### **Kabocha vs Plaza: Alternative visions for the future of polkadot**

### **TL;DR**

As the Kusama and Polkadot ecosystems have evolved, contributors and token holders have sought to develop new strategic directions to meaningful adoption of the underlying technology.

This has led to Polkadot and Kusama treasuries spending c. $150m and $30m respectively.

Despite the combined effort and hard work of many talented contributors this spending has led to neglible on-chain impact, little real economic activity, a steadily falling marketcap and the creation of no productive businesses - other than those subsidised by inflation based funding and therefore detached from economic reality.

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**Kabocha** and **Plaza** are two distinct approaches to the challenges currently facing the broader Polkadot ecosystem.

While both aim to solve problems of fragmentation by concentrating talent, tools and functions within a tighter technical foundation, they diverge significantly in their origins, organisation and economic strategies.

- **Kabocha** is led by a slow and emergent approach to development after first being incubated within [Edgeware](https://https://forum.polkadot.network/t/re-introducing-edgeware-substrates-most-chaotic-governance-experiment-and-second-oldest-mainnet/500) - Polkadot's second oldest network and its original governance experiment. KAB is only minted for creating objective on-chain impact - specifically driving adoption of the soon to launch dUSD stablecoin. Unlike USDT/C, dUSD recirculates yield generated through its issuance back to the organisations that generate the impact. This funding takes the form of 'advances' - loans that are repaid when revenues are generated - like a [decentralised record label](https://https://www.quora.com/What-is-an-advance-given-by-a-major-record-label-to-an-artist-Do-they-have-to-pay-it-back). These loans are automatically repaid via the yield generated by the projects eventual economic activities, or via an incentivised curation programme that generates income from other organisations the project onboards - creating a sustainable model that bakes in a network effects flywheel.

- **Plaza** is a stable, scalable system concept developing on Polkadot's Asset Hub and is focused on addressing fragmented functionality, liquidity, talent and narrative by moving currently sharded components such as staking, smart contracts and asset issuance into a single chain focused on simplified onboarding of users. Plaza uses the DOT token, which is widely traded on major exchanges - something it is hoped that gives the network the chance to aggregate talent and tooling to fast-track adoption. Its funding mechanism relies on the Polkadot Treasury and community governance through the OpenGov system, where token holders vote on funding proposals for projects through an ultimately subjective and time consuming process. Whilst on the surface Plaza offers a reliable and secure environment for developers, its growth potential is hamstrung by many unsovlable issues that are downstream from the original network design and launch. [Read more here](https://www.rob.tech/blog/plaza/)

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This paper presents a comparative analysis of the two projects, showcasing their unique value propositions for contributors within the Kusama and Polkadot ecosystems.

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### **Comparative Analysis: Kabocha vs Plaza**

| **Aspect** | **Kabocha** | **Plaza** |
|-----------------------------|----------------------------------------------------|-----------------------------------------------------------|
| [**Network**](#network) | Krievo satellite chain incubated by Edgeware | Polkadot system chain |
| [**Token**](#token) | KAB (traded OTC) | DOT
| [**Token Supply**](#token-supply) | 69 million tokens | 1.48 billion tokens |
| [**Token Price**](#token-price) | $0.10 (OTC) | $4.38 (listed on major exchanges) |
| [**Market Cap**](#market-cap) | $6.9 million (implied) | $6.67 billion |
| [**Historical Performance**](#historical-performance) | Emerging, unlisted, early-stage governance project | ICO at $0.29, ATH at $55, currently trading at $4.38 |
| [**Focus**](#focus) | Experimental governance, non-state money | Consolidated hub for staking, smart contracts, asset issuance |
| [**Coretime Costs**](#coretime-costs) | Purchases coretime from Kusama (£1.00/year) | No coretime cost, onboarded via governance |
| [**Stablecoin**](#stablecoin) | Uses dUSD with near 0 fees, yield shared within the Kabocha ecosystem| Uses USDT/USDC with near 0 fees, yield profits retained by Tether and Circle|
| [**Go to Market**](#go-to-market) | Marketed by Krievo-based organisations utilising dUSD| Concentrated around the Polkadot brand |
| [**Store of Value**](#store-of-value) | Focus on long-term decentralised governance and sustainability, using dUSD to build on-chain value | Relies on DOT’s established position and wide use as a store of value in the Polkadot ecosystem |
| [**Narrative**](#narrative) | A bet on the **"Store of Values"** concept, where the network’s value is backed by the time, effort, and insights of contributors, generating value through cultural collateral (NFTs) | A bet on a singular visionary approach, leveraging the established Polkadot brand for growth and stability |
| [**Identity**](#identity) | **Seeds Concept**: Kabocha builds identity around the idea of roots, shoots, and cultural contributions, focusing on the organic growth of individuals and their projects within the network. | **Proof of Ink**: Plaza’s identity mechanism relies on Gavin Wood’s **Proof of Ink**, where algorithmically generated tattoos serve as a form of verifiable digital identity. |
| [**Organisation**](#organisation) | Structured around **Krievo-based organisations**, with decentralised governance guiding growth | Utilises **Collectives and Proxies** within Plaza, offering structured but flexible governance for user interaction |
| [**Funding Mechanism**](#funding-mechanism) | **KAB is minted automatically** when Krievo-based organisations generate sales. For every $1 of product/service sold on-chain, KAB is minted 1:1. Customers receive 1% cashback in KAB for their purchases. | **Plaza leverages the Polkadot Treasury** via the OpenGov system, relying on token holders to approve funding proposals and liquidating DOT to stablecoins to pay projects. |
| [**Creative Funding with dUSD**](#creative-funding-with-dusd) | dUSD yield flows to Decent Partners, who provide loans to creative projects that pledge rights to the network but retain their IP. Loan repayment is automatic from project-generated yield via the waterfall revenue structure. | Not applicable. Plaza does not have a decentralised loan structure based on yield from a stablecoin. |
| [**ROI of Spending**](#roi-of-spending) | **Objective**: KAB is minted based on measurable, on-chain sales and impact | **Subjective**: Spending decisions rely on token holder votes and governance to allocate funds from the treasury |
| [**Potential Growth**](#potential-growth) | High alpha due to early-stage nature and market dynamics | Growth tied to broader Polkadot adoption | |
| [**Main Value Proposition**](#main-value-proposition) | Experimental decentralised governance with alpha potential | Scalable infrastructure leveraging Polkadot's ecosystem |
| [**Upside for Contributors**](#upside-for-contributors) | High upside potential for grass-roots builders who missed out on Polkadot’s early ICO | Benefits from a stable network but less alpha compared to early ICO participants |

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### **Network**
- **Kabocha**: Kabocha operates as a **parachain on Kusama**, which is known as a high-risk, high-reward experimental network designed for rapid iteration and governance experiments. Kusama serves as Polkadot's canary network, enabling projects like Kabocha to push the boundaries of decentralised finance and governance. Kabocha leverages Kusama’s flexible infrastructure to build a decentralised ecosystem that focuses on governance and economic experiments, providing a sandbox for contributors to innovate.

- **Plaza**: Plaza is a **system chain on Polkadot**, which means it functions as part of Polkadot’s core infrastructure. Polkadot provides a stable, scalable, and secure environment, focused on enabling cross-chain interoperability and secure transactions. As a system chain, Plaza benefits from Polkadot’s robust consensus mechanism and security model, offering infrastructure suited for more mature and secure applications.

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### **Token**
- **Kabocha**: The native token of Kabocha is **KAB**, which is currently traded over the counter (OTC). Since KAB has not been listed on public exchanges, its price is more speculative and privately negotiated. KAB serves as the governance and utility token within the Kabocha ecosystem, allowing holders to participate in governance, staking, and on-chain activities. As an OTC-traded token, KAB offers higher risk but also higher potential reward for early adopters.

- **Plaza**: Plaza uses **DOT**, Polkadot’s native token, which is widely traded on major exchanges. DOT is a well-established asset within the Polkadot ecosystem, used for governance, staking, bonding for parachains, and securing the network. As a widely accessible token, DOT offers liquidity, stability, and lower volatility compared to early-stage tokens like KAB.

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### **Market Cap**
- **Kabocha**: Kabocha’s **market cap** is estimated at **$6.9 million**, reflecting its early-stage nature. The relatively low market cap means there is significant room for growth, but it also indicates the higher risk associated with early-stage projects. Kabocha’s market cap will likely increase as it gains traction and more contributors participate in its governance and ecosystem.

- **Plaza**: Plaza has a **market cap of $6.67 billion**, which reflects its position as a core part of the Polkadot ecosystem. DOT’s market cap is one of the largest in the blockchain space, showing the established nature of Polkadot as a leading network for cross-chain interoperability and secure smart contracts. The high market cap means more stability and lower risk for investors, but also less opportunity for exponential growth compared to smaller, emerging projects like Kabocha.

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### **Token Price**
- **Kabocha**: **KAB** is traded **OTC** at a current price of **$0.10**. This price reflects the token’s early-stage status and speculative nature. OTC trading offers flexibility in pricing, but also means that the token’s liquidity is limited compared to publicly traded assets. As Kabocha develops, there’s potential for KAB’s price to appreciate significantly once it is listed on public exchanges.

- **Plaza**: **DOT** is currently traded at **$4.38** on major exchanges like Binance, Kraken, and Coinbase. DOT’s price has been more stable over time, reflecting its established position within the blockchain ecosystem. While it has seen significant price swings in the past, DOT’s current value reflects a more mature market that has adjusted after the initial post-ICO highs.

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### **Historical Performance**
- **Kabocha**: As an **unlisted, early-stage governance project**, Kabocha has no significant historical performance data. The token’s current OTC price of $0.10 reflects its speculative nature, and it offers early investors the opportunity to engage in governance and economic experimentation. Kabocha’s future performance will depend on how successfully it can grow its community and develop its governance model.

- **Plaza**: **DOT** has a well-documented history, having launched at **$0.29** during its ICO, peaked at **$55**, and is now trading at **$4.38**. DOT’s historical performance shows its ability to capture significant investor attention, followed by market corrections that stabilised its price. This performance reflects the broader crypto market’s cycles and the maturation of the Polkadot ecosystem.

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### **Focus**
- **Kabocha**: Kabocha is focused on **experimental governance** and the creation of **non-state money**. Its primary objective is to explore new ways of decentralising governance, with a particular emphasis on community-driven decision-making and funding. Kabocha uses its dUSD stablecoin and KAB token to build an economy where contributions are rewarded based on measurable on-chain activity, allowing for innovative economic models that could redefine how decentralised communities function.

- **Plaza**: Plaza’s focus is on being a **consolidated hub for staking**, **smart contracts**, and **asset issuance**. As a system chain on Polkadot, Plaza provides stable infrastructure for developers and businesses to build secure and scalable blockchain applications. It emphasises interoperability, allowing for the seamless transfer of assets and data across different chains. Plaza serves a more conventional blockchain role, catering to developers who need reliable infrastructure for deploying dApps.

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### **Coretime Costs**
- **Kabocha**: Kabocha pays **£1.00 per year** for coretime from Kusama. Coretime represents the cost of securing the network through validation and consensus, and Kabocha benefits from Kusama’s low-cost model. This makes it affordable for Kabocha to maintain decentralised governance and operations without incurring significant overhead.

- **Plaza**: Plaza does not incur any coretime costs as it is **onboarded via Polkadot’s governance**. Being a system chain means Plaza benefits from Polkadot’s built-in security and scalability without the need to pay for coretime. This makes Plaza a cost-effective option for organisations looking to build on a reliable blockchain infrastructure without additional expenses.

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### **Stablecoin**
- **Kabocha**: Kabocha uses **dUSD**, a Brale-issued stablecoin that plays a central role in its decentralised economy. What makes dUSD unique is that its **yield is shared within the Kabocha ecosystem**, benefitting organisations and contributors who adopt it as their primary medium of exchange. This creates a closed-loop system where economic activity directly contributes to the ecosystem’s growth and sustainability.

- **Plaza**: Plaza relies on widely used centralised stablecoins like **USDT** and **USDC**. While these stablecoins offer stability and liquidity, the **profits from their yield are retained by Tether and Circle**, meaning the yield generated does not benefit the Polkadot ecosystem. Plaza’s reliance on centralised stablecoins limits its ability to capture the financial upside that a decentralised stablecoin like dUSD provides.

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### **Go to Market**
- **Kabocha**: Kabocha’s go-to-market strategy is driven by **Krievo-based organisations** that use **dUSD** to promote and sell products/services within the ecosystem. These decentralised organisations help grow the Kabocha network by creating organic demand for its stablecoin and governance systems. The more organisations that adopt Kabocha’s tools, the more it benefits from network effects and decentralised growth.

- **Plaza**: Plaza’s go-to-market strategy revolves around the **Polkadot brand**, which is well-established and widely recognised in the blockchain space. This top-down approach allows Plaza to benefit from Polkadot’s existing reputation, making it easier to attract developers, businesses, and investors. Plaza’s marketing relies on the broader success of Polkadot, providing it with a strong foundation to grow its user base.

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### **Store of Value**
- **Kabocha**: Kabocha introduces the **"Store of Values"** concept, which redefines how value is created and captured within the ecosystem. Instead of relying on speculative market forces, Kabocha ties its value to the **time, effort, and cultural contributions** of its community members. This creates a more organic and decentralised store of value, where the network’s success is directly linked to the contributions of its participants, making it a novel alternative to traditional value storage mechanisms.

- **Plaza**: Plaza uses **DOT** as its primary **store of value**, which is more traditional and widely adopted within the Polkadot ecosystem. DOT’s value is tied to its use as a staking asset, governance token, and bonding mechanism for parachains. As a well-established store of value, DOT benefits from its liquidity, stability, and integration into Polkadot’s infrastructure, making it a safer and more reliable option for investors.

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### **Narrative**
- **Kabocha**: Kabocha’s narrative is built around the idea of the **"Store of Values"**, where the network’s value is driven by the collective contributions of its participants. This concept shifts the focus from speculative capital to the creation of long-term value based on time, effort, and cultural assets (such as NFTs). Kabocha positions itself as a platform for building a sustainable, decentralised economy that rewards real contributions.

- **Plaza**: Plaza’s narrative is more focused on the vision of **Gavin Wood** and the **Polkadot brand**, which is one of the most trusted and well-known in the blockchain space. Plaza positions itself as a continuation of Polkadot’s mission to create a secure, scalable, and interoperable blockchain network. This top-down narrative appeals to contributors who trust in Polkadot’s long-term vision and leadership.

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### **ROI of Spending**

- **Kabocha**: The **Return on Investment (ROI) of spending** in Kabocha is highly **objective** because it is based on **measurable, on-chain impact**. Every time a Krievo-based organisation generates sales of a product or service using **dUSD**, **KAB tokens** are automatically minted in a 1:1 ratio with the dollar amount of the sale. This creates an **objective link** between actual economic activity and the issuance of new tokens, ensuring that spending is tied to real, measurable contributions. Additionally, customers of these organisations receive **1% cashback in KAB**, further aligning incentives and promoting continued use of the network. In this way, Kabocha’s spending is **performance-driven**, where value creation leads directly to token issuance and ecosystem growth.

- **Plaza**: In contrast, Plaza’s **ROI of spending** is more **subjective**, as it relies on the **Polkadot Treasury** and the **OpenGov system** to determine how funds are allocated. Token holders vote on proposals to allocate treasury funds, meaning that spending decisions are driven by collective governance and subjective assessments of a project’s value. Once approved, funds are often converted from DOT to stablecoins (like USDT/USDC) to pay for project development. This method of funding introduces an element of subjectivity, as it depends on the preferences and judgments of the voting participants, which may not always align with on-chain performance or measurable impact. The ROI in Plaza is, therefore, influenced by governance dynamics and community decision-making rather than direct economic activity.

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### **Funding Mechanism**

- **Kabocha**: Kabocha’s funding mechanism is **automatic and performance-based**. When a **Krievo-based organisation** sells products or services on-chain using the **dUSD stablecoin**, **KAB tokens** are **automatically minted** in a 1:1 ratio with the dollar value of the sale. This means that for every $1 generated in sales, 1 KAB is created, ensuring that token issuance is directly tied to actual economic activity. Furthermore, the funding mechanism is also designed to benefit customers, who receive **1% cashback in KAB** on their purchases, incentivising participation and creating a circular economy. This mechanism is **objective and impact-driven**, rewarding real contributions and creating a sustainable funding model where the ecosystem grows as more economic transactions occur. The system also provides decentralised funding to creative projects, where loans are issued from **dUSD yield** and repaid through the waterfall revenue structure.

- **Plaza**: Plaza’s funding mechanism is **governance-based**, relying on the **Polkadot Treasury** and the **OpenGov system** to allocate funds. In this system, token holders propose and vote on funding decisions, and once a proposal is approved, funds are drawn from the treasury to support the project. These funds are typically liquidated from **DOT into stablecoins** (such as USDT or USDC) to pay for project expenses. The approval process is based on subjective community voting, which means that funding decisions are influenced by the preferences of the token holders, and may not always be tied directly to measurable on-chain impact. This governance-driven funding mechanism provides a democratic way to distribute resources, but it also introduces a layer of subjectivity and dependence on the community’s collective decision-making.

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### **Summary of Funding Mechanism**
- **Kabocha**: The funding mechanism is **automatic and impact-based**, with KAB tokens minted directly based on on-chain sales of products or services in dUSD. It ties funding to measurable economic activity, creating a transparent and performance-driven model. Additionally, creative projects receive loans from dUSD yield, repaid automatically from generated yield.
- **Plaza**: The funding mechanism is **governance-driven**, relying on the Polkadot Treasury and token holder votes to approve funding proposals. This approach is **subjective**, with funds being allocated based on community preferences and governance decisions, rather than directly linked to on-chain economic performance.

Kabocha’s funding model is more **decentralised, objective, and automatic**, whereas Plaza’s model is **community-governed and reliant on token holder decisions**, making it more democratic but potentially slower and influenced by subjective voting preferences.

### **Creative Funding with dUSD**

- **Kabocha**: Kabocha leverages the **dUSD stablecoin** to create a **decentralised funding model** for creative projects. Through the **Decent Partners organisation**, yield generated from dUSD is used to **issue loans** to creative projects that pledge certain rights to the network but retain ownership of their intellectual property (IP). This model allows creators to access funding without giving up full control of their work. The projects that receive loans are required to use **dUSD as the primary currency** in their operations, further integrating the stablecoin into the ecosystem. Loan repayment is **automatic**, as it is deducted from the portion of the **yield the project generates** through its activities. This **waterfall revenue split** ensures that projects repay their loans over time without the need for manual intervention. This approach incentivises economic activity within the Kabocha network and creates a **self-sustaining funding loop** for creative initiatives, all while maintaining decentralised governance.

- **Plaza**: Plaza does not have a comparable decentralised funding model based on stablecoin yield. The **Polkadot Treasury** funds projects through governance proposals and token holder voting, but it does not have a specific mechanism that ties funding to a stablecoin or provides loans repaid through generated yield.

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### **Potential Growth**

- **Kabocha**: Kabocha presents **high growth potential** due to its **early-stage nature** and experimental governance model. Being a relatively new project, its market is still developing, and its **current low market cap** offers significant room for expansion. Kabocha’s unique approach—such as its **"Store of Values" concept**, **decentralised funding with dUSD**, and **performance-based KAB minting**—provides opportunities for exponential growth, especially for early adopters and contributors who believe in long-term decentralised governance and economic models. The network’s emphasis on community-driven growth and real economic activity further positions it for potential alpha returns, making it an attractive option for those seeking high-risk, high-reward opportunities.

- **Plaza**: Plaza’s potential growth is tied to the **broader adoption of the Polkadot ecosystem**. As a **system chain on Polkadot**, Plaza benefits from the overall growth and success of Polkadot’s technology and brand. While Plaza offers a more **stable growth trajectory**, given its established infrastructure and the widespread use of **DOT**, it is less likely to experience the rapid growth seen in early-stage projects like Kabocha. However, its integration into the Polkadot ecosystem and reliance on DOT gives it consistent, incremental growth as Polkadot continues to gain traction in the blockchain space.

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