Kusama is an experimental version of the more well-known Polkadot network. Kusama offers developers and blockchain enthusiasts opportunities to explore Polkadot functionalities and deploy innovative and novel projects. At the same time, anyone has an opportunity to earn rewards and grow their holdings of the Kusama network’s native cryptocurrency KSM. When staking through Bitcoin Suisse, KSM holders have the potential to earn rewards of 20% or more – compared to approximately 14% normally.
Kusama is an early, experimental version of the Polkadot blockchain, referred to as a “canary network” by its founder Gavin Wood. As canaries were used by miners to detect poisonous gases in the mines, Kusama is used to test, trial and reveal potential problems in the Polkadot setup.
Kusama was launched in August 2019, first as a proof-of-authority network where all validator nodes were run by the Web3 Foundation (without reward). After accumulating a sufficient number of third-party validators, the network converted to a proof-of-stake mechanism, similar to the one used by Polkadot.
The functionality and design of Kusama is very close to Polkadot in all aspects; it ensures interoperability and scalability and provides a platform for building and connecting different blockchains as parachains. Kusama is governed by the users. Developers are given absolute freedom and are encouraged to undertake high risk projects and experiment with innovations.
Kusama provides a wide range of opportunities for its network participants: they can participate in the network governance by submitting and voting for proposals, set up a validator node, develop a parachain with new functionalities, and even become members of a cyber secret society. Despite being conceived as a playground for blockchain developers and enthusiasts, Kusama also holds considerable economic value. With a market capitalization of $480M, it is significantly smaller than Polkadot, but is still in the top 20 on the staking market.
As Kusama is a proof-of-stake blockchain, network participants have an opportunity to earn staking rewards by staking Kusama’s native cryptocurrency – KSM.
Kusama uses the same staking system as Polkadot – Nominated Proof-of-Stake (NPoS). To earn rewards, KSM holders can choose to become either validators or nominators. Validators do the actual work in the network – participating in block production and ensuring finality in the blockchain.
To earn rewards, nominators only need to choose up to 16 validators that they want to support with their stake. The validators selected to participate in the consensus mechanism receive rewards for their work and share these rewards with their nominators. The rewards are distributed among validators based on the principle of “equal reward for the same amount of work.” This means that validators with smaller stakes will generally receive higher reward per-KSM. Such incentives are designed to prevent high centralization among validators.
Staking KSM is not risk-free. Validators can lose their stake if they misbehave, intentionally or unintentionally (for example, by going offline or attacking the network). Nominators supporting “bad” validators also risk losing their stake. As in Polkadot, a validator can become “oversubscribed” if it gets too many nominators, and some of the nominators might miss out on rewards.
In this setup, to maximize your reward as a validator requires maintaining the balance between providing excellent service and clever management of the stake.
Why Stake Kusama with Bitcoin Suisse
Bitcoin Suisse has been offering staking services for over 2 years and has accumulated significant expertise in managing crypto assets. As a regulated entity, Bitcoin Suisse is a trusted and reliable counterparty for both private investors and corporate entities.
The market annualized return on staking KSM as a nominator is 14,09%, according to Staking Rewards. This rate is an average among validators with different risk profiles and depends on the share of coins staked in the network, meaning it may fluctuate in the future. Thanks to our expertise, clients which have staked KSM with Bitcoin Suisse have been able to earn 20% on their holdings.
The Bitcoin Suisse staking service for Kusama also includes all necessary hardware and infrastructure. Customers can monitor their performance, see the current and historical rewards, and be in full control of their assets through the Staking Dashboard in the Bitcoin Suisse Online portal.