Kusama historical analysis - spending, coretime demand and treasury ROI

This post extends the analysis first outlined in Kusama treasury annual spending analysis - 2020 > 2023 (june), @asteeber’s Kusama Treasury Follow-up Analysis: Continued Budgeting Incompetence and the ongoing conversations in Adjusting the current inflation model to sustain Treasury inflow


Kusama is 3 years old, so it is worth considering what has been learned in that time, what historical insights may be surfaced from existing data and how this can inform future strategies as the ecosystem moves from an evolving coretime loan model, to a coretime sales model.

This post includes data from a coretime lease and treasury spendng analysis - its purpose is to offer a starting framework to get people to see the network differently.

The underlying model

The Twitter thread version

For those who like your analysis in tweets.

Key points:

  • Parachain auction speculation continues to hide many sins, creating valuations and treasuries that seem secure and sustainable, but that do in fact exist precariously - held up more by hope than reality.

  • Historical data from coretime leases can help us model future expectations around coretime pricing and income for both Instant and Wholesale offerings and allow us to to better plan future scenarios.

  • Current and historical spending strategies are detached from the fundamental value drivers of the network and its corespace product offering and as well as having zero impact, are entirely unsustainable in their current form.

  • Treasury spending should be focused on developing public good strategies that directly impact the demand for coretime as a raw material, funding teams transforming it into useful coretime resources.

Coretime loans vs coretime sales

The primary historical demand driver of $KSM has been through slot auctions and the creation of independent networks that leverage a shared security model to bootstrap their token economies.

In this model, customers of the network’s primary product of secure blockspace, use either their own funds, or those loaned by contributors to lease year long slots.

Although branded as parachain leases, it is useful to think of this paradigm through the lens of the new language as bulk annual coretime leases.

We can define the parameters of a lease in the following way.

Coretime lease
Period (days) Periods Duration (days) Blocktime (seconds) Blocks per lease
42 8 336 12 2419200

The customers driving coretime lease demand are called parachains and we can understand the basic parameters in the following way, with total KSM locked acting as a surrogate for bulk coretime pricing.

Coretime demand
Lease begins Lease ends Number Parachain Funding type KSM bond KSM price Bulk price
15-Jun-21 15-Jun-22 1 Karura Crowdloan 501138 $420.00 $210,477,960

Coretime leases and opportunity costs

Since the coretime lease model relies on KSM being locked and then unlocked when the slot finishes. As a result, teams or contributors - the customers of coretime leases have their funds returned, and are therefore only sacrificing the opportunity cost of their KSM.

Since KSM locked in coretime leases is not staked, the simplest way to value this opportunity cost is in the staking returns a holder is forgoing which for Kusama is approx 10% pa.

Since coretime sales accrue to the network treasury rather than being returned to a customer, the opportuntity cost is replaced with a direct cost.

Coretime income

There are two proposed sales models for coretime:

  • Wholesale: Selling 4 weeks of “coretime” per month. This coretime can’t be assigned/used directly.

  • Instant: Similar to a parathread, this involves a continuous sale of “coretime” for immediate use.

Using coretime leases to benchmark coretime sales

Using previous parameters for coretime leases allows us an imperfect but useful comparison to track the transition from opportunity costs, to direct costs, valuing the Kusama’s primary product in the process.

We can take Karura’s example to model a coretime lease equivalent for wholesale and instant pricing - this was the most expensive coretime offered.

Coretime equivalent
Instant - price/block Wholesale - 4 weeks
$87.0031 $17,539,830

We can see the latest slot 93 was secured by Parathread 2274 at the following rates:

Instant - price/block Wholesale - 4 weeks
$0.0012 $239

By aggregrating all of the historical data for coretime leases to date, we get the following results:

(note blended refers to the average/total of each year, whilst all time is an average/total of individual coretime leases).

Kusama network history All time 2020 2021 2022 2023 - July Blended
Kusama network value
TWAP $127 $35 $381 $61 $30 $127
Coretime loans
Lease total 3,436,253KSM 0KSM 2,792,013KSM 595,831KSM 48,409KSM 3,436,253KSM
Lease average 36,949KSM 0KSM 186,134KSM 7,987KSM 1,614KSM 48,934KSM
Annual coretime loan demand
Bulk loan total $1,182,193,973 0 $1,083,068,026 $97,620,456 $1,505,491 $295,548,493
Bulk loan average $12,711,763 0 $72,204,535 $528,516 $50,183 $18,195,808
Coretime pricing
Price / block equivalent $5.2545 0 $29.85 $5.2545 $0.0207 $8.78
4 Weeks wholesale equivalent $1,059,314 0 $6,017,045 $169,480 $4,182 $1,547,677

Some charts

Now lets zoom out and look at the big picture.

Let’s begin with KSM price change over the 3 year period of parachain auctions. Note the vertical axis is on a log scale, which allows us to bring together data across a large spread.

For every one value of y, the value of x will increase by a factor of ten.

Now lets see the demand for KSM via the amount locked up in slots.

And then lets consider the total bulk price of these coretime leases.

Treasury spending

As noted previously, Kusama’s common good treasury has spent c. $22m in the past 3 years covering a range of domains.

Year 2020 2021 2022 2023 Total
Wallets $94,034 $600,985 $936,762 $207,749 $1,839,530
Development $491,659 $1,218,280 $4,616,067 $2,346,304 $8,672,310
Education $26,987 $330,999 $2,208,839 $661,728 $3,228,553
Art-Experiment $141,088 $5,670 $39,800 $12,018 $198,576
Events $0 $51,743 $807,492 $231,753 $1,090,988
DEX liqudity $0 $0 $4,740,000 $0 $4,740,000
Maintenance $3,470 $146,114 $1,391,633 $364,064 $1,905,281
Totals $757,238 $2,353,790 $14,740,593 $3,823,616 $21,675,237

Since domains are categorised through subjective rather than objective means, the boundaries of each area remains unclear, in flux and open to interpretation.

When it comes to assessing the effectiveness of spending, each proponent presents, assesses and reports their own KPIs, although in many cases there is no reporting.

In general, the overall motivation is to generate awareness that will then result in some form of on-chain impact further down the road, though what this on-chain impact might be is rarely if ever discussed.

Individualism, Collective intelligence and Tragedy of the Commons

For voters wishing to make educated decisions in the public benefit, their assessments trend towards either personal interests and popularity contests.

When it comes to personal interests, voters with a specific expertise may be great at assessing the quality of a proponent in their specialist area, but poor judges when considering anything outside.

On the popularity contest side, the nature of token based communities trends towards tribalism - with previously funded teams afraid to vote against projects, for fear of losing support when the time comes to present new funding requests.

At the same time emerging contributor token-ocracy binds groups together to defend and extend their own common interests, but at the expense of a collective common good.

The compounding effect of this process is the collective becomes ever more divided, ineffective and wasteful - an entirely predictable tragedy of the commons that all token based treasuries are headed towards.

The tragedy of the commons is a metaphoric label for a concept that is widely discussed in economics, ecology and other sciences. According to the concept, if numerous independent individuals should enjoy unfettered access to a finite, valuable resource e.g. a pasture, they will tend to over-use it, and may end up by destroying its value altogether. To exercise voluntary restraint is not a rational choice for any one individual - if he did, the others would merely supplant him - yet the predictable result is a tragedy for all. - Wikipedia

What is the Kusama treasury for?

Despite the subject of so much attention, debate and argument, very little time is given to questioning the fundamental purpose of the common good treasury - and shared network resources in general.

Instead people’s short term focus tends to be on seeing the treasury as a pot to be spent on relatively arbitrary domains, whose relevative importance ebbs and flows depending on who is being asked, with little or no thought given to the primary demand and value drivers of the network.

With the arrival of coretime sales, we finally have a more concrete focus on the primary business that Kusama is in and therefore a way to focus attention, strategies and spending over the long term.

Setting coretime income expections

Objectively speaking, the primary driver of coretime leases were parachain auctions.

Demand was bootstrapped by crowdloans, with expectations of a new token, with no direct value accrual to the main network, the primary motivation for the speculative frenzy.

With teams now preferring to Self Fund rather than Crowdloan, we are beginning to get better signal as to the actual value of coretime in Kusama, since the speculative benefits have receded.

When we remove crowdloans from the picture, this is the current status of 2023 coretime lease demand when considered through the lens of coretime sales pricing structures for self-funded projects.

Coretime pricing equivalent
Instant - price/block Wholesale - 4 weeks
$0.0131 $2,639

When we use the data to calculate potential coretime income for 2023, we get the following:

Total income: 25306 KSM / $759,983

Remember coretime sales is a direct cost, whereas coretime leases are an opportunity cost.

In the absence of new demand drivers, this is likely the upper bound of income for Kusama.

A few more charts

Using historical data to simulate Instant Coretime

Using historical data to simulate Bulk Coretime - 4 week periods.

Treasury ROI

When we focus our attention on the core business of the network, we can more easily assess the value of treasury spending to date.

Since demand for coretime leases has to date been driven by auctions, the ROI on treasury spending in terms of driving direct demand for corespace can be written down to 0.

Kusama network history All time 2020 2021 2022 2023 - July Blended
Kusama network value
TWAP $127 $35 $381 $61 $30 $127
Coretime loans
Lease total 3,436,253KSM 0KSM 2,792,013KSM 595,831KSM 48,409KSM 3,436,253KSM
Lease average 36,949KSM 0KSM 186,134KSM 7,987KSM 1,614KSM 48,934KSM
Annual coretime loan demand
Bulk loan total $1,182,193,973 0 $1,083,068,026 $97,620,456 $1,505,491 $295,548,493
Bulk loan average $12,711,763 0 $72,204,535 $528,516 $50,183 $18,195,808
Coretime pricing
Price / block equivalent $5.2545 0 $29.85 $5.2545 $0.0207 $8.78
4 Weeks wholesale equivalent $1,059,314 0 $6,017,045 $169,480 $4,182 $1,547,677
Treasury spending
Domains - awareness $21,675,237 $757,238 $2,353,790 $14,740,593 $14,740,593 $32,592,214
Directions - impact 0 0 0 0 0 0
Total costs $21,675,237 $757,238 $2,353,790 $14,740,593 $14,740,593 $32,592,214
Treasury ROI
Direct coretime demand 0 0 0 0 0 0
Common good return -$21,675,237 -$757,238 -$2,353,790 -$14,740,593 -$14,740,593 -$8,148,054

Coretime as a public asset → Coretime as a public resource

So if the common good treasury is not for funding arbitrary domains, what might it be for?

By beginning to focus attention on the metrics that really matters - coretime demand and price, we can begin to build cohesive strategies to make sustained impact.

If we begin by understanding that corespace is a raw material - computation.

This computation has a cost that is currently defined primarily through indirect means, however we can still value it using simple methods and in turn begin to structure treasury spending in ways that can directly impact coretime demand.

Further thoughts

This work is once again designed to prompt questions, challenge orthodoxy and push people to understanding that the challenges Kusama and Polkadot face are existential in nature, despite the distracting nature of token valuations.

For those expecting coretime income to save the day, it is worth considering the numbers and the trajectory the networks are on in terms of pricing power.

Hope for the best, plan for the worst.

The spreadsheet is there to be critiqued, copied, evolved and amended. Do your worst.


Although not a good look, it is ok for the treasury to go broke. The critical parts are the validators and the fellowship, neither of which rely on the treasury. Kusama is a canary net, not a business. ROI is what is learned, reputations built, and all the extra-chain coordination that evolves.

The big treasury to start is like baby fat for a growth spurt at the launch of OpenGov to initialize the coordination of human actors around the chain. As we go along and learn how to operate the machine better we will trim away the dead growth and lean up as treasury inflow/outflow comes into balance.

What is the Kusama treasury for?

"The Kusama relay chain exists as a security hub for parachains and for testing / Scaling of Polkadot’s core mechanics:

The fellowship will rely on the treasury afaik.

The fellowship is also technically led, I don’t expect it to have the cultural impact needed and as you can see from the rise of system chains, the incentive is there for parity / fellowship to absorb features from parachains / apps.

In the absence of strategic spending, to generate demand for core space and a holistic integration of tech, creativity and culture the experiment will (and is) failing.

But these are just my opinions - look at the data and consider the likely levels of coretime income.

I have modelled Kusama’s numbers, Polkadots are far worse despite the marketcap - the canary network is doing its job.

This is a super high-quality post. Cheers!

For what it’s worth, I recommend not giving the general public editor access to the linked google sheet. I fixed a typo, and then reduced myself (and everyone with the link) to having only commenting access, as it would be unfortunate if the work that went into the sheet was not immediately visible.

I disagree with measuring treasury ROI as 0 for all spends, based on the premise that demand for coretime leases has been driven by auctions. As we don’t have a point of comparison, it’s entirely possible that the average cost of a lease would be much lower (or higher) than it is now without the treasury spends to date. I do agree that measuring ROI in terms of impact on block prices is important, but it’s also hard to do without anything for differential analysis because the goals of the treasury proposals are often so removed from any given lease.

I do definitely agree that creating demand for secure substrate coretime needs to be the focus. It is wild to see the drop in price per block over the years. Additionally, I know that many parachains are running at less than full capacity. Increasing the granularity of coretime leases via instant buys would probably reduce the overall demand even further, as those parachains could switch from buying a block every 12 seconds in a year to buying a block only when necessary.

Update, one thing I’ve just realised I omitted was the treasury income with Bifrost’s return of staking rewards from their 50,000 KSM treasury loan.

Bifrost had repaied 50,000 KSM + one year staking reward back to Kusama Treasury - Subscan

Afaik this has been the only ‘income-like’ treasury proposal, but since it is merely returning staking rewards you can see it less as income and more like a new source of inflation.

Question: How do we frame this treasury ROI? @asteeber @jonas / others?

They have a new proposal for year 2 of the same ‘Treasury Subsidy’ here.

Borrowing process

Kusama side

Apply to Kusama treasury to borrow 50,000 KSM to the ParaId2001 (F7fq1jMmNj5j2jAHcBxgM26JzUn2N4duXu1U4UZNdkfZEPV) beneficiary through the (Treasury::propose_spend) method of the treasury module on Kusama.

Bifrost side

Generate Bifrost treasury derived address via Utility::derivative_account_id method;
Through the Tokens::set_balance method, an additional 50,000 KSM will be issued on Bifrost treasury derived address;
Transfer 50,000 KSM from Bifrost treasury derived address to the treasury (eCSrvbA5gGNYdM3UjBNxcBNBqGxtz3SEEfydKragtL4pJ4F) address via the Tokens::force_transfer method;
Mint 25,000 KSM into about 25,000 vKSM via VtokenMinting::mint method;
Add 25,000 KSM and corresponding minted 25,000 vKSM trading pairs to Zenlink and Mangata to provide liquidity.


In the actual transaction, steps 4 and 5 need to be called through the utility.dispatchAs method.
In the actual transaction, steps 1-5 need to be packaged into one transaction through utility.batchAll.

Repayment process

Bifrost side

Remove liquidity from DEXs, retrieve the liquidity of the KSM-vKSM trading pair to the treasury account;
With the VtokenMinting::redeem method, almost 25,000 vKSM is converted back to more than 25,000 KSM;
Transfer 50,000 KSM from Bifrost treasury address to treasury derived address via Tokens::force_transfer method and set_balance to 0;
Transfer 4,750 KSM (one year 50,000 KSM staking rewards from vKSM) from Bifrost Treasury to Bifrost Sovereign account on Kusama via the XCM;
Initiate a proposal on Kusama, repay 54,750 KSM to the Treasury.

Kusama side

Return roughly 54,750 KSM from ParaId2001 to Kusama treasury address (F3opxRbN5ZbjJNU511Kj2TLuzFcDq9BGduA9TgiECafpg29).

It has a service (coretime) that it offers for sale priced in it native currency.
Central banks are companies.
I’m unsure how this isn’t a business?

What business is Polkadot in?

Refering to the Medium article, " Announcing the Kusama Network," Announcing the Kusama Network. Announcing the Kusama Network | by Polkadot | Kusama_Network | Medium

" Kusama will exist as long as its community maintains it." <-This is real. Blockchains don’t die easily. Look at Ethereum Classic. Even Lisk is still a thing. Lisk ffs!

“and we envision it will cater to new, early, high-risk functionality and projects preparing to develop and deploy on Polkadot.” <-Agile delegation is just such a new, early, high-risk functionality that Kusama is meant to test.

“One percent of DOT tokens at Polkadot genesis have been reserved as an eventual incentivisation grant to Kusama’s stakeholders and community. The precise mechanics of this have not yet been finalised.” ← This means that Kusama is a protectorate of Polkadot. Kusama is for R&D. There is lots of cash in the back pocket. It will not be allowed to die any time soon.

According to the Polkadot Fellowship Manifesto, Section 8, Fellowship allowances are paid monthly in DOT. I don’t see anything about KSM. https://github.com/polkadot-fellows/manifesto/blob/0c3df46d76625980b8b48742cb86f4d8fa6dda8d/manifesto.pdf

What matters for Kusama is that there is a community willing to maintain it, which there is, as an R&D staging ground for ideas that might make it to Polkadot. Kusama is a canonical history, rules for state transition, and the set of humans that agree to voluntarily self organize to use and maintain it. Kusama is not a business.


Indeed. And each fork has developed its own culture. Some immediately, others over time.

You list things that are were outlined at launch - but this is social technology, different people, different projects, different decisions.

There are two ways to frame possible futures:

  1. Kusama does everything you list, spending focuses on that and nothing more. This will be a success from the perspective you present, but it will not teach Polkadot anything other than technical proficiency. There will be no chaos.

  2. Kusama and its parachains and talent conjure up some unpredicted magic and mischief that remixes, rethinks and reworks the underlying components, resources and capabilities into something distinctly fresh and new. Who knows, it might even figure out a better way to drive coretime income or meaningful adoption and real world impact?

So sure, Kusama can be just a canary net, but if all it ever does is remain in the shadow of Polkadot, that will not be good for anyone.

There is no tragedy of the commons here. The treasury is not a common good with numerous independent individuals enjoying unfettered access. The treasury is controlled by the token-holders who are, or who for the most part support, the fellowship.

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What is “the common good” in your mind?

What outcomes would you like to see as a token holder?

Reduced forum post to a twitter thread.

As a token holder I would like to move past what a/the common/public good/bad is and focus on delivering value for user-developers.

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In ordinary political discourse, the “common good” refers to those facilities—whether material, cultural or institutional—that the members of a community provide to all members in order to fulfill a relational obligation they all have to care for certain interests that they have in common.

At its core the common good is to ensure the survival of a collective enterprise (a common or a public).

focus on delivering value for user-developers

Let’s just call this group ‘customers’ of the Kusama collective.

If you have no demand, you have no customers. Therefore in the absence of demand, the role of the treasury is to create (subsidise) this demand. This is how a government works.

This is how public spending drives the creation of tools, tech and infrastructure that can then form the foundation on which a market is built.

It doesn’t work the other way around.

All of the tooling exists for user-developers - this is just the same excuse made so people can spend money to paper over the cracks and fluff up stuff, without addressing underlying issues.