Short Recapture

2 minute read

The last three months I have been following the Kulupu Discord and Telegram chat quite closely. I also participated in governance via voting on different referenda. Here’s a short recap about the things that happened and why.

Kulupu as a Proof of Work Blockchain faces some unique challenges that other Substrate based chains don’t face. A lot of these have to do with the different type of system that PoW is as opposed to Proof of Stake. The community differs too and is made up of three actors, namely in order of magnitude: investors; miners and finally the developer. Kulupu is a side-project of Wei Tang and he mainly, with the help of Shawn Tabrizi, does all the dev work.

The emission of the coin was 1 KLP per second, similar to Grin. With the surge in interest during the Polkadot launch came a surge in price. Investors were concerned by the enormous creation of coins per day. These concerns were addressed by a halving of the block reward, the emission was reduced to 1 KLP every other second and a reward lock. Miners are unable to dump their coins on the market, their reward is locked for a period of 100 days and slowly vested in batches of 10% during this period.

To make the coin even more attractive to buyers, a cap on the total amount is currently being proposed. In a couple of years the block-reward will be reduced to 8 KLP. If the blocks that are created are half full, a zero-sum is met between burnt transaction fees and block reward. Note that transaction fees are always burnt, otherwise miners would have an incentive to do fake transactions.

Miners are in charge of the safety of the network. To reduce 51% attacks on the network Wei implemented signed mining. This makes renting hash-power anonymously impossible. Pooled mining is not possible though too. The hash-rate is quite high at the moment and the network seems to be dominated by one miner.

Furthermore a voluntary taxation of 20% was introduced and miners are able to decide whether it’s burnt or donated to the treasury. That’s where my current proposal on of Gitcoin integration comes in. Like Polkadot and Kusama I think it’s a good idea to spend funds on further development and thus grow the userbase.

Kulupu lacks a roadmap to prevent speculation. The website gives an impression what is to be expected. The main focus will be enabling actor-based smart contracts. These mitigate the risk of front-running.

To be frank the currency had quite a pump and dump and this caused frustration on all sides. Most short-term investors have difficulty understanding the tentative approach of governance and do not care to participate. But as we can see the demands of investors were and are certainly addressed. On the other hand the market clearly desires more use-cases. On chain governance and forkless upgrades alone do not suffice. Acala, Reef Finance, Mantra Dao and other DeFi projects in the Polkadot ecosystem will have to integrate KLP.