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What is Kintsugi (KINT)?

Kintsugi (KINT) is a decentralized layer-1 network deployed as a Kusama parachain, built with Substrate technology and optimized for Bitcoin. It is the canary network of Interlay, a Polkadot-based project focused on connecting Bitcoin with DeFi platforms. Kintsugi launched on October 13, 2021, as a Kusama parachain built using Substrate technology, and it shares the same code base as Interlay while focusing strictly on innovation and staying ahead in feature deployment.

The network allows Bitcoin holders to utilize their assets within the Kusama ecosystem through kBTC, a 1:1 Bitcoin-backed asset. KINT is the native utility and governance token. 10,000,000 KINT is emitted over the first four years, followed by a 2% annual inflation starting in year five. The project represents a live experiment with real economic value, designed to bring trustless Bitcoin to Kusama and its parachains.

Key Specifications & Tokenomics

• Name: Kintsugi
• Ticker / Symbol: KINT
• Blockchain / Network: Kusama parachain, built with Substrate technology
• Consensus: Proof-of-Stake, with security provided by the Kusama parachain
• Launch Date: October 13, 2021
• CoinMarketCap Listing Date: November 1, 2021
• Category: Blockchain, DeFi, Bridge Token, Smart Contracts, Governance
• Max Supply: Not capped (unlimited). 10,000,000 KINT is emitted over the first 4 years; from year 5 onward a 2% annual inflation applies.
• Supply Model: 10 million tokens emitted over the first 4 years; 2% annual inflation from year 5 onward
• Allocation: 70% community (30% vault rewards, 5% governance staking, 35% on-chain treasury); 10% reserve for Kintsugi Labs; 20% team and early backers
• Official Website: Kintsugi.interlay.io
• Explorer: polkadot.js.org
• Governance Forum: kintsugi.subsquare.io
• Source Code: github.com/interlay/interbtc
• Whitepaper / Docs: docs.interlay.io

Who created Kintsugi?

Kintsugi is the canary network of Interlay, created by Alexei Zamyatin and Dominik Harz, who founded Interlay in 2020 to bring their research into practice. The two met in 2017 during their PhDs at Imperial College London, where they were among the first researchers at Imperial College London's Cryptocurrency Research and Development Center. Alexei Zamyatin serves as CEO and is a PhD researcher from Imperial College London's Cryptocurrency Research and Development Center, focusing on security and decentralization of blockchain networks. Dominik Harz serves as CTO with a similar research background.

Both co-founders have been researching Bitcoin and Ethereum since 2015/16, authoring over 30 papers with more than 700 citations. They regularly presented their work at major conferences including DevCon IV, EthCC, Building on Bitcoin, and Breaking Bitcoin. In 2020, they founded Interlay to bring research into practice, and today Interlay employs 18 staff including developers with experience at major technology and financial firms. Both Kintsugi Labs, a not-for-profit organization, and Interlay are responsible for the Kintsugi platform.

How does Kintsugi work?

Kintsugi operates as a Kusama parachain that enables Bitcoin holders to participate in DeFi through its flagship product, kBTC. The process begins when a user locks their BTC with a vault, either by depositing with an existing vault or creating their own. The user's BTC is insured by an additional collateral deposit held within the vault. The user then receives kBTC at a 1:1 ratio to the amount of BTC locked.

Once minted, kBTC can be utilized as collateral for borrowing, lending, yield farming, and other purposes across the Kusama ecosystem. Users can redeem their kBTC for actual Bitcoin at any time through a trustless, crypto-protocol-based process, so long as their BTC is properly collateralized within the vaults. kBTC is created through a multicollateral system similar to DAI, in which KSM, BTC, and KINT tokens can be used as collateral.

The network uses Substrate technology to create a network capable of interoperating between different chains quickly and easily. Kintsugi adopts Polkadot's standard governance structure with two major modifications: optimistic governance and stake-to-vote. Optimistic governance differentiates between internal treasury proposals requiring only a majority council vote and external proposals requiring both a council majority and a public referendum. Under stake-to-vote, KINT holders participate in network governance, making decisions on network improvements and electing council decision makers.

What makes Kintsugi unique and valuable?

Kintsugi's primary value lies in its role as a canary network for Interlay, meaning it always stays ahead in terms of features and innovation. The network brings radically open Bitcoin to Kusama, allowing Bitcoin holders to access the increasingly diverse DeFi ecosystem built on Kusama and its parachains including Karura, Shiden, and Moonriver.

kBTC is secured by collateral through a MakerDAO-inspired collateralized debt position system. Vaults lock collateral in various digital assets such as KSM, ensuring users' deposits maintain ample collateralization even during price volatility. If misbehavior occurs within a vault, Kintsugi's consensus mechanisms detect the event before slashing the user's funds and returning the deposited collateral. The system is overcollateralized, meaning the value of deposited collateral exceeds the value of BTC offered, which aims to ensure truthful behavior on the network and reduce exchange rate fluctuation risk.

Anyone can open or create a vault and help secure kBTC at any time, making the system radically open and accessible. Vaults receive KINT as rewards for assuming liquidation risk and helping protect against hostile governance takeovers.

What is Kintsugi used for?

KINT is the native utility token used for governance votes to decide on protocol upgrades and determine how network resources are allocated, as well as fees for processing transactions. KINT holders can participate in network governance, making decisions on network improvements and electing council decision makers. The token serves as the medium of exchange for paying transaction fees and earning network participation rewards.

Additional KINT functions include self-management by risk takers, where vaults, kBTC users, developers, and protocols that integrate kBTC must be able to vote on changes to the system to protect their interests. KINT also serves as a liquidity bootstrapping mechanism, as vaults face capital costs from locking in insurance collateral to secure BTC. The token acts as a reward and guarantee currency for system participants, maintaining the security of the parachain and serving as a platform for the deployment of kBTC and other DeFi functionalities. Users who deposit their BTC in a vault are rewarded with KINT.

How Is the Kintsugi ecosystem developing?

Kintsugi won Kusama parachain auction 11, raising a crowd loan of 200,000 KSM, worth approximately $60 million at the time of winning. Crowdloan participants received KINT rewards as part of the community allocation. The project received two Web3 Foundation grants in 2020 and 2021 to implement interBTC, initially referred to as PolkaBTC, based on the XCLAIM protocol developed by the co-founders in 2018. The XCLAIM paper was presented at Scaling Bitcoin in 2018 and described the first-ever protocol to move cryptocurrencies like Bitcoin to Ethereum in an economically trustless and decentralized manner.

The ecosystem aims to bring Bitcoin to the DeFi world being formed in Kusama, Polkadot, and Ethereum. kBTC enables bitcoin-based transactions across other Kusama parachains such as Karura, Shiden, and Moonriver. The Interlay network is hosted as a Polkadot parachain and will be connected to Cosmos, Ethereum, and other major DeFi networks. The project's ultimate goal is to make cryptocurrencies easier to use within the Kusama ecosystem through tokenization of Bitcoin and various financial strategies.

How to mine Kintsugi?

KINT cannot be mined through traditional proof-of-work methods. As a Kusama parachain using proof-of-stake consensus, Kintsugi distributes tokens through staking rewards and vault participation. According to the Kintsugi tokenomics, 5% of the supply is allocated to governance staking rewards (stake-to-vote).

Participants can earn KINT by operating vaults that secure kBTC, as vaults receive KINT as rewards for assuming liquidation risk. Users who deposit their BTC in a vault are also rewarded with KINT. Within the 70% community allocation, 30% goes to vault rewards, 5% to governance staking rewards, and 35% to the on-chain treasury controlled by network governance.

How to keep your Kintsugi Coin safe?

KINT holders should prioritize using official and audited wallets compatible with Kusama parachains and Substrate-based networks. Since KINT is a parachain token, users should verify they are interacting with the correct network and official contract addresses before conducting any transactions. Hardware wallets that support Kusama and Substrate-based assets provide an additional layer of security for long-term storage.

Users should never share their private keys or seed phrases with anyone. When participating in governance or staking activities through platforms like kintsugi.subsquare.io, ensure the connection is secure and the URL is verified. For those operating vaults or participating in the kBTC system, understanding the collateralization requirements and liquidation risks is essential to protecting deposited assets. Regularly reviewing official communication channels for security updates and network announcements helps mitigate potential risks. As with any cryptocurrency investment, users should conduct thorough research and consider the unlimited supply nature of KINT when making decisions.