Kusama is the sandbox of Polkadot. For those unfamiliar with such terminology, Kusama is a test environment where developers can experiment and test applications before officially launching them on the Polkadot network.
There are important advantages to using a test environment in that developers can use less rigid governance frameworks and more advantageous staking requirements than Polkadot.
Following its success in June, the Kusama Council is set to conduct five more scheduled auctions in the coming weeks.
During the parachain auctions users through the “candle method” staking their Kusama tokens (KSM) in favor of the project they want to vote for during a predetermined period of time. The winner of the auction is the project that receives the largest total funding, somewhat like what happens in any eBay-style auction.
The use of blockchain has improved the mechanism of candlestick auctions and even if the participants know the beginning and end of the auction they don’t know what the term block will be in the five days and this guarantees each project an equal opportunity to gain value.
The next auction will be held on September 1 and in total there will be five auctions in five weekswith times set at 2pm on September 1, 8, 15, 22 and 29 and cryptocurrency exchange Kraken has announced that it will allow users to staken KSM tokens on the platform thus ensuring support for parachain auctions.
In the first five crowd-loan auctions, 18 independent teams signed up, raising a total of over 1.3 million KSM (Approximately $450 million) from 20000 unique accounts, with decentralized exchange Karura taking the top spot, recording an initial total blocked value of over 500,000 KSM, or $90 million at the time of writing. Subsequently, the platform was launched on both Polkadot and Kusama in the following month. Other notable successes among the initial auctions include Moonriver and Shiden, which received over KSM 205,000 and KSM 138,000, respectively.
Crowd-loan is a mechanism designed to promote decentralization among parachains by distributing tokens to users in exchange for their staked assets. The method bears similarities to liquidity mining on Ethereum, where participants can receive tokens from their preferred project in decentralized finance.
If a crowd-loan campaign is successful, the associated parachain is added to the Relay Chain, and the collective tokens will be locked into the account of this parachain for the duration of its activity.
