Karura is an experimental network running on Polkadot’s Kusama chain. It was introduced in October 2020 after winning a crowdloan auction on the Kusama network, with which, in June 2021 it became the first parachain launched on Kusama. As a Substrate-based chain, Karura has most of its integration points similar to those of Kusama and Polkadot.
The project was developed by the Acala network team and co-exists with it by sharing more or less the same features, such as having an algorithmic stablecoin, in Karura’s case – kUSD, which can be borrowed against collateral or traded on exchanges. Just like Acala aims to become an all-in-one DeFi hub on Polkadot, Karura has set the same goal for Kusama.
Karura was launched as a Proof-of-Authority network whose governance was restricted to a single super-user key held by the Acala Foundation, allowing it to issue transactions and upgrades while resolving issues during its launch process.
Since its genesis, Karura was secured by Kusama’s Nominated Proof-of-Stake (NPoS) validators, while its collators were provided by node service partners.
Later, during its various development stages, Karura has become far more similar to Acala, having introduced a Council Governance system, essentially the same as the one used by Polkadot, launched its stablecoin and KAR token, a testnet, and introduced its own DEX. The Karura DEX has so far bootstrapped its KSM/KAR pair, started trading and started its liquidity program, enabled the kUSD stablecoin protocol with KSM and LKSM as collateral, and is expected to introduce more features in the near future.
The algorithmic stablecoin issued by Karura (kUSD) has the same mechanics as Acala’s aUSD, which are similar to that of the DAI stablecoin – various types of tokens can be used as collateral to mint the stablecoin, which is supposed to be kept at a value of 1 US Dollar, at all times.
As Karura’s mechanics are similar to those of Acala, and both are developed by the same team and intended to share the same ecosystem, the project doesn’t have its own whitepaper or documentation, instead information about it is available through the Acala documentation portal.
For developers wishing to launch an app, Karura has provided in-depth guides, naturally, those are similar to the ones for Acala, and are available on its documentation webpage.
Karura has various ways to transfer tokens and supports different types of tokens than the ones available on Kusama. Karura-supported tokens include its KAR token, Acala’s aUSD stablecoin, Kusama’s native KSM token transferable from its Relay Chain, LKSM – tokenized staked LKSM, as well as other project’s native tokens – BNC, TAI, PHA, KINT.
Similar to Acala, Karura wallet addresses are based on the SS58 address format, and much like the way Polkadot’s Kusama addresses start with a capital letter, while Polkadot’s start with the number 1, Karura wallet addresses start with a small letter while Acala’s start with the number 2.
Karura fees can be paid with any token supported by the platform, however, the protocol automatically converts them to its KAR token, through its integrated DEX – the same approach as the one used by Acala.
KAR is Karura’s utility token, it is launched on the Kusama Relay Chain with a maximum supply of 100,000,000 minted in the genesis block at launch. The token has a fixed and deflationary total supply. The distribution includes 60.87% of the token allocated to the community, 18.33% for early backers, 10.8% for backers, and 10% for the founding team. The 60.87% of the total supply of the token were distributed through the community in the following manner: 34% were left for Auction and Liquidity program rewards, 11.62% were kept by the Treasury and act as the Protocol’s Reserve fund, 10.25% were left to serve as reserve for the Reward fund, while 5% were kept for the ecosystem’s development.
Different categories of KAR token holders were subject to different vesting periods. For example, while backers’ KAR tokens were vested between one and five months, the founding team’s allocated KAR tokens were vested for 18 months.
Besides as means of payment for transaction fees on Karura, the KAR token is also used to incentivize nodes’ participation in the network and allows developers to deploy new Substrate pallets on the Karura blockchain by staking it. At the same time, KAR can also be used by its holders wishing to participate in the project’s development, through voting on Council members’ elections and other platform updates. The token is also used as an automatic adjustment to the Karura algorithmic stablecoin protocol by changing its interest rates or collateral ratio.
Karura is meant to be an unaudited experimental network and as such there are no Karura audits. The project was developed by the Acala Foundation - the team of developers behind Acala. Its co-founders include Ruitao Su, Bette Chen, Bryan Chen – the co-founders of Laminar, and Fuyao Jiang from Polkawallet. The Foundation’s team is based around the globe, including New Zealand, China, Europe, Brazil, and the United States.
Karura won a Polkadot auction in 2021, raising $24,475,563, as well as another auction in 2022 whose details have not been made public. The project has won three grants from the Web3 Foundation and has partners such as Altair, Amplitude, Astar, Bifrost, Bit.Country, Centrifuge, Dipole, Interlay, Khala Network, Moonbeam, Moonriver, Phala Network, Shiden Network, SubQuery Network, Subsocial, and OAK Network.
Investors in Karura include Digital Currency Group (DCG), Polychain Capital, Alameda Research, Pantera Capital, 1confirmation, Arrington XRP Capital, Coinbase Ventures, Hashkey, KR1, Singum Capital, DFG, Altonomy, Berkley Blockchain Xcelerator, CMS Holdings, Coinfund, D1 Ventures, Deltahub, Dentos, Divergence Ventures, DRF, Goodmore capital, Hypershpere, P2P Capital, P2P Validator, Prafi Capital, Republic Labs, ROK Capital, SNZ Holding, SPARTAN, Stake zone, web3 Capita, and Zee prime capital.
The Karura roadmap is divided into four main phases, two of which have been completed fully, the third – named Govern Via Council is currently being developed and has so far seen the introduction of Council Governance, enabled Democracy, removed Sudo, as well as enabled numerous other features of the platform. To conclude the phase, the developers need to launch the Karura Bitcoin and Ethereum bridges, enable Acala’s EVM+ on Karura, and integrate autonomous liquid staking to the project. The fourth and final stage of the current Karura roadmap is named Govern via Elected Council. Although no details of it are shared, it is expected to be similar to the same stage of Acala’s development as the two networks are envisioned to be alike. The roadmap’s progress can be followed here.
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