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Karura

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This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is Karura?

Karura (KAR) is a cryptocurrency token that powers the Karura network, a scalable, EVM-compatible DeFi hub built on the Kusama blockchain. Founded by the Acala Foundation, Karura offers a suite of financial applications, including trustless staking derivatives, multi-collateralized stablecoins, and an automated market maker (AMM) DEX, all with low gas fees. The KAR token has various utilities, including transaction fees, node incentivization, and community governance, and is part of a sustainable token economic model.

How is Karura used?

Karura (KAR) is the main utility token of the Karura network, which operates on the Kusama blockchain. It serves several purposes within the ecosystem:

  1. Smart Contract Execution: Developers use KAR to pay for the execution of smart contracts on the network.
  2. Reward Token: KAR is the primary reward token for the system. Users can stake KAR to secure passive returns and receive additional tokens, such as LS tokens, which enable them to secure more returns on investment.
  3. Staking and Liquidity: KAR can be staked to secure passive returns while maintaining liquidity. This is achieved through tradeable liquidity staking tokens, which allow users to stake their tokens without locking up their liquidity.

Overall, the KAR token plays a central role in facilitating transactions, incentivizing participation, and maintaining the overall functionality of the Karura DeFi platform.

How do I store Karura?

To store Karura (KAR) tokens, you can use a variety of methods:

  1. Hardware Wallets: Ledger devices support Karura tokens. Install the Karura app on your Ledger device, connect and unlock it, and then use Ledger Live to manage your tokens.

  2. Software Wallets: You can use the Polkawallet app, which allows you to connect to the Karura network and view your KAR tokens.

  3. Mobile Wallets: Math Wallet supports Karura tokens, allowing you to send, store, and exchange your cryptocurrency on both mobile and desktop devices.

  1. Exchange Wallets: After purchasing KAR tokens, they will be deposited into your exchange wallet. It is recommended to transfer them to a hardware wallet for added security.

  2. Karura Account: You can also manage your KAR tokens directly through the Karura website and its associated wallet.

It is essential to ensure the security of your tokens by using a reliable wallet and following best practices for storing cryptocurrencies.

How to buy Karura?

To buy Karura (KAR) tokens, follow these steps:

  1. Choose an Exchange: Research and select a reputable cryptocurrency exchange that operates in your country and supports Karura trading. Consider factors such as fees, security, and user reviews. Some popular exchanges for buying Karura include Kraken, Gate.io, OKX, Klever Wallet, and Kriptomat.

  2. Create an Account: Register on the exchange's website or mobile app, providing personal information and identity verification documents. This process typically includes email verification and photo identification.

  3. Fund Your Account: Transfer funds to your exchange account using supported payment methods like bank transfer, credit card, or debit card. Some exchanges also accept Bitcoin (BTC) for deposits.

  1. Buy Karura: Navigate to the Karura market on the exchange, enter the desired amount of Karura you wish to purchase, and confirm your transaction. The process is usually quick and secure.

  2. Transfer to a Hardware Wallet (Optional): For added security, consider transferring your purchased Karura tokens to a hardware wallet like Ledger or Trezor.

Remember to always choose a reputable exchange, be aware of fees and security measures, and keep your crypto assets secure.

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History of Karura

Karura (KAR) is a decentralized finance (DeFi) platform built on the Kusama network, which is often referred to as Polkadot's canary network. It is designed to operate as a DeFi hub, allowing developers to create financial applications for its users. Karura's integration with Kusama and its community-focused approach, such as the usage of crowdloans for parachain slots, demonstrate a strong community foundation, which can be critical to the long-term sustainability of any cryptocurrency project.

Karura's tokenomics are intricate and strategically designed. The maximum supply of KAR tokens is capped at 160 million, with 100 million minted in the genesis block. The remaining tokens are allocated based on the Acala 2.0 upgrade schedule. The distribution of KAR tokens is carefully segmented among various stakeholders, including the community, early backers, broader backers, the founding team, and participants in auction rewards or liquidity programs.

The vesting schedule of KAR tokens is particularly noteworthy. For example, the founding team has an 18-month lockup period post-launch, after which 30% of their allocation becomes liquid, and the remaining 70% vests over 48 weeks. This structure is mirrored across different stakeholder categories, with variations in lockup and vesting periods. This approach strikes a balance between immediate liquidity and long-term commitment to the platform.

Karura has implemented mechanisms to incentivize community engagement and participation. For participants in the Parachain Auction, the allocation is both generous and incentivizing. Supporters receive at least 12 KAR for every 1 KSM contributed, with a potential increase based on participation levels. Additionally, Karura has implemented a referral program where recipients of referral codes gain an extra 10% KAR, fostering community growth and engagement.

In terms of token burns, Karura incorporates a mechanism where 1% of unspent tokens per month and 20% of cumulative transaction fees are burnt, aligning token scarcity with the platform's usage and success.

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How Karura works

Karura (KAR) is a cryptocurrency that operates as a parachain on the Kusama blockchain. It is designed to provide a suite of financial applications optimized for decentralized finance (DeFi) and is often referred to as the "DeFi Hub of Kusama." Here's how it works:

Key Features
  1. Multi-Collateral Stablecoin (kUSD): Karura offers a stablecoin called kUSD, which is backed by cross-chain assets and maintains a stable 1:1 value with the U.S. dollar. Users can stake KSM (Kusama tokens) to receive kUSD, providing a collateralized stablecoin solution.

  2. Liquid KSM (L-KSM) Staking: Karura allows users to stake KSM and receive liquid KSM (L-KSM), which can be used for various DeFi applications. This feature enables users to access their staked KSM without waiting for the unbonding period, making it more liquid and accessible.

  3. Decentralized Exchange (DEX): Karura has a built-in DEX that uses an automatic market maker mechanism, allowing for efficient and cost-effective trading. The DEX supports various tokens, including Bitcoin and Ethereum, through bridges.

  1. Flexible Fee Tokens: Karura's platform allows users to pay gas fees with virtually any token, including KAR, KSM, LKSM, BTC, ETH, and more. This flexibility makes it more convenient for users to interact with the platform.

  2. Sustainable Token Economic Model: Karura has implemented an on-chain treasury and a Decentralized Sovereign Wealth Fund (dSWF) to promote sustainable development within the community and network.

Technical Infrastructure

Karura is built on Substrate, the same technology used by Polkadot, allowing developers to create unique economic models for individual parachains. It also features the Acala EVM, which is compatible with Ethereum and enables the integration of Ethereum DApps without losing the functionality of Substrate.

Security and Validation

As a parachain on Kusama, Karura inherits the security of the Kusama network by plugging into its validators. This ensures that Karura's network is secured without the need for recruiting a separate set of validator nodes, reducing costs and increasing efficiency.

Tokenomics

The KAR token has a fixed supply and is backed by a certain amount of reserved Acala (ACA) tokens. This fixed supply and backing by ACA tokens provide a stable foundation for the value of KAR.

Founding Team and Funding

Karura was founded by a team with strong experience in engineering and product management. The project has received funding from prominent names in the crypto industry, including Pantera, Polychain, Coinbase, Arrington XRP Capital, and Digital Currency Group.

Overall Functionality

Karura provides a comprehensive DeFi platform with a range of applications, including staking, stablecoins, lending, and a DEX. Its flexible fee tokens, sustainable token economic model, and strong technical infrastructure make it an attractive option for users and developers looking to engage with the Polkadot ecosystem.

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Karura's strengths

The Karura (KAR) token has several strengths that make it a compelling investment opportunity in the DeFi space:

  • Utility and Functionality: KAR is the main utility token of the Karura network, powering the DeFi hub of Kusama. It is used for smart contract execution, and developers pay for these services using KAR. Additionally, it serves as the primary reward token for the system.

  • Staking and Passive Income: Users can stake KAR to secure passive returns and receive LS tokens, which enable them to secure more returns on investment (ROIs).

  • Limited Supply: The KAR token has a fixed supply of 100,000,000 over the life of the project, which can help maintain its value.

  • Flexibility and Interoperability: Karura offers flexibility in rewards, allowing users to take rewards in various tokens, saving time and fees. It also leverages the advanced Kusama network to provide scalable services, including a low-fee AMM DEX and a suite of financial applications.

  • Scalability and Security: The network uses the Polkadot Relay Chain to settle transactions and remains secure through a hybrid consensus module called GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement).

  • Early Adoption and Innovation: As Acala's "canary network," Karura is designed to bring cutting-edge DeFi technology to users, ensuring they interact with the latest innovations while maintaining safety and security.

These strengths position Karura as a robust and versatile DeFi platform, offering a range of benefits to users and developers alike.

Karura's risks

Karura (KAR) is a cryptocurrency project that offers a suite of decentralized finance (DeFi) services, including a decentralized exchange (DEX), liquid staking, and a stablecoin called kUSD. While Karura provides several benefits, it also carries financial risks that investors should be aware of:

  1. Volatility: The cryptocurrency market is known for its volatility, and Karura is no exception. The value of KAR can fluctuate significantly due to market movements and the overall health of the crypto ecosystem. This volatility can result in significant losses if not managed properly.

  2. Risk Management: Karura employs extensive risk management measures to ensure the stability of its stablecoin, including automatic liquidation of high-risk positions. However, these measures are not foolproof and may not always be effective in mitigating risks.

  3. Scalability Concerns: Although Karura is designed to be scalable, it still faces the challenge of maintaining performance as the network grows. If the network becomes congested, it can lead to higher fees and slower transactions, which can negatively impact the value of KAR.

  1. Competition: The DeFi space is highly competitive, and Karura faces competition from other projects offering similar services. If Karura fails to innovate and improve its offerings, it may lose users and investors to other platforms.

  2. Regulatory Risks: Cryptocurrencies are subject to changing regulatory environments, and Karura is no exception. If regulatory bodies impose stricter rules or restrictions on DeFi projects, it could negatively impact the value and usability of KAR.

  3. Security Risks: As with any blockchain project, Karura is vulnerable to security risks such as hacking and smart contract vulnerabilities. If the network is compromised, it can result in significant financial losses for users and investors.

  1. Liquidity Risks: Karura's liquidity staking feature, while innovative, also carries liquidity risks. If users are unable to access their staked tokens when needed, it can lead to financial losses and decreased confidence in the platform.

  2. Tokenomics: Karura's tokenomics, including the distribution of tokens and the role of KAR in the ecosystem, can also impact its financial stability. If the token distribution is not well-managed or if the token's utility is not clear, it can lead to market instability and decreased value.

Investors should carefully consider these risks and perform thorough research before investing in Karura (KAR).

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Karura's ecosystem

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Karura’s team

  • Ruitao Su: Co-founder & CEO of Karura, also the current CEO of Laminar Protocol, an award-winning software engineer, entrepreneur, investor, and advisor to tech companies and startups.
  • Fuyao Jiang: Co-founder of Karura, also the Founder of Polkawallet.
  • Bette Chen: Co-founder & COO of Karura, also the COO at Laminar, an experienced product manager and entrepreneur with 10 years of product management experience in software and high technologies.
  • Bryan Chen: CTO of Karura, one of the best Substrate developers, who also started and led the Substrate Developer Academy globally to help grow more substrate developers worldwide.

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