Development - the Kusama ecosystem is rapidly growing
Parachain - the Kusama blockchain is fast and efficient thanks to its parachain
Governance - a voting system for users who can invest in the parachain through auctions

Weaknesses

Testing platform - it is exposed to greater security risks
Unclear future - as it is a testing platform, it may not exist forever
Inflation - 10 % inflation of the KSM coin

Basic Information

Kusama runs on the Nominated Proof of Stake (NPoS) consensus.

The Kusama blockchain is a pre-production environment for the Polkadot blockchain, acting as a sandbox that allows developers to test new versions of projects for Polkadot in a live and realistic environment. Kusama functions as a "Canary Network," which is a crucial part of the Polkadot ecosystem and allows for careful testing and verification of main updates and code versions before they are released on the main Polkadot blockchain.

Kusama has its own coin, kusama (KSM), to govern and operate its own network, to connect a parachain to Kusama chain and as a utility currency for network users.

The Web 3.0 Foundation, led by Gavin Wood, is behind the creation of the Kusama blockchain.

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Functioning of the Chain

The Kusama blockchain is a "Canary Network" for the Polkadot blockchain, so these networks are almost identical. Unaudited codes are released on Kusama before they are released on Polkadot. The difference between the two networks is the speed of voting and change implementation, where Kusama is faster.

Becoming a validator on Kusama is easier due to lower deposit requirements. It should be noted that the Kusama blockchain is experimental, emphasizing speed over stability and security.

Nominated Proof of Stake (NPoS)

This is a consensus algorithm that allows users to earn rewards for validating new blocks, but only nominated nodes are allowed to participate in block validation. This mechanism is designed to incentivize good behavior and punish bad behavior, ensuring that only honest and reliable nodes can participate. NPoS is a popular consensus algorithm as it combines the security of PoS with the added benefits of stakeholder voting.

Nominated Proof of Stake (NPoS)

Main differences between Polkadot and Kusama:

Price: the required amount of coins to launch a parachain on the Kusama blockchain is smaller than on Polkadot. This makes it more affordable for testing purposes.

Kusama

the existential deposit is 0.000333 $KSM
the deposit required to set an identity is 0.333333 $KSM
the minimum contribution required to participate in a crowdloan is 1.000000 $KSM

Polkadot

the existential deposit is 1 $DOT
the deposit required to set an identity is 20.258 $DOT
the minimum contribution required to participate in a crowdloan is 5 $DOT

Speed: the Kusama blockchain has adjusted parameters for a faster running of the blockchain

Kusama

slot - 6 seconds
epoch - 1 hour (600 slots)
session - 1 hour (6 sessions per era)
era - 6 hours (3,600 slots)

Polkadot

slot - 6 seconds
epoch - 4 hours (2,400 slots)
session - 4 hours (6 sessions per era)
era - 24 hours (2,400 slots x 6 epochs x 6 seconds)

Governance: regarding governance, the parameters are also adjusted for faster upgrades

Kusama

Polkadot

Staking, Validating and Nominating

Kusama

Polkadot

Treasury

Kusama - 6 days since last wallet use
Polkadot - 24 days since last wallet use

This does not mean that the Kusama blockchain is faster in terms of block creation or transaction throughput (these are the same on all networks), but that there is a shorter time between governance events, such as referendum proposals, voting, and the implementation of approved updates. As a result, Kusama can adapt and develop more quickly than Polkadot.

Auction mechanisms

Parachain slot auctions take place in a modified candle auction format and last about a week. To prevent auction sniping (a strategy of bidding at the last minute) and improve price determination accuracy, the exact time of auction completion remains unknown until its conclusion.

Crowdloans

Some teams may choose to crowdfund for slot rental using the crowdloan mechanism, which allows people to support a team by locking up their $KSM until the end of the rental period. These teams can reward their supporters as they see fit, and can set up their crowdloan in various ways, hosting it either on Kusama or on a third-party platform.

Always keep in mind that the Kusama blockchain is a "Canary Network." There is therefore not as much emphasis on the security of the entire blockchain, various parachains, or dApps. The main focus here is on testing the technology in real blockchain conditions and fixing bugs before deploying on the main Polkadot blockchain.

Slot: A slot refers to a fixed time interval during which validators can add a new block to the blockchain. This timing is important to ensure that blocks are properly ordered and transactions are correctly verified and recorded on the blockchain. Each slot serves as a "window" for validators to insert one new block.

Epoch: This is a large time unit that is divided into smaller units called slots. In each slot, there is one validator who has the right to propose a block. In the Kusama system, the duration of an epoch is the same as the duration of a session, which is a period during which a specific set of rules applies to validators.

Session: This is a period during which a specific set of rules applies to validators who verify transactions. During this time, designated validators are established, and they can only join or leave the validator group when a session changes. A session is therefore a "time envelope" during which only designated validators can participate in transaction verification.

Era: This is a period during which the set of validators and active nominators for each validator is recalculated, which can affect reward levels. An era is therefore a "segment" after which the network's validators change.

Development History

2019

Kusama was founded by Gavin Wood (founder of the Polkadot blockchain and co-founder of the Ethereum blockchain)
in August, the Kusama blockchain was launched on the Proof of Authority (PoA) consensus
in October, the upgrade preparing for the transition from PoA to Nominated Proof of Stake (NPoS) took place

2020

in January, an upgrade to version 1034 took place, which shut down the network for 8 days
in June, the Kusama blockchain switched from the PoA consensus to NPoS

2021

in June and July, the first parachain auctions were completed
since then, 67 parachain auctions have taken place

When Kusama tried to update to version 1034 on 4 January 2020, a naming error occurred, which blocked the entire blockchain. The Polkadot team helped by releasing several updates to restore it. These updates rejected the bad upgrade and allowed the chain to operate more efficiently. The Kusama blockchain returned to normal on 12 January 2020, 8 days after the bad upgrade.

Team

Gavin Wood was one of the co-founders of the Ethereum blockchain and was also the first technical director of the Ethereum Foundation. Before working on Ethereum, he was a researcher at Microsoft. Wood designed and helped develop the Solidity language for writing smart contracts, and also released a paper that defined the Ethereum Virtual Machine (EVM), a runtime system for smart contracts in Ethereum. After leaving the Ethereum Foundation in January 2016, he founded Parity Technologies and the non-profit Web 3.0 Foundation, which focuses on decentralized infrastructure and internet technologies, including the Polkadot network. In 2019, he also founded the Kusama blockchain, an experimental development environment for Polkadot.

The Web 3.0 Foundation and Parity Technologies are behind the Kusama blockchain, and their teams, led by Gavin Wood, are responsible for the development of the entire ecosystem.

Governance

The KSM coin is the governance coin of the Kusama blockchain and is used for:

Staking
Validator rewards
Voting

Anyone with 100 $KSM in their wallet can propose a change. Three types of users decide on the approval of the proposal:

Referendum Chamber - this is every user who owns KSM coins - they can propose, approve or reject proposals from others
Council - Council members are elected by KSM coin holders - they are responsible for proposing and determining changes that are applied to the blockchain
Technical Committee - these are teams of developers who are building the Kusama ecosystem and can submit special proposals. The Kusama blockchain leadership votes on the members of the committee

Voting Timetable

Every 7 days, a new referendum will come up for a vote, assuming there is at least one proposal in one of the queues. There is a queue for Council-approved proposals and a queue for publicly submitted proposals. The referendum to be voted upon alternates between the top proposal in the two queues. The "top" proposal is determined by the amount of stake bonded behind it. If the given queue whose turn it is to create a referendum that has no proposals (is empty), and proposals are waiting in the other queue, the top proposal in the other queue will become a referendum. Multiple referenda cannot be voted upon in the same period, excluding emergency referenda. An emergency referendum occurring at the same time as a regular referendum (either public- or council-proposed) is the only time that multiple referenda will be able to be voted on at once.

Voting Strength

Referendum voting usually involves locking coins for a certain amount of time. Voting without locking is possible, but the vote has a low value. Holders of a small number of coins can influence the outcome of the referendum through time-locking.

On the Kusama blockchain, there are 283,000 addresses that own some KSM coins. The first 20 wallets own over 50 % of the total coin supply (as of 12 February, 2023). So, voting here can easily be manipulated.

Revenue & Tokenomics

The Kusama blockchain’s revenue for the year 2022 was approximately 4.6 million USD. These funds are used to operate the blockchain and build the ecosystem.

Participants of the DOT coin sale were airdropped KSM coins at a ratio of 1:1. So, those who participated in the Polkadot genesis sale can claim the same amount of $KSM.

The Kusama blockchain has a total supply of 10 million coins. However, for those interested in the tokenomics, there is no fixed maximum supply. Instead, it increases annually by 10 %.

The percentage of staked KSM coins also affects inflation. Kusama validators can earn 100 % of newly minted $KSM, but only if exactly 50 % of all KSM coins are staked. If this number is outside the 50 % boundary (above or below), the Kusama Treasury receives a certain inflationary reward.

The Web 3.0 Foundation is also looking for new and better ways to get KSM coins into the hands of developers who want to build on the Kusama network.

The total number of $KSM in circulation is 8,980,098 (12 February 2023).

The total number of staked $KSM among validators is 6,220,000 (12 February 2023).

KSM coins were airdropped 1:1 with $DOT. However, the total number of $KSM is not the same as the number of $DOT due to a decision made by the Polkadot community in 2020 that resulted in a 100x increase in supply. This change explains the difference in the amount of coins in both blockchains, but also causes a difference in the value of the coins because of Polkadot’s high emission, causing it to have a dispersed value.

The Uniqueness of the Chain

Testing blockchain

Kusama is a unique blockchain network that serves as a testing "Canary Network" for Polkadot. While most blockchain ecosystems only use testing networks for the development of their decentralized applications (dApps) and projects, Kusama uses a live blockchain network, allowing it to provide functioning markets and conditions that are not available elsewhere.

In addition, Kusama also uses modified governance settings, allowing it to work up to four times more quickly than Polkadot. These features make Kusama a unique testing network that offers many benefits for developers and projects within the blockchain ecosystem.

How the Network is Secured

The security of the Kusama blockchain is handled by 1,000 validators.

Kusama uses slashing as a measure against inappropriate behavior by validators (e.g., interruption, network attack, or use of modified software). In this case, the validator and its nominees will lose a portion of their staked KSM coins. These $KSM will be added to the Treasury, allowing the Council to use Treasury funds to repay slashing in the event of an incorrect determination.

In the event of legitimate slashing, coins will be transferred from harmful validators to those who are building the ecosystem through the normal Treasury process. Validators with a larger number of nominations will be penalized more severely than less popular ones, discouraging nominees from transferring their nominations to less popular validators.

The slashing function is divided into 4 levels:

Level 1: isolated unresponsiveness; i.e., being offline for an entire session. Generally no slashing, validator only receives a suspension (chilling)
Level 2: concurrent unresponsiveness or isolated equivocation, a very small amount of the stake is slashed and validator is suspended
Level 3: misconduct unlikely to be accidental, but which does not harm the network's security to any large extent. Examples include concurrent equivocation or isolated cases of unjustified voting in GRANDPA. A moderate amount of the stake is slashed, and the validator is suspended
Level 4: misconduct that poses serious security or monetary risk to the system, or mass collusion. Slashes all or most of the stake behind the validator and the validator is suspended

Bug bounty program

You can report bugs here.

You can also report bugs here. This service is handled by immunefi. At the bottom of the page, you can see the list of rewards and their size.

Before investing in the Kusama blockchain, it is necessary to do your own thorough research (DYOR). Kusama is significantly different from classic blockchains, so it is important to get familiar with it before investing. Kusama places a greater emphasis on speed of upgrades and innovation, while the security of dApps is not as prioritized. Investors should be aware that there may be higher risks in this network than in classic blockchains, so it is important to be aware of what you are looking for in a blockchain investment, and where your priorities lie.

Nodes

Own Node

Running a validator in the Kusama blockchain is identical to running a validator in the Polkadot blockchain.

Running a validator node in the Kusama blockchain is identical to running a validator in the Polkadot blockchain. To set up the node in the Kusama network, follow the Polkadot 'Run a Validator - Guide'and adjust it to the Kusama chain, see below.

When starting a node, pass the --chain=kusama CLI flag: ./target/release/polkadot --pruning=archive --chain kusama
You must own KSM coins for activating the validator

Benefits of the validator:

Reward in the form of new $KSM
Decides on the distribution of rewards for nominators
Actively maintains the security of the network

Nominator

Nomination in Kusama requires two steps:

Lock coins on the blockchain
Choose a set of validators to which these locked coins will be automatically assigned

To nominate your $KSM to a validator, you need at least 0.001667 $KSM. Once you have completed the previous 2 steps and made the nomination, your locked coins can be assigned to one or more selected validators, and this happens every time the active set of validators changes. This set of validators is updated on Kusama every era. By clicking here you can check the history of each validator.

You can become a nominator yourself or delegate your votes to a pool.

The video tutorials are created for the Polkadot blockchain, but since Kusama is a test blockchain, they work equally well for Kusama.

Benefits of being a nominator

You don’t have to take care of any hardware
You don’t directly participate in network security

Road Map

The Kusama blockchain, also known as a "Canary Network," shares a Road Map with the Polkadot blockchain. Anything new that is deployed on the Polkadot blockchain is first deployed on the Kusama blockchain.

In Q4 2022, the focus on the Polkadot network will be on the scalability and development of parachains, relay chain management, cross-chain communication, and staking.

Here is a detailed description of all the innovations that have been deployed to date.

Ecosystem

The Kusama ecosystem is divided among parachains.

The largest Polkadot parachains:

Karura
SORA
Bifrost Kusama

There are 19 parachains in the Kusama ecosystem that deal with DeFi.

The total DeFi TVL among the parachains is 46,300,000 USD (12 February 2023)

The Web 3.0 Foundation is an organization that is responsible for the development of the Kusama blockchain ecosystem. It understands the importance of supporting and developing the community and technological growth within this ecosystem. Therefore, it developed a Grants Program that provides financial and technical support for projects and initiatives that contribute to the development of Kusama. These grants help the community build and develop new tools and services that are key to the successful development of the ecosystem. More information about the Grants Program can be found on the Web 3.0 Foundation's website.

Community

Discord is a very important platform for Kusama ecosystem users. It has an active and friendly community made up of friendly moderators, although it is not too large. User questions are relatively quickly solved, and all Kusama ecosystem events can be monitored on Discord.

Twitter is a great source of current information about what's happening on the Kusama blockchain. You'll find the latest updates, information about postponed updates, and the results of parachain auctions.

Many beginner-friendly videos are available on YouTube, all of which are well-produced and help you get your bearings in the Kusama ecosystem. These videos are very useful for anyone who wants to learn how the Kusama blockchain works, and how to work with it.

Partners

Investors

Investors in the Kusama blockchain include anyone who bought $DOT and received an airdrop at a 1:1 ratio.

A list of major companies that have invested in the Kusama ecosystem can be found here. These companies believe in the future of the Kusama blockchain and are willing to invest their resources into the development of the ecosystem and help achieve its plans and goals. These investments contribute to the overall development and stability of the Kusama blockchain and support the development of dApps and services that it offers.

Partner

The largest partners of the Kusama blockchain are the Web 3.0 Foundation and Parity Technologies.

Where to Buy

The KSM coin is the 139th largest cryptocurrency and therefore supported by almost all CEXs

To buy on a decentralized exchange (DEX), use the Acala parachain directly:

Karura network

When buying on a CEX, always check if it supports the $KSM.

For example:

Supported Wallets

Ledger Nano X - the most widespread hardware wallet (HW) on the market. By pairing with your software wallet (SW), you will have increased security for your cryptocurrencies.

TrustWallet - software wallet

Nova Wallet - software wallet

Analyst Opinion

Kusama is a pre-production version of the Polkadot blockchain, allowing developers to test new features and dApps before going live. Kusama has become a popular choice among cryptocurrency enthusiasts as it is experimental and developer-friendly, allowing it to move quickly and openly support the development of new projects. Networks like Kusama can be an effective tool for developing new DeFi projects as they can be tested under real economic conditions.

Investing in Kusama can be an opportunity for investors who want to support interoperability or diversify their digital assets. However, keep in mind that it is a test environment before making your investment.

Although Kusama has many similarities with Polkadot, it focuses on supporting innovation and ease of development, while Polkadot focuses on the enterprise world. Both blockchains have a common goal of creating an interoperable network and building a decentralized but connected future. Despite Kusama's growth, its potential may be limited as it primarily serves as a test network for the more popular blockchain, Polkadot.