Kusama

KSM is a proof-of-stake (PoS) cryptocurrency that distributes KSM as a reward for validating transactions via “staking.” The staking process involves users depositing an amount of KSM into a smart contract in order to stand a chance of being selected to validate new blocks and makes KSM an inflationary asset with an inflation rate of 10% per year.

In June 2019, the Web3 Foundation announced the private token sale of 500,000 DOT, or 5% of the total DOT supply. One month later, the Polkadot team announced the upcoming launch of the Kusama Network. To incentivize Polkadot users to participate on the experimental Kusama Network, DOT holders were able to claim one KSM for every DOT held. Eventually, the Polkadot developers plan to offer a fixed-rate conversion of KSM back to DOT.

Both Kusama and Polkadot offer on-chain governance protocols for KSM and DOT token holders. What makes Kusama different from Polkadot is that governance moves at a quicker pace. Because the two networks are standalone with different parameters for governance and different protocol votes, the governance structure of Kusama allows KSM holders to vote on protocol upgrades unique to the Kusama Network.

KSM hit its all-time low of $0.9143 in January 2020 just a few months after the token’s launch and amid a widespread market sell-off because of COVID-19 concerns. As the crypto market recovered, kusama outpaced the rest of the market and spiked in August 2020 following the launch of the Rococo parachain testnet. KSM’s price reached its all-time high of $623.75 in May 2021 during the buildup to the first parachain auction on the Kusama Network.