Last summer, Polkadot made its own little bit of history after confirming the first five projects to occupy parachain slots on its canary network Kusama. Disparate blockchains that bolt onto Polkadot’s main Relay Chain for security, yet are otherwise independent, parachains represent a new way of doing business in blockchain, a maximalist vision aimed at enhancing scalability and governance while permitting the possibility of forkless upgrades. The five projects were Karura, Moonriver, Shiden, Khala and Bifrost.
Fast-forward to today, and the first batch of parachains are set to expire, releasing over 1 million locked Kusama (KSM) tokens into the market. Given that KSM’s current supply is 9 million, basic economics dictates that the price will suffer, as tokens that were previously inaccessible will suddenly reenter circulation. Price fluctuations, of course, affect staking and liquid staking — though the latter innovation allows users to utilize their tokens even when they’re locked.
Related: How much intrigue is behind Kusama’s parachain auctions?
We’re all familiar with staking: It’s the process of “locking” tokens into a system as collateral for the purpose of securing a network. In exchange for one’s participation in such an endeavor, rewards are accrued.
Within Polkadot’s complex nominated proof-of-stake (NPoS) ecosystem, stakers can either be nominators (whose role it is to nominate validators they trust) or validators, but in both cases, the same economic incentive applies. The problem, as described above, is what happens at the end of a staking period. It’s all well and good receiving generous rewards for securing the Relay Chain (not to mention several parallel chains), but if the price of the native token
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