TL;DR. Three things are missing from the paper, and each one changes its conclusion.
- Market capitalisation is the wrong basis for comparing the two networks, because it masks what is weak about the stronger one. On that measure Polkadot’s validator bill is 1.52% of its market capitalisation against Kusama’s 45.7%, so Polkadot looks thirty times more comfortable. That comfort is made of price rather than structure. The coin supply behind it is already voted down by 13.14% every two years, an individual operator’s dedicated income is about half your $3,000 a month, and a price is not something governance can vote back up. Kusama’s problem is a validator count OpenGov controls and has already cut once. So the network with the worse ratio has the fixable problem, and the one with the better ratio is the network you propose Kusama depend on.
- Capping supply assumes an inflationary economy cannot be sustained, and that is an assumption rather than a law. Bitcoin capped because the asset is the whole product, and the decision has been copied since as though it were a finding. Of the four networks usually cited for the move, only Bitcoin and Polkadot capped anything, and Ethereum’s usage-linked burn now retires 1.4% of what it issues because its own scaling moved the fees beyond the burn’s reach. Every functioning economy issues new money deliberately, because a growing one needs a growing money supply. So the question is not the rate of issuance but whether the issued money buys anything that compounds. Grants do not. Memberships do, and Kusama has that running with paying users today, which makes the alternative a live design rather than a theory.
- The alternative is a demand-side model, and if it works KSM supply tightens without a burn and without a cap. The fifth option you name and never study is generating enough ordinary revenue to run the network rather than minting it, and Kusama has that running with paying customers. Kreivo, a Kusama parachain with no token of its own that uses KSM as its fee token, charges about 0.3 KSM for a membership, paid into a treasury the collectives on that chain govern between them, so each new member moves coin out of circulation and into a commonly held pot. Kusama issues about 1.34m KSM a year, so 4.5m memberships a year absorbs all of it, and one company there, Bloque, has a stated year-end target worth 47% of that on its own. Grow the membership economy faster than issuance and supply tightens because more people are joining, which is the outcome the cap is reaching for, arrived at from the demand side.
Thank you for this. It is the most serious economic work anyone has put in front of KSM DAO in a long time. You flag the $3,000 monthly validator cost as a working assumption rather than a benchmark, you say market capitalisation is a comparator and not a spendable budget, and you describe the cohabitation arrangement as revocable access rather than dressing it up as sovereignty.
Those concessions are what make the paper worth arguing with, so here is where we would push. All three are omissions rather than errors.
Our interest, declared up front. We are Birdbrain, an experimental onchain collective on Kreivo, a Kusama parachain where a group can register itself as a community and govern its own affairs. We are community 1786, with 25 memberships issued across 22 identities, verifiable on chain today.
What makes us an experiment rather than a product is that we run as a participation collective. There is no separate sign-up step. Any passkey-gated act on one of our surfaces, a comment, an endorsement, a vote, is what mints or re-anchors the membership, so taking part is joining. The passkey stays on the member’s own device and is the on-chain signer, which means the account is theirs from the first gesture and we cannot move it. What accumulates against that key is what we call a seed: an identity grown from a record of participation rather than issued by us. Nine of the 25 memberships sit on that non-custodial footing today. Self-custody has been the default for every new member since August.
Our community account holds a seat in the KreivoCollective, the body whose members are the community accounts themselves and which governs the parachain, so we are one of the DAOs that votes on how Kreivo works. We supported Wish For Change #573 rather than #574, the lightweight independent Kusama JAM your paper cites, and we supported #437, which put Kusama’s treasury burn under the control of OpenGov rather than leaving it hard-coded. We put RFC-001 on using the treasury to subsidise onboarding to this forum in July. We hold KSM and we have been buying more of it to pay for memberships for collectives we are onboarding. Read everything below with that in view.
1. Run your own arithmetic on Polkadot, then bring Polkadot’s own answer back
Your method is clean enough to port to the other network: take a fully-loaded cost per validator per month, multiply by the number of active validators, and compare the result against what the economy can finance. We did that for Polkadot. The figures are read from Polkadot Asset Hub and CoinGecko on 29 August 2026, and the price-dependent ones move with the market.
Polkadot runs 600 active validators. At your $3,000 a month that is $21.6m a year, against a market capitalisation of $1.424bn, so 1.52%. Set beside the 45.7% you calculate for Kusama, that reads like a thirty-fold cushion, and on that particular measure it is one.
Since March, Polkadot no longer hands newly minted DOT straight to the staking system. Issuance goes into a pool on Asset Hub and is allocated from there, currently 45.2% to rewards shared by validators and their nominators, 22.6% to a separate incentive paid only to validators in proportion to their own stake, and 32.2% held back in a buffer. The two payout budgets together run at 103,766 DOT per era, and an era on Polkadot is a day, so 37.87m DOT a year. At $0.8375 that is $31.7m, which is 147% of the operating cost your assumption implies. The break-even DOT price is $0.570, and DOT trades 47% above it.
Here is why the surplus is less comfortable than it looks. It is a cushion made of price, sitting on a quantity that Polkadot has already voted to shrink: Wish For Change #1710 caps supply and cuts issuance by 13.14% of remaining supply every two years. The 32.2% buffer, roughly 18m DOT a year, is the flexibility in the system, and it is a governance decision about how to divide minted coin rather than income the network has earned. And at the level of a single operator the picture is tighter than the network-level surplus suggests: the incentive paid directly to validators works out at 1,753 DOT a month per slot, about $1,468 against your $3,000, with the rest of an operator’s take coming from a reward pot shared with 911m DOT of nominator stake, at a minimum commission that reads 0.00% on chain today. A comfortable network and a squeezed operator are both true at once, which is the distinction your $3,000 assumption exists to expose.
Kusama’s ratio is worse, and its problem is a different problem. Kusama Asset Hub still mints the old way, with no allocation pool and no validator incentive budget at all, paying about 918 KSM per era. An era on Kusama is six hours, so four a day, 1.34m KSM a year, $4.72m at $3.52. That covers 18.7% of the same bill.
The two failures are not the same failure, and the difference decides what can be done about either. Kusama’s is a problem with the top of the fraction: 700 validators is a set sized for an ambition the network did not grow into, and OpenGov can shrink it with a vote it fully controls. It already has, in Referendum #655, and #573 directs it to go further. Polkadot’s is a problem with the bottom of the fraction: the validator set did not grow, the price fell, and because rewards are denominated in DOT their dollar value tracks the price one for one. Kusama’s ratio is a level it has been sitting at. Polkadot’s is a trend it is moving along.
We raise this because the paper leans on Polkadot’s balance sheet in two places. §3.2.1 puts KSM buying out DOT on the table and rules it out on the two networks’ relative capitalisation, and §5 lists grants from DOT DAO, and the 10m DOT of Wish For Change #498, among the instruments that would pay for Kusama’s endowment. A network planning to buy security from another network’s staking economy should know how that economy is funded and on what schedule it is scheduled to shrink.
The more useful thing, though, is what Polkadot did about its own position, and here we think the paper stops one step short. You cite the allocation pool twice and you describe its direction accurately: away from a security budget defined by whatever issuance happens to produce, toward one that is explicitly managed, and progressively financed by what the protocol earns rather than by newly minted DOT. Read the proposal and the roadmap you cite as references 15 and 16 and the reasoning is spelled out. Validators and treasury recipients have real-world expenses payable in fiat, so the pool is specified as a multi-asset account that can pay in something other than DOT, with a DOT-native stablecoin integrated closely enough that payments can be made in stable terms.
That is the fifth of your five options, adopted by the network you propose Kusama procure security from, and set out three paragraphs above the sentence in which you name it. The paper brings the pool across as context for why Kusama should cut its validator set. It does not bring across the conclusion, which is that the answer to a security budget under price pressure is revenue, and that the currency the revenue arrives in is part of the answer. Section 3 below is what that already looks like on Kusama.
2. Fixed supply is an inheritance, not a finding
The paper reasons that if KSM no longer has to pay for base-layer security, the reason for issuing it goes too, and moves toward scarcity, with Polkadot’s cap and an earlier discussion of burning KSM as the reference frame.
The peer group behind that move needs correcting. Bitcoin and Polkadot capped supply. Ethereum and Solana did not. Solana kept a scheduled reduction in issuance and voted down market-based issuance in March 2025, falling short of its two-thirds threshold. Ethereum built the demand-responsive burn instead. Both are inflationary today.
Ethereum is the instructive case, because it built exactly the mechanism deflationists ask for, a burn tied to the fees paid on the base layer, and then its own scaling success broke it. The Dencun upgrade moved activity onto layer twos and the fees went with it. Over the last thirty days the burn has retired about 41 ETH a day against roughly 2,900 ETH a day of issuance, so 1.4% of it, and ETH supply is growing at 0.86% a year. Those figures are live at ultrasound.money. A monetary rule tied to congestion on the base layer stops working at the moment you succeed at moving activity off it. Ethereum picked the right idea and the wrong variable.
The direction of travel inside this ecosystem has also been away from burning rather than toward it, and the paper reads as though scarcity were the settled destination. Polkadot stopped burning across the whole system in March under Wish For Change #1827: unspent treasury funds now stay in the Treasury, and slashed stake is redirected into the allocation pool, on the reasoning that a network is better off allocating its own money than destroying it. Kusama’s treasury burn has been zero since February 2025, and #437 put its destination under OpenGov’s control, which is itself an incremental political decision that moves the economy in a new direction. Two networks retired the burn in the same period, and the paper proposes that Kusama step past both of those decisions and cap supply instead.
The substantive objection is simpler than any of that. A cap is a claim that a network’s best use of its own money is to not have any. That claim holds when the asset is the entire product, as in the case of Bitcoin. It is much weaker when the network has something worth buying. Every functioning fiat economy runs mild inflation deliberately, because a growing economy needs a growing money supply, and because deflation punishes the spending that makes it grow. So the question that settles it is not the rate of issuance. It is whether the issued money buys anything that compounds. Grants do not: they are converted to fiat and nothing comes back. Memberships that form the foundation of commercial enterprises can. That is the argument of RFC-001, and it is an argument about demand, which is why it does not appear anywhere in a paper that measures everything against market capitalisation.
3. Kusama already has the fifth option running, and the paper does not look at it
Your own sentence lists what a network can do: reduce the security system, share it, buy access to someone else’s, consolidate economies, “or generate sufficient non-inflationary revenue to sustain it.” Your five scenarios cover the first four. The fifth never becomes a scenario. As a result the words Kreivo, membership, Bloque and dUSD do not appear in the paper at all, and each of them is checkable on chain today.
What exists. Kreivo is a Kusama parachain built around groups rather than individuals.
The first thing to say about it is what it does not have. Kreivo has no token of its own. Its native token is KSM, which anyone can check by reading the chain properties off the node: tokenSymbol: KSM, twelve decimals, Kusama’s own address format. So the membership price, the transaction fees and the commerce fees below are all denominated in Kusama’s coin rather than in a competing one issued to capture the same value. That makes Kreivo a variation on a system chain in economic terms, bound to KSM the way Asset Hub is, while keeping its own governance origins rather than answering to Kusama’s OpenGov. It is a different trade from the one cohabitation offers Kusama in your §3: Kreivo ties itself to KSM economically and keeps control of what it decides, where cohabitation would buy Kusama security on terms another network can withdraw.
Its runtime modules for communities, sign-in and payments are live, and the code is public if you would rather read it than take our word. 19 communities are registered and 695 memberships have been issued. A membership is an NFT that carries its own prefunded allowance for transaction fees, so a member can use the chain without ever holding KSM, and joining takes one passkey gesture with no seed phrase. Each membership costs about 0.3 KSM.
Where that KSM goes, which matters more than the price. It is paid into the Kreivo Treasury, an on-chain account nobody holds the keys to. It is not an invoice to a company and it does not come to us. That treasury is controlled by referendum, and the electorate is the set of community accounts on the parachain. Every collective there has a vote over the pot as it accumulates, including us, including any collective Kusama subsidises into existence tomorrow. It holds 482 KSM today. That is small, and it being small is the honest starting point: this is a sink that has only just begun to fill.
Which gives two ways to reach the destination the deflation argument is aiming at. The collectives can vote to burn what accumulates, which permanently retires KSM at a rate set by how many people are joining rather than by how congested the chain is, and which no layer two can route around, because the membership is itself the thing being adopted. Or membership sales grow faster than issuance, so more KSM flows into the pot than the network mints. That second one is what a growing economy is supposed to look like, and it does not require anyone to legislate scarcity. Either route ends where the deflationists want to be. Neither needs a cap.
The magnitudes, so this is arguable rather than rhetorical. Kusama issues about 1.34m KSM a year to the staking system. At 0.3 KSM a membership, 4.5m memberships a year absorbs all of it. Kusama’s treasury on Asset Hub holds 866,705 KSM, enough to pay for 2.89m memberships outright, and that balance is growing: the treasury used to burn 0.20% of itself every spend period until February 2025 and has burned nothing since, so the remnant has gone from roughly 397,000 KSM in May 2025 to 866,705 today. #437 already handed the destination of that burn to OpenGov, so the growing stash is a decision the network has already taken rather than a fight it still has to win.
The same figures monthly, which is the rate at which a real business actually adds customers. The treasury account grew from 826,124 KSM on 27 July to 866,705 KSM today, so it is taking in about 1,190 KSM a day net of what it spends, which is roughly 36,000 KSM a month. That is what remains of issuance once the staking system is paid. At 0.3 KSM a membership it is 120,000 memberships a month, and that is the line the question turns on. Below it, subsidised onboarding is paid for out of what the treasury receives and the stash still grows. Above it, onboarding starts drawing the stash down, which is the point at which membership demand has outstripped the treasury’s own supply of KSM. The higher threshold is about 370,000 memberships a month, where the membership economy absorbs everything Kusama mints. Run at that rate and the shortfall against inflow is 75,000 KSM a month, so the 866,705 KSM already sitting there funds roughly eleven months of it before the network has to decide whether to keep going.
And the demand is not hypothetical. Bloque runs a payments SDK, VISA card issuance and a stablecoin exchange on Kreivo, settling in dUSD, a dollar stablecoin issued on Kusama Asset Hub on Brale’s regulated rails. Its platform figures are published live at metrics.bloque.sh, so what follows can be checked rather than taken from us. As of 20 August it reported 116,000 end users, up from about 1,000 six weeks earlier, and 260,000 product accounts, roughly 2.1 for each user. More than 100,000 funded Kreivo addresses, which its team puts at about a quarter of all active accounts in the Kusama ecosystem. 50,000 cards issued into Venezuela through a partner whose own base is around 1.5m daily users. A stated year-end target of 1m end users, and named fintech partners representing roughly 10m users across Latin America. Bloque is moving those accounts onto addresses derived from the sign-in module, so accepting terms of service mints a real membership.
Put the two halves together. 1m users at 2.1 accounts each is 630,000 KSM, 47% of a full year’s staking issuance, from one company’s stated year-end target. The named pipeline of 10m users would need 3m KSM, which is 16% of everything Kusama has ever issued and more than the treasury could fund at any price. That is a constraint on supply rather than on affordability, and it is the constraint a network should want to have.
Memberships are not the only flow into that pot, and the second one is external revenue. Every commerce payment through the payments module carries a fee: 1% from the sender and 3% from the recipient, both mandatory, both paid to the same Kreivo Treasury, with community accounts exempt on whichever side of the trade they sit. So the effective take is between 1% and 4% depending on who is trading with whom. The fee is charged in whatever asset is being paid, so a payment in dUSD pays its fee in dUSD. That is dollar revenue arriving in a collectively governed treasury, rather than KSM moving between two public accounts, and it is denominated in the same unit as the endowment your §5 wants to fund. It is the non-inflationary revenue you name in your list of five and then do not pursue.
And that pot is fed by many small economies rather than one big one. Each of the 19 collectives is the merchant of record for whatever it sells, because the listings module identifies a merchant by the same identifier it uses for a community. Each has its own account, its own membership collection and its own governance track, 18 of which are live. They are independent economies sharing a settlement unit and a treasury. The fee schedule is a parameter the parachain’s own collectives govern.
For scale against your own figures: at a 1% ‘tax floor’ on all collectives, $126m of annual payment volume would fund the $1.26m seven-core endowment you use as an illustration. Across a million members that is $126 each per year, roughly $10 a month of card spending. At 4% it takes $31.5m of volume, so $31.50 per member per year. Neither is a demanding number for a card business, and both are revenue rather than issuance.
Which makes this a modular version of the pool you already describe. An allocation pool is a fund sitting between a network’s income and its expenses, with outflows a governing body can adjust as conditions change, so that the network’s costs are progressively paid out of what it earns. A Kreivo collective’s treasury is that shape at a smaller scale, and there are 19 of them instead of one, each with its own account, its own members and its own governance track, all settling in the same unit. Scale a network of local economies, each consuming KSM to admit its members and each paying commerce fees on what those members actually do, and the allocation problem Polkadot solved centrally gets solved once per economy, with the parachain’s own collectives governing the common pot above them.
The difference that matters is where the money comes in. Polkadot’s pool is fed by issuance, 55.9m DOT a year of it, and the roadmap’s route to paying validators in stable terms is a DOT-native stablecoin minted against DOT as collateral. That is a hedge built out of the same asset whose price movement created the exposure in the first place. Kreivo’s fees are charged in the asset being paid, so a dUSD payment pays a dUSD fee. That is dollars arriving as revenue, on regulated rails, rather than dollar exposure manufactured from the network’s own balance sheet. It is the same destination you credit Polkadot for heading toward, reached without the network having to collateralise it.
So the honest form of the claim is this. A validator’s bill is denominated in dollars. A commerce fee on a card economy is denominated in dollars. If the second is large enough it pays the first, and nobody has to sell KSM into a falling market to do it. The arithmetic sets the bar. At the 1% floor, funding your seven-core JAM endowment takes $126m of payment volume a year. Funding the whole current 700-validator bill of $25.2m takes $2.52bn, which spread across the 10m users in Bloque’s named pipeline is $250 each a year, about $21 a month of on-chain spending. We put those forward as arithmetic rather than as a forecast.
What we will not overclaim. The modular pool described above allocates money inside Kreivo, and no mechanism exists today that routes a Kreivo fee to a Kusama validator. That path is a design question we raise below rather than something we have built, and we put the volume arithmetic in the open precisely so it can be judged before anyone builds it. The mechanism is live, the system is scaling meaningfully but we have a long way to go.
What we would ask of the comparative study
Add a revenue column to the trade-off table in §4.2, where you compare the five scenarios, rather than deferring the question to the “predetermined monetary and resource runway” in §6.1, where discovery is doing a lot of unpaid work. Concretely: the endowment you cost for seven cores is $1.26m a year. Spread across a million memberships that is $1.26 per member per year. That number is small enough that the comparative study can honestly ask whether an ordinary membership economy reaches it. The honest answer today is that the path from a Kreivo fee, or from yield on dUSD reserves, to KSM DAO’s balance sheet has not been built. Which governance instrument could build it is a design question, and we would rather see it named in your resource model than skated over in ours.
One more, on the currency mismatch, because we think it is the real mechanism behind the death spiral you describe in §2.4. Your endowment is priced in dollars and Kusama’s issuance is denominated in KSM, so an obligation to pay for cohabitation forces selling into weakness at exactly the moment the network can least afford it. Polkadot’s roadmap reaches the same diagnosis and answers it with a stablecoin minted against DOT, which converts the mismatch into a collateral position rather than removing it. The alternative is a stablecoin the network earns rather than mints, and Kusama is the only one of the two networks that already has one live and settling real payments. Which of those two hedges holds up better under the price path you model in §2.4 seems to us a question your comparative study is well placed to answer, and we would take either result.
In summary
All five of your scenarios look at supply: what Kusama should stop paying for, who it should buy from, how little coin it should issue. Every one of them is a way of shrinking to fit.
The three things above are the same problem seen from the demand side. Polkadot’s comfort is a price cushion sitting on a quantity of coin it has already voted to shrink, and its own answer was an allocation pool aimed at protocol income and a plan to pay operators in a stablecoin, so buying security from Polkadot inherits that transition rather than avoiding it. Both networks have already retired the burn, so capping supply steps past two recent decisions rather than following them. And the fifth of your five options is running on Kreivo today, with paying users and a fee stream denominated in dollars.
That gives Kusama two routes to where the deflation argument wants to arrive, and neither needs a cap. The collectives vote to burn what accumulates. Or membership sales outgrow issuance, which is what a growing economy looks like. About 370,000 memberships a month is where the second one lands, 120,000 a month is where the treasury stops keeping up, and Bloque’s year-end target is 47% of a full year’s issuance from one company.
So the question we would put back to you is not whether Kusama can afford its security. It is whether the comparative study will measure the demand side at all. Happy to bring the workings on any of the above, including the Polkadot figures, which we would rather you check than take from us.
One last thing. §3.2.1 puts KSM buying out DOT on the page and then rules it out on relative capitalisation, which is the same measure section 1 above spends its length arguing is the wrong one. Thank you for writing it down anyway. Most papers would have left it out, and a scenario nobody has costed is not the same as a scenario that has been ruled out.
