Eleven projects joined the race when Kusama parachain auctions started on June 15. A few more got in during the latter auctions of the first batch. With impressive gains to the tune of 900,000 KSM (approximately $180 million, at the time of writing), are Kusama auctions still fair and democratic, or is everything already decided by whales? Let’s analyze the available data and attempt to illuminate the current standings.
As announced on June 8, the first batch of parachain auctions on Kusama includes five events, each of them one week long. During the auction, projects are bidding in Kusama’s native token, KSM, for their parachain slots, and it requires roughly 100,000 KSM (or about $20 million) to win. To fund their bids, projects run crowdloan campaigns. A crowdloan is an innovative crowdfunding mechanism that lets ecosystem participants stake KSM for their favorite parachain candidates and get rewards in their utility tokens.
The first auction ended, and Karura — the decentralized finance (DeFi) hub of Kusama — was distinctly in the lead with an incredible bid of 501,138 KSM (about $100 million). The second auction ended just a few days ago, and there was little doubt about its winner. Moonbeam’s canary network, Moonriver (205,935 KSM staked), was steadily winning by 50% over the nearest rival, Shiden Network (100,544 KSM). In turn, the latter is overcoming Khala Network (27,474 KSM) by 73%, and it looks like an obvious leader for the third auction.
Here’s the current leaderboard:
Based on this graph, readers may conclude that the first three auctions were bought by large-scale investors for their sock puppet projects, while the real competition is around the fourth and the fifth auctions. But both conclusions are far from reality, and I will explain why.
The first-ever crowdloan campaign was registered for a candidate under the ID 2000 and took the first line in the list of campaigns on the Kusama network. The name of the project, Karura, is symbolic. Kusama’s logo has a bird’s shape, while Karura is a hybrid with a human torso and bird head, which is symbolic in Japanese mythology. Perhaps this is directly related, as if an established connection with Kusama could make people godlike and inevitably stand Karura creators in line with gods who rule Kusama’s being.
Karura’s crowdloan kicked off on June 11, a few days before the first auction, and no other campaign saw such enormous interest. On June 17, Karura collected an unprecedented 400,000 KSM. The total amounted to 501,138 KSM, making Karura the unconditional winner of the first auction. Let’s take a deeper look at the breakdown of the campaign’s contributions:
This data may surprise those who expected to see the severe dominance of large-scale contributions, but the distribution between retail and nominal whales looks quite organic.
Maybe just a single contribution of 46,415.89082 KSM (around $9 million) stands out among others. But there is a clear explanation: It’s coming from Kraken, which launched its interface for Kusama crowdloans to pool bets for its users. Since the data of Kraken users’ activity is publicly available, we can see how it breaks down into individual contributions:
The deposits on Kraken came evenly spread during the entire period of the campaign and we couldn’t outline any particular activity bursts. It looks like Kraken users demonstrated an elevated interest in the Karura crowdloan campaign, which was anticipated, given that Karura launched its crowdloan before others.
We can further aggregate the above tables into nominal whales (who gave more than 1 million KSM), average holders (who contributed from 50 to 1,000 KSM), and retail users (who contributed less than 50 KSM). The aggregated data looks like this:
Despite a substantial share of whales in Karura’s crowdloan (46.58%), the results still indicate extremely high activity by retail contributors. The total of 16,896 individual participants in this campaign is almost three times the number pertaining to Moonriver, the next-closest contender:
With all the positive sentiment around Karura, there are two questions left to be answered. First, without doubting its desire to make a safe bet, is it worth overpaying for the parachain slot by that much? Second, how is it planning to maintain KAR’s implied value to guarantee contributors some sort of reasonable rewards on their KSM, given that the token is not live yet and there will be inevitable selling pressure when it launches?