point before the chaos) the difficult part began: implementing the solution. First return the network to a state 45 minutes before the disaster, but make the network believe that the exact time of the same was that, was a problem. It is not just changing the time of the clock, it was changing it throughout the network, synchronizing it, doing everything possible so that the clocks returned to normal time. To accomplish this, Wood released a modified version of the Kusama software that allowed for two things:

1. Go back 45 minutes before the disaster and disable the update that caused the problem.
2. Maintain a “warp time” in which the network worked 6 times faster than before, and that after synchronizing with the current real time, that accelerated time was deactivated, to continue at the original speed of the system.

Wood's creativity called this "The DeLorean", a clear mention of the Back to the Future movie, and it suits him perfectly, because they traveled to the past (on the Kusama network) and returned to the future (with time sped up on the web ).

That said, it's clear that Kusama is a network designed for those who want the latest and don't mind taking a little security risk for the latest technology. But not only that, Kusama being Polkadot's testing ground has access to its technologies much earlier. For example, in Kusama parachains can already be used, while in Polkadot they are not fully implemented yet. Of course, the real testnet of Polkadot (Rococo) already has the parachains active, but in this network no real projects are developed, as is the case in Kusama.

It is these kinds of things that drive the development of Kusama and make a project increasingly valuable in the eyes of the community. Of course, taking care and attention, that if you need a high security environment, Kusama may not be your best option.

Links of interest