Kusama (KSM) is a test currency with big ambitions

Most test nets do not go beyond a purely auxiliary tool, and their tokens have no value. In contrast, Kusama is a fully-fledged ecosystem, and the KSM cryptocurrency is doing quite well in the market.

What is Kusama?

The Kusama network was created in 2019 under the leadership of Gavin Wood, the founder of Polkadot and former CTO of Ethereum. Its purpose is to help startups develop and improve Polkadot's products.

The result was the creation of a specialized blockchain network almost identical to Polkadot. Not only does Kusama use Substrate as its "mother" blockchain, but the foundation of its code is also virtually the same. The network's governance structure and participant roles are also taken entirely from Polkadot.

However, Kusama is optimized for iterative project development. As a result, the rules for opening para chains (specialized blockchains within the network), launching contracts, and making changes to them are significantly more liberal than in Polkadot. The staking requirements to obtain a specific role in the network or to qualify to create a para chain have also been reduced.

As a result, Kusama is a kind of "sandbox" where developers can develop and customize their products with minimal resources and time "in an environment that is as close to a combat situation as possible." When everything is ready, they can transfer the already optimized product to the Polkadot network and be sure that there will be no problems.

To distinguish such networks from "classic" testnets, where there is no economic involvement, the Kusama concept is often referred to as a "canary network", similar to the canaries that were placed in mines in the past as "alarms" to warn of dangerous gas concentrations.

However, over time, the Kusama network has outgrown its status as Polkadot's " appendage." It has become a full-fledged independent ecosystem, albeit still closely linked to the "parent" project.

As it turned out, a network with Polkadot's capabilities but much more relaxed rules allowing products and subnets to evolve faster is valuable in its own right.

KSM is the "lifeblood" of Kusama

Kusama's eponymous cryptocurrency, with the ticker KSM, is used on the network for almost every function, from validator rewards to governance.

KSM usage scenarios include:

• Payment of transaction fees on network transactions.
• Staking. Validators are required to stack KSMs to qualify to validate transactions. Holders of such coins are called nominators. It is also possible to delegate their coins to a validator.
• Network management. KSMs are used as the network's control tokens when voting. Submitting a proposal for a vote requires a KSM contribution to the network's treasury.
• Obtaining a parachain slot also requires a payment in KSMs.
• KSMs serve as utility tokens. Services such as creating proxy accounts on the Kusama network or creating and changing nominator pools are paid for in this currency.

Simply put, anyone who wants to work in the Kusama network requires an impressive amount of KSM coins.

Kusama cryptocurrency exchange rate

As of early January 2025, KSM is trading around $36.6 per coin and ranks 151st in CoinMarketCap's capitalization ranking with a value of $583 million.

The current values are far from the historical maximum reached on May 17, 2021 — $542.34. However, it is noteworthy that over the past two years (since the second half of 2022), the Kusama rate has been stable by the standards of the cryptocurrency market — fluctuating between $20 and $40 per coin. In addition, the KSM exchange rate in its entire history has never dropped below the initial price of $1.8, which was recorded when the coin entered the market in December 2019. This is rare for a coin that is not even in the top 100 in terms of capitalization.

Kusama (KSM) prospects

There are no prospects for a meteoric rise of hundreds of percent for KSM, at least as of early 2025. However, there is every reason to believe that the trend of relative stability with very slow growth over the past two years will continue for the foreseeable future.

The principal value of KSM is not related to the media hype or speculative prospects of the asset but to the practical application of the coin in the Kusama network. This network remains in demand as a "testing ground" for Polkadot and as an independent ecosystem: new subnets and products are launched with enviable regularity. This means that there will continue to be a steady demand for KSM.