The future of staking seen by Bitfrost – The staking protocol Bitfrost Financebuilt on Kusama, applied for a 50,000 KSM loan at the Kusama Treasury (KSM). To understand the stakes of such a credit for the cryptosphere, a detour to understand the mode of operation of Polkadot (DOT)Kusama, and Bitfrost is necessary, before returning to the heart of this news.
Polkadot: the basic architecture
Polkadot is a project that aims to create a multichain ecosystem – made up of several parallel blockchains – interoperable.
In other words, the project wants to enable communication between blockchains, cross-chain transactionsthanks to a rather singular structure.
In a simple way, thearchitecture of Polkadot is mainly composed of:
- of a relay chain Where relay chain : it is the main chain of Polkadot and Kusama – a simplified explanation of the role of Kusama in relation to Polkadot is provided in section 4;
- Of parachains : a set of parallel blockchains, all linked to the relay chain, a connection that allows interoperability between parachains.
Parachains: the starting point for transactions
Of them key players manage the parachains. The first is made up of the assemblers Where collators.
The latter maintain a full node of the relay chain and their own parachain. Assemblers thus have thehistory of all transactions on their parachain, but also on those made on other parachains on Polkadot or Kusama.
However, the actions of the assemblers focus mainly on their own parachain. Assemblers will play a role partially similar to that of a PoS blockchain validator. They go verify and validateat their level, the transactions carried out on their parachain.
In this context, they produce, a candidate block. This block aggregates the transactions they have validated on the parachain along with a temporary proof of state – a summary that explains the ending balance, as a result of the transactions in the block.
They then pass this candidate block and this proof to the second essential actors of the parachains. Those are the validators assigned to the relevant parachain. These validators serve asintermediaries between a parachain and the relay chain.
To become a validatora Polkadot or Kusama user must staker – lock – DOTs, the respective native token of the projects. They participate, in this context, in the securing of the entire network.
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Validators at the service of interoperability
Validators assigned to a parachain receive a candidate block and the proof of status from the assemblers. They then check the block. Once the latter has been validated, they will send the relay chain candidate block.
The validators of the other parachains must then find a consensus for a final approval of this block transmitted in the relay chain.
The block, once validated by the validators of the different parachains, is then permanently added to the parachain concerned, and therefore to thevery whole Polkadot or Kusama ecosystem.
Kusama or the search for flexibility
This Polkadot setup, and its organization in the verification, with a multi-level transmission of transaction information from a parachain, allows the different blockchains linked by the relay chain to communicate with each other.
However, this structure can be “heavy” for projects which, at an early stage of deployment, seek a certain speed execution.
Polkadot thus imagined Kusamaa blockchain he describes as a “canary network”. Kusama’s architecture has been designed in such a way as to make the faster updates than on Polkadot.
Votes on Kusama indeed take about 7 days, compared to approximately 28 days on a much slower Polkadot. In return, the latter benefits from a better protection against possible attacks, thanks to a more demanding governance.
A pre-production in early stage
Kusama presents itself as a pre-production environment for Polkadot. It’s not a simple testnet – the network sits between a testnet and Polkadot.
Kusama users can use this network to deploy their applications to a limited number of users within a parachain. They can thus concretely test their products in a controlled environment, quite similar to Polkadot. They will then be able to identify any problems that need to be corrected.
The deployment of their applications on Kusama also allows them to determine areas for improvement, and to have a strong proof of concept for their projects.
Bitfrost: staking without its main drawback
Bitfrost Finance is a staking protocol built on Kusama. Protocol users can use its app – with an intuitive interface – to stake cryptocurrencies, such asEther (ETH) or the DOT, in order to generate gainful interest.
Then, the Bitfrost protocol issues, in return for these staked tokens, a derivative called “vToken”. Staking KSM tokens via Bitfrost thus makes it possible to obtain a vKSM in exchange – or more precisely, a quantity of vKSM slightly below the staked KSM.
Holders of these vTokens can use them to redeem their staked tokens and claim their rewards. But these vTokens can also be used in DeFi apps built on Kusama parachains.
In summary, these vTokens allow investors to stake their initial tokens in Bitfrost. Thus, they generate gains, while taking advantage of opportunities offered by other DeFi protocols on Kusama. This would be impossible in classic staking, cryptocurrencies being locked in a protocol without an equivalent “free”.
A credit at the service of the KSM ecosystem
Bitforst eliminates the main drawback of traditional staking. The protocol thus encourages the staking of tokens linked to blockchains that make up the ecosystem of Kusama and Polkadot.
To have base liquidity for the KSM pair and its derivative vKSM, the protocol solicited a 1 year loanwith a 19% interestof KSM50,000 (about $2.5 million) to the Kusama Treasury. The request for this loan was submitted to the vote of the actors in charge of the governance of Kusama and Polkadot as well as the community.
Given the technical functioning – described above – of Polkadot, Kusama, and Bitfrost finance, this loan, if grantedcan thus be considered as a support to the development of the entire DOT ecosystem.
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