• The Kusama network is planning to hold the next five parachain auctions

  • Kusama is a platform that serves as a test environment, or “canary network,” for developers to experiment with and evaluate the efficiency of their blockchain code and applications before they are officially released on the Polkadot network.

    Because of the trial-and-error nature of Kusama, developers can benefit from a less stringent governance framework as well as lower staking requirements than they would on Polkadot.

    Following the success of its first parachain auctions in June of this year, the Kusama Council is planning five more auctions in the coming weeks.

    Kusama’s parachain auctions use a rare historical method of auction analysis known as the candle method, in which users bid during the fixed allocated auction time, staking their Kusama (KSM) tokens for their preferred project. The auction is won by the project with the highest total funding.

    This hourglass approach is well-known to modern retail consumers due to its use in the bidding process on the e-commerce platform Ebay.

    This method, however, is not without flaws. Most notably, issues arise when front-running encourages insider knowledge, as well as when a late-night bidding war skews the dataset because every bidder knows when the timer expires.

    The case for candle auctions, as addressed in research at the Web3 Foundation this year, is twofold with the addition of blockchain technology: “front-running and the presence of smart contracts among bidders.”

    Although bidding participants are aware of the start and end times of the blocks, they are unaware of the time of the critical termination block with the 5-day ending period. This ensures that no bidder can predict when the auction will end, giving each project an equal chance of acquiring value.

    On September 1, the first parachain slot auction of this new round, and the sixth overall, will begin. The initial bidding period will be two days long, followed by a five-day closing period. Five auctions will take place over a five-week period, with a planned pause for evaluation to assess network performance.

    The auctions will take place at 12:00 GMT on September 1, 8, 15, 22, and 29.

    Between June 15 and July 20, 18 independent teams registered to participate in the crowdloan campaign, receiving funding from nearly 20,000 unique accounts that contributed a total of over 1.3 million KSM (approximately $450 million).

    Crowdloaning is a mechanism that distributes tokens to users in exchange for their staked assets in order to promote decentralization across the parachain. The method is similar to Ethereum liquidity mining in that participants can receive token grants from their preferred Defi project.

    If a crowdloan campaign is successful, that parachain will be added to the Relay Chain, and the collective tokens will be stored in that parachain’s account for the duration of its operation.

    The majority of the slots in the first five auctions were overpaid for, indicating a positive trend toward decentralization and the sharing of the individual project value.

    Kraken, a cryptocurrency exchange, announced their support for parachain auctions, allowing customers to stake Kusama’s KSM tokens on their platform.

    Karura, a decentralized exchange platform, took the top spot among the teams involved, with an initial total value locked of over 500,000 KSM, valued at $90 million at the time of writing. The platform then advanced to launch the following month on both Polkadot and Kusama. Moonriver and Shiden were also notable auction winners, receiving over 205,000 KSM and 138,000 KSM, respectively.

    What's your reaction?
    Happy0
    Lol0
    Wow0
    Wtf0
    Sad0
    Angry0
    Rip0