Kusama slot auction is about to open, explain the investment opportunities behind it

Polkadot parallel chain auction is expected to draw near, and investors holding coins KSM and DOT, in addition to pledge proceeds, have a lot of reward opportunities for their participation in the auction.

As the Polkadot parallel chain auction is expected to approach, investors holding coins KSM and DOT have a lot of opportunities for their participation in the auction rewards, in addition to pledge gains.

At the same time, if deflation is expected in the process of the elevated number of pledges, it will have an obvious supporting effect on KSM and DOT prices. It is especially important for investors to pay attention to this aspect in the case of a significant rise in the first half of 2021.

First of all, we can pay attention to the Kusama issue volume situation, as well as the use and destruction mechanism of the treasury KSM, and the impact on the KSM price.

Introduction of Kusama token KSM and its usage
The total amount of Kusama in circulation is 10 million KSM tokens with an annual inflation rate of 10%.

Token uses: governance; pledge to participate in slot auctions; node pledge; pay transaction fees

There is a Treasury (Treasury) in the Kusama network, and the funds in the Treasury come from the following.

(a) Node penalties: verifier nodes committing evil will result in the forfeiture of pledged KSM tokens, part of which will be rewarded to whistleblowers and part of which will flow into the Treasury.

Transaction fees: a portion of the transaction fees for each block is awarded to the block verifier and another portion goes to the treasury.

Partial inflation: The inflation rate of the first year of KSM is designed to be 10%, which is rewarded to the nodes that pledge KSM, corresponding to an ideal pledge rate of 50%. That is, if 50% of the total KSMs are pledged, then all the inflated KSMs will be rewarded to the pledged nodes, and if the pledge rate is less than 50%, this will result in a portion of the inflated KSMs flowing into the treasury.

Parallel thread fees: When a parallel thread performs a state update, it pays KSM fees per block, part of which is rewarded to the verifier of that block, and the other part flows into the treasury.

The funds in the treasury are mainly used for ecological development. The expenditure of the treasury needs to be approved by the council, and after approval, it enters a waiting period (budget period), currently the budget period is 6 days by default, if all the funds are not spent within the budget period, a certain percentage of KSM will be destroyed for deflation (currently the destruction percentage is 0.2%).

Users can initiate proposals to propose spending to the treasury. To prevent users from abusing this feature, a deposit of 5% of the requested amount (currently set at a minimum of 0.067 KSM) needs to be pledged when initiating a proposal, and if the proposal is not approved, the deposit is destroyed, and the reverse is returned.

What is Kusama Treasury
The Kusama Treasury (Treasury) is a pool of KSM funds, which is funded by transaction fees, slash penalties, inefficient staking, etc. in the Kusama network. The role of the Treasury is to provide financial support to projects that promote the development of the Kusama network and thus the prosperity of the ecosystem.

Any KSM holder can submit a Treasury Proposal to request access to KSM in the Treasury, and the Treasury’s expenditures and uses are managed by the Kusama Council, which, if approved by the Council, will receive the appropriate KSM funds.

KSM income, expenditure and stock changes
The volume of KSM in the Kusama treasury has steadily increased, interspersed with consumption and expenditures, and its volume growth trend continues. As of June 2, 2021, the number of KSMs in the treasury of the Kusama test network in Poca grew to 351,443 KSMs. during the same period, the data on the income Income was 456,814 KSMs and the expenditure grew to 100,409 KSMs.

Kusama slot auction is about to open, explain the investment opportunities behind it

Source: http://www.dotreasury.com

The Kusama treasury’s revenue was 456,000 KSM, of which 88.9% came from KSM inflation, 3.4% from Slash, and 3.2% from Staking.

The Kusama treasury spent 100,000 KSM, of which 67.7% was spent on proposals, 4.7% on tips, and 27% was directly “burned”.

Kusama slot auction is about to open, explain the investment opportunities behind it

Source: http://www.dotreasury.com

From the chart above, on the IncomeIncome side, the current KSM inflation amounted to 406,278 KSM, of which 15,649 KSM were confiscated and 15,044 were pledged.

In terms of ExpenditureOutput, the expenditure for proposals reached 67,985 KSM, followed by the destruction of 27,667 KSM.

After offsetting the income and expenditure, the number of KSMs increased to the current 351,443. The growth trend continues with

Kusama slot auction items at a glance
The boom of the Poka ecosystem started with the parallel chain slot auction, as Poka majors in cross-chain, which is equivalent to the Layer 2 network of Ether. Therefore, paying attention to the process of Poca parallel chain slot auction can confirm the growth potential of Poca ecology as well as help investors judge the profit potential of holding Poca tokens DOT, KSM, etc.

On June 2, Westend, the Poca test network, has upgraded Shell Chain to Asset Parallel Chain Westmint (i.e. Westend’s version of Statemint), and it is running stably!

The public interest parallel chain is mainly used for system-level public use without participating in slot auctions, and becomes a parallel chain to Kusama directly. For example, Statemine, the first parallel chain on Kusama, is a public interest parallel chain, which is a token issuance platform supporting both homogenized tokens (FT) and non-homogenized tokens (NFT).

Thus, Kusama Test Network is getting closer to the point of parallel chain slot auction, and it is time to pay attention to the investment opportunities of potential auction projects.

Kusama parallel chain slot has more potential auction projects, but judging from the classification, it is similar to the structure of the current DeFi ecosystem. More basic projects and so on will come on line with Polka’s Kusama network parallel chain. The corresponding functional relationship of the projects on the Ether Layer1 corresponding to the Poka ecological projects can be referred from the following chart.

Compared to DeFi projects on Ether, many of them are relatively easy to understand in 1 classification from stable coins, lending protocols, decentralized exchange DEX, prophecy machines, synthetic assets to NFT, etc.

And in the polka ecology, more polka projects are important underlying infrastructure as parallel chain auctions have not yet officially started. Acala, for example, is both the stable coin of the PoC ecology and a participant in the PoC ecology’s lending agreement synthetic assets, etc. Therefore, Acala would be the important underlying infrastructure.

Parallel Chain Bid Pledge Rewards + Airdrop Project Opportunities
In Poka’s Kusama pilot network parallel chain auction pledge, users can participate in parallel chain auctions of different projects by pledging KSM tokens. Once successful, they will be rewarded with the corresponding tokens. Different project parties have different ratios for the amount of token rewards, and in terms of quantity, one can get 10 times or even 100 times more than the amount of KSM.

At this point, the opportunity we see is not only the chance of price increase during the holding of KSM and DOT, but also the important aspect of profitability for KSM and DOT holders to contribute the coins in their hands, participate in parallel chain pledging and get the tokens allocated by the project side.

Incomplete statistics show that the project side’s token allocation ratio in parallel chain auctions can range from 5% to 80%. The chart shows that the lowest token allocation ratio is Equilibrium at 5%, the highest token allocation ratio is up to 80% for ChainX, and most project parties’ token allocation is less than 20%.

The ratio of the number of project side tokens allocated per KSM, the most from the chart is Clover, which can allocate SKU tokens up to 200. for Bifrost, ChainX and Acala, each KSM will receive 10 BNC, 10 KSX and 12 KAR.

About Kusama Parallel Chain lockout and bidding
Boca parallel chain slots can only be rented, not purchased. The slot rental cycle is 6 months, and all slots start and end at the same time. In other words, when the project owner auctions parallel chain slots, one cycle is six months long. It is possible that each auction contains 4 cycles or 2 years.

In terms of investment cycle, the longest time to hold KSM or DOT is up to 2 years, while holding the project owner’s tokens. Therefore, the revenue space is the main concern of users.

For the project side’s tokens, this part of the income will certainly be there, and with the project side’s various expected developments continue to advance, the coin price will also have more reflections in the future, not to mention, some project side’s lock-up is actually relatively flexible, and to do parallel chain lease period to continue to lock-up, part of the unlocking can bring early income for investors.

For example, once Acala’s Kusama parallel chain Karura bid is successful, 30% of the KAR rewards received will be released immediately after Karura goes live and can be freely circulated for trading and also used for KaruraDeFi products and ecology. And the remaining 70% of the rewards will be given to the backers in a linear release until the end of the 48-week lease period.

Summary: The process of locking up KSM and DOT in the parallel chain auction reduces the number of tokens in circulation accordingly, which is beneficial for the rise of the coin price. At the same time, the project placed tokens to users participating in the parallel chain auction, increasing the profit space.

In fact, the further development process of Boka ecology and the elevated number of parallel chain slot auctions are beneficial to the investors involved in it. Investors can choose suitable projects to participate in parallel chain pledge auctions according to their needs and increase the profit space.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/kusama-slot-auction-is-about-to-open-explain-the-investment-opportunities-behind-it/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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