Like myself many have a keen eye on the Polkadot and Kusama ecosystem, especially given major developments are occurring NOW; at the start of a new bull cycle. As they are quickly establishing themselves as distributed Ledger Technology’s foremost contenders I believe Kusama and Polkadot are entering a perfect storm both in terms of development and investing opportunities.
Before I expand on my reasoning I will be treating Kusama as what it has evolved to be, which is an independent speedier and exploratory network that pre-dates and pre-empts what is going to occur on Polkadot. Both of these networks co-exist and complement each other in a well-planned and novel ecosystem that will have a very significant impact within the crypto space. Throughout this report I will elaborate on how I will personally maneuverer within the Kusama and Polkadot ecosystem.
Naturally and Strategically Better than the Rest.
Kusama and Polkadot share the same codebase, where the only difference is around security, speed and value. Polkadot been technically more secure (thus holding the far superior market cap) and Kusama been less risk averse and thus been able to iterate far quicker. Both are best envisioned as layer zero protocols that contain every major attribute todays’ protocol network should possess (see pic).
Whilst Kusama brags to be faster, cheaper with a keen goal of capturing value of new innovative projects. I perceive the relationship as Polkadot been the city, whereas Kusama is the navy, who in essence explore unknown territory with the mission of seeking out cutting edge ideas and adopting them for the good of the entire Polkadot and Kusama ecosystem (from this point on I will refer to the ecosystem as the Polkadot ecosystem). Okay, so we’ve defined the two pronged Polkadot and Kusama relationship, lets touch on the history and why the Polkadot ecosystem hold tremendous undiscovered value.
Lets quickly explore more about the origins of these chains and the strategy that has been clearly well thought out. Firstly Polkadot has been in the making for 4 years where pioneering founder Gavin Wood had the perfect provenance as been the co-founder of Ethereum and author of Ethereum solidity language. So with this being said, it is very fitting for him and the Parity team been perfectly poised to push the technology that underpin the crypto space on a few levels.
On a strategic front, one of the things that drew me to Polkadot was the fact they did not rush the technology, whereas other protocol chains quickly hit market and felt the harsh impact of bear market conditions. It also has to be said Ethereum remains to be the foremost protocol blockchain, but it is clear for Ethereum to fully migrate to become a next generation blockchain it has to undergo at least two more years of pivoting and adapting to scale at an industrial level.
As an analogy, I compare Ethereum as a the well-built race track, but the cars that race on the track are well below standard. On the contrary, Polkadot has a fleet of world class race cars, though the race track is still under construction. Ultimately, Polkadot can rapidly build their race track before Ethereum updates its fleet of cars and this could potentially put the Polkadot ecosystem on a very unfair advantage. Either way, in terms of strategy, Polkadot have not been overtly publicly competitive like some other blockchains regards their relationship with Ethereum. The message has been much more progressive from Polkadot, and with Polkadots interoperability properties it could potentially assist Ethereum and lighten the load, because let’s admit if this space feels the wrath of mass traffic, ala end of 2017, Ethereum will need all the help it can get!
Parachains and Sharding
Kusama and Polkadot will both host parachain slots, where these slots enable any project leasing a parachain to adopt instant layer 1 protocol properties. This means any project or venture can host a blockchain and share the properties Kusama and Polkadot possess by leasing a parachain slot.
In order to lease a parachain slot, the competing parachain project must raise enough KSM or DOT respectively. Parachain slot numbers on both networks are limited, and the project will be required to settle their lease in KSM and DOT. Notably, this means parachain projects are required to own KSM or DOT, or alternately they can reward their native token to KSM or DOT holders, in exchange of bonding their tokens on the parachain projects behalf. Ultimately this will no doubt lead to a perpetual supply shock on both Kusama and Polkadot.
This is where you may ask where does sharding comes into play? Well, the act of parachains running on and in parallel with Kusama and Polkadot tantamount to sharding.
Predictions - The Perfect Storm and timing is everything
Okay, here is the bit the investors will no doubt be eager to read. Hopefully you can see the logic in my investing strategy, but on the same note do not treat this as any form of financial advice.
As per the chart, we know Kusama intends to launch and host parachain in Jan 2021. We also know Polkadot intends to launch its parachains in Q2. Clearly this is a staggered approach, where Kusama is literally taking the role as canary in the coal mine and leading in this massive development. Very recently I have traded all my DOT for KSM. I have done this for two core reasons. The first being, I believe KSM to be fundamentally undervalued compared to DOT. Secondly, I anticipate the price of KSM to rise significantly as the effects of a supply shock occur on KSM when parachains are available and auctions commence. This is a short term move, and I do intend to re-buy my DOT position back, ensuring I have enough exposure in both (a ratio of 70/30 in favour of KSM).
I am also looking to take advantage of bonding my KSM to innovative projects such as Karura, who I believe will be the one stop shop for hosting a suite of products such as decentralised finance and a decentralised exchange. I have used their Mandala test network and looks nothing less than superb, and will greatly compliment the Kusama ecosystem. Other projects such as Moonbeam, Phala also look reverting. As the Kusama ecosystem evolves and unfolds, I will look to re-visit the subject of parachain offerings.
As soon as parachains get the all clear for launch I expect KSM to rally very hard, where it could potentially go as high as $200 before late February 2021. This is dependent on the successful launch of parachains and market conditions.
You can probably tell I am naturally bullish on this potential crypto bull run, but moreover on the entire Polkadot ecosystem. At the time of writing I expect KSM to hit between $750 and $2000 and I expect DOT to hit between $75 and $125. Clearly there are projects still to be revealed within the Polkadot ecosystem, but I predict some Parachains could offer 100x gains, with a few that will take many of us by surprise.
So, to conclude, it is clear to me the Polkadot ecosystem is progressing with the Midas touch, and right now my attention is fully on Kusama parachains and what opportunity emerges from this massive development. If you enjoyed this content I would really appreciate you sharing it over you’re social media channels – Thank you for reading.