0.0 What is Kusama for?
Kusama’s purpose as a ‘canary net’ is twofold:
- Test experimental ideas under real economic conditions ahead of arriving on Polkadot.
- Advance concepts that may only ever exist within Kusama.
Watch Gavin talk about Kusama’s role here.
1.0 Problem definition
Kusama’s direction is informed by the contributions of an emerging contributor set who propose spending to the collective’s treasury denominated in KSM.
Stablecoins are important to counter volatility of crypto assets, this can be useful to support budgeting and expenditure by collectives and to ensure a consistent baseline when assessing the relative impact and performance of treasury spending over time.
With the Polkadot 1.1 upgrade it is now possible for the treasury to spend any asset which unlocks new possibilities within Kusama for a native stablecoin related to spending, management and diversification.
See: Multi-asset treasury and milestone based spends.
With Tether removing support for USDT, Kusama is reliant on bridged USDT and USDC from Polkadot.
Tether has never been a good fit for the Web3 philosophy given its murky origins and continuing lack of transparency in terms of its ownership, reserves and profit.
Circle’s USDC is native to Polkadot and is managed more transparently, however yield from its growing reserves is entirely privatised and directed to opaque ends.
It makes sense for Kusama to experiment with more innovative approaches as part of a move towards a more structured approach to kickstarting ecosystem innovation.
2.0 Introducing Branded Stablecoins
Web3 democratizes the ability to issue currency that was traditionally available only to central governments.
Branded stablecoins are mission-based community monies, allowing value-aligned users to contribute and access the general benefits of on-chain tokenization (self-custody, transparency, 24/7 settlement, etc.).
| - | Traditional currencies | Traditional stablecoins | Branded stablecoins |
|---|---|---|---|
| Revenue generating |  |
|
 |
| Mission aligned | |
|
|
| Community governed | |
|
|
| Open access | |
|
|
| Transparent | |
|
|
| Composable | |
|
|
With Brale integrated into Kusama established organisations within the ecosystem and new entrants can issue their own branded stable coins.
They can then grow their own local economy through membership and direct yield on reserves to whatever purpose their community sees fit.
They will benefit from issuing branded stablecoins through:
-
Generating Revenue: earn yield on the underlying treasury reserves, to cover operational overheads, invest in the community or direct to mission-aligned causes
-
Growth & Retention: community currencies foster a sense of solidarity, and the brand attracts mission-aligned members as money moves through the ecosystem.
-
Control: communities manage the features of the currency through their own governance frameworks, as self-sovereign money
-
Programmability: branded stablecoins unlock interesting use cases not possible with analogue currencies in terms of their programmability.
-
Fungibility: community monies are fluid between each other enabling a more cooperative economy to emerge over time.
As the cost to issue branded stablecoins trends to zero over time, we can re-imagine issuers as any collective with a mission-aligned following, including local, philanthropic, religious, and political communities, protocols, DAOs, network states, metaverses, and traditional businesses.
3.0 Why Kusama?
Although other chains have integrated Brale, Polkadot’s adaptable, interoperable and scalable technology is uniquely suited to advancing this leading use-case which is not yet owned by any ecosystem.
We see it as the trojan horse that leads adoption of the other features such as on-chain identity, organisation and asset management.
The governance focused technology innovations play perfectly into allowing branded stablecoin issuers to manage yield generated treasuries on-chain, enabling them to create grant-making and investment programmes uniquely suited to their ecosystem’s values and mission.
4.0 Meet the teams
AAG appearance
Watch initial appearance here with Glo Dollar as an example of a branded stablecoin.
4.1 Brale
Brale enables the creation of branded stablecoins from partner organisations sharing revenues on yield.
Brale’s leadership team has developed regulated financial products for over a decade.
At Dwolla, we helped invent Banking-as-a-Service (BaaS), facilitating tens of billions per year in transaction volume for more than 10 million end users.
Our partners built the BSA/AML programs banks and FinTechs rely on to operate their businesses.
As a registered Money Services Business (See NMLS ID 2376957) and a licensed money transmitter in the US, Brale is licensed to offer stablecoin issuance, redemption, exchange, and custody services.
As of December 2023, Brale has acquired Money Transmitter Licenses or exemptions to offer regulated services in the following 36 U.S. states:
Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Georgia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Utah, West Virginia, Wisconsin, Wyoming.
Stablecoins are fully backed by cash, cash equivalents, and U.S. treasuries, subject to daily reporting and monthly attestations performed by an independent accounting firm according to standards set by the American Institute of Certified Public Accountants (AICPA).
Reserves are held in a number of U.S. regulated financial institutions that have FDIC insurance, ensuring that the funds remain available for disbursements irrespective of the health of the underlying banking institutions.
Treasury yield on stablecoin reserves is evaluated monthly and based on average daily market cap in the previous month.
4.2 Decent Partners
Decent Partners provide Network Services to on-chain governed networks, fusing independent research, strategy and development, building bridges between on and off-chain talent, assets and resources to release the creative potential of connected minds.
Our strategy is rooted in the assumption that direct contribution and experimentation across all aspects of live on-chain governed networks will lead to insights not revealed through more traditional top down education.
We co-stewarded the development of the Edgeware incubated Kusama parachain Kabocha that is set to experiment with identity, rights management and collective creation.
We are structured as a UK based on/off chain organisation with experience operating across Edgeware and Kusama networks as well as contributing to Decred - perhaps the oldest on-chain governed network.
Our network covers a wide range of experience from finance, investment, regulation, media, advertising, brands, digital development, events and talent development.
The company has existed since 2016 with the intention of building a network based business that could develop sustainable new revenue models for advancing network public media, goods and services, aligning stakeholder incentives over the long term.
We first engaged with Gavin and Ethcore (ahead of the formation of Parity) in 2016, and later participated in the original Polkadot ICO and Edgeware lockdrop.
Returns have been used to fund operations and to bootstrap a range of grass-roots initiatives with the intention of onboarding these to Substrate based networks over time.
5.0 Risks, Compliance and Regulatory
Reserves backing the stablecoins are fully backed 1:1 with supply and are held in Brale’s treasury infrastructure in segregated accounts in U.S. financial institutions.
Reserves are reported on daily, subject to monthly reserve report attestations performed by an independent accounting firm.
Reserves are also directly reported to U.S. regulators.
As a regulated entity, Brale is committed to managing reserves in line with all laws and regulations, and would face severe legal action for any unintended use of reserves.
Stablecoins can be off-ramped to USD through Brale for registered U.S. businesses.
MiCA is expected to go into effect in late 2024, and Brale expects to apply for European licensing. We believe that Brale’s current treasury and transparency practices are consistent with MiCA’s requirements for asset-backed tokens.
6.0 Deliverables
6.1 Functionality at launch
To be delivered within 16 weeks per payout structure.
- Brale back-end integration with AssetHub
- Issue your own stablecoin
- Receive monthly yield in Brale’s SBC USD stablecoin.
- Fiat On/Off ramps
7.0 Timelines
Project delivered ~16 weeks from receipt of first payment.
8.0 Grants
8.1
| Brale | |
|---|---|
| Verified address | F9ob8GJg7CCMpUKrR6PJdS9tpgDBKSw4CWNjGpEPgahnTVJ |
| Issuer | Issuance, regulations, insurance, redemptions, custody, audits. |
| Grant | $125,000 |
| Volatility buffer 10% | $12,500 |
| Total | $137,500 |
| Date | 2024-03-21 |
| KSM EMA30 | $49.19 |
| Total KSM | 2795 |
8.2
Unused volatility buffer will be returned to the treasury.
9.0 Network Services
| Decent Partners | B |
|---|---|
| Verified address | FvrbaMus8iASyrQYkajQWDxsYvG5gb72PFPuvy8TvkFFVGn |
| Network Services | Research, strategy, business development, stakeholder relations, proposal development. |
| 10% Network Service Fee (NSF) | $12,500 |
| +10% volatility buffer | $1,250 |
| Total | $13,750 |
| – GBP | £10,757 |
| – VAT @ 20% | £2,151.40 |
| – Total GBP | £12,908.40 |
| Total USD | $16,498 |
| Date | 2024-03-21 |
| KSM EMA30 | $49.19 |
| Total KSM | 336 |
10.0 Total spend to be approved
| Spend | |
|---|---|
| Grant | $137,500 (inc volatility buffer) |
| Network Services | $16,498 (inc VAT, volatility buffer) |
| Total USD | $153,998 |
| Total KSM | 3131 |
Unused volatility buffer returned to treasury.
11.0 Payment structure
Spend sent in parallel to two separate verified beneficiary accounts.
-
Decent Partners - FvrbaMus8iASyrQYkajQWDxsYvG5gb72PFPuvy8TvkFFVGn
11.1 Schedule
-
50% paid out to addresses 1 block after confirmation.
-
50% paid out 1612800 blocks after confirmation (16 weeks).
Note: 112 days x 24 hours x 60 minutes x 60 seconds / 6s blocks
11.2 Scheduled spend amounts
Brale: 2795
- Approval payment: 1396 KSM
- Delivery payment: 1396 KSM
Decent Partners:
- Approval payment: 168 KSM
- Delivery payment: 168 KSM
11.3 Optimistic payout
The second scheduled payments are optimistic - they assume the core integration and launch functions will be complete within 16 weeks.
Kusama governance retains oversight of second payment.
If necessary second payment will be rescheduled or cancelled.
This is done by issuing a call to cancel the scheduled taskname.
This is done via the scheduler pallet with a referendum issued on the treasurer track.
11.4 Calls for cancelling second spend
11.4.1 Cancel Brale delivery spend
11.4.2 Cancel Decent Partners delivery spend
0x15002b010180446563656e7420506172746e6572732064656c6976657279207370656e642020010a000000
12.0 On-chain invoice
Invoice included as a system remark alongside on-chain proposal to assure data persistence related to the grant for accounting and compliance purposes.
13.0 Preimage
This is a fairly complex call and utilises the scheduler pallet on the Treasurer track
Learn more about the scheduler pallet in this educational video.
13.1 Call data
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
13.2 Preimage hash
0xc6f806deecd9b06bae9c4bc162577386288a6eb71093312f0b64df4373ddf28d
13.3 Preimage length
2177
14.0 Conflicts of interest
None.