Kusama price prediction: Does the parachain have strong foundations?

The proving ground for Polkadot, Kusama paved the way for parachain technology. Will it go up more in 2022?

Kusama canary token against a stock chart                                 
Kusama acts as the canary to the Polkadot blockchain – Photo: Shutterstock
                                

Contents

Those familiar with the blockchain newcomer Polkadot might be less aware of its predecessor, Kusama, which is something of a ‘canary network’ for Polkadot: an experimental network acting as a proving ground for on-chain governance, parachain technology, consensus and other aspects that will make up the Polkadot ecosystem.

Kusama, firmly rooted in the Web3 movement, laid the foundations for Polkadot’s vision of a truly scalable, customisable, high-throughput blockchain offering, powered by the KSM cryptocurrency.

What is Kusama (KSM), what are the key aspects of the Kusama platform and what sort of KSM price prediction can we manage for the years ahead? Let’s find out.

The Kusama blockchain: Key features

Kusama touts high customisability and scalability for developers building DApps on its blockchain. How is this achieved? The answer lies in parachain technology, a new way of deploying DApps. Rather than using a rigid smart contract, which must adhere to the principles of the blockchain hosting it (the modus operandi of Ethereum), parachains essentially allow a developer to build their own mini blockchain, with its own tokenomics, consensus and governance. 

A Kusama parachain can be thought of as a subsidiary of a larger corporation that has been given the freedom to operate how it sees fit. Ethereum, on the other hand, tends to micromanage, constantly dictating how the DApps built on it are allowed to function. Although still technically under the Kusama umbrella, parachains operate autonomously.

Furthermore, through ‘bridging’, these parachains are able to speak to and interact with each other. Or to use the above analogy, each subsidiary can trade information, resources and money.

The Kusama network is secured through the Relay Chain, a nominated proof-of-stake (NPoS) network consisting of 1,000 validators at the time of writing. As of 15 July, 70% of circulating KSM coins are bonded to the NPoS validators.

Chart showing the latest stats of the Kusama blockchain
Real-time visualisation of Kusama’s validation activity – Credit: alpha.chainviz.app

There is one caveat to this parachain ecosystem. According to the whitepaper, Kusama estimates that a maximum of 100 parachains are able to operate at any given time. In August 2021, Kusama announced its first raft of parachains, consisting primarily of decentralised finance (DeFi) protocols.

KSM tokenomics: Key figures

There are currently 8.47 million KSM in circulation, priced at $54.51, giving a market capitalisation of almost $462m. A recent 24-hour trading volume of $45m amounted to 9.7% of market cap. KSM ranks at number 76 on the crypto charts.

KSM inflates at a rate of 10% per year. According to a blog post, transaction fees and a percentage of staking rewards go to the treasury, for deployment based on governance proposals of KSM holders. 

KSM was first distributed via an airdrop at a 1:1 ratio for holders of Polkadot’s DOT coin. 

Major exchanges holding liquidity include Binance, Kraken, Crypto.com, Huobi and KuCoin.

Recent price action

After a high of $520 on 8 November, KSM encountered a downward trend throughout the remainder of 2021 when the crypto market entered a cooling period. Subsequent lows were observed on 10 January 2022, when KSM plunged to $228.6 and further down to $154.5 on 31 January.

Despite a swell in early February, KSM was still underperforming throughout the first half of Q1 2022, trading below the trendlines at $166.92. However, by 2 April the token was trading at highs of $205.67 – the highest price recorded so far this year. 

Roughly in line with broader crypto market downturns, by 18 June, the token was trading at $44.35. However, the token has performed well in a recent 24-hour trading window and is currently exchanging hands at $54.61, up 15% from the previous close.

Some of this success may be attributed to Polkadot’s relative resistance in the bear market, where new parachains continue to be launched on a regular basis. There are 21 active parachains on Polkadot, and 40 on Kusama: 

Views from the forecasters

We can see some less optimistic price targets at WalletInvestor’s KSM price prediction, which suggests the token will sink to $4.95 and does not expect the token to recover, suggesting it is a “bad long-term (one-year) investment”.

Gov.Capital’s KSM price prediction is extremely bullish, giving a 12-month target of $522.82 and a five-year target of $3,815.95.

PricePrediction’s Kusama price prediction for 2022 is also very bullish, projecting an average value of $80.73 in August, and $90.85 in December. The site forecasts a yearly average of $133.28 for 2023 and $201.31 for 2024. The Kusama price prediction for 2025 is $295.35. 

The KSM price prediction targets given by DigitalCoinPrice are $79.56 for August this year and $75.26 for December. The site forecasts a yearly average of $79.83 for 2023, $84.62 for 2024 and $106.46 for 2025. The Kusama price prediction for 2030 is $252.11. Of the 26 metrics used by the forecaster, the majority of 10 point to a sell strategy. Four suggest buying and 12 remain neutral.

Keep in mind that online forecasters’ Kusama price prediction estimates should not be used as a substitute for in-depth due diligence. Be sure to read up on the project and long-term potential before placing an investment.

Where next for Kusama?

The question is, does Kusama have a future as Polkadot becomes more widely adopted? Kusama continues to take on board new parachains. That said, anyone considering an investment in KSM would be wise to look into what the developers are saying over social media and via official blogs in the months ahead in order to assess the long-term viability of the Kusama network.

FAQs

How many Kusama coins are there?

There are currently 8.47 million KSM in circulation.

Is Kusama a good investment?

Kusama is a well-supported blockchain solution with good utility. However, Kusama is also a ‘canary network’ for the better-known Polkadot network, meaning that it is used as a testing ground for projects on Polkadot. This should be taken into consideration when assessing the long-term sustainability of the project.

Will Kusama go up?

General consensus among the KSM price prediction forecasters is that KSM will increase in price, although it must be said that these digital forecasters do not take into account certain volatility factors. They should be just one aspect of your due diligence exercise.

Should I invest in Kusama?

Be sure to read all available whitepapers, social media coverage, news releases and the website before placing an investment. Your investment choices are your own. This article presents you with neutral information and should not be misconstrued as financial advice.

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
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