Crust Shadow
Last updated: November 11th, 2021 6:00 PM CST
The Technology
Crust Shadow is Crust’s canary network dedicated to decentralized cloud storage. Crust’s mainnet is currently live and operating as a stand-alone substrate blockchain. As of writing this the mainnet offers over 2,200,000 terabytes of decentralized storage where users can submit orders to the Crust blockchain to pin IPFS files onto Crust nodes. It is seldom that a project has a functioning mainnet before winning a parachain slot on Kusama and we are lucky to be able to see how functional Crust’s technology actually is before deciding whether to contribute KSM toward their crowdloan.
But if Crust has a functioning network then why do they need a parachain slot? As a stand alone network their blockchain is only secured by their own validators and it does not benefit from the security of Kusama’s 1,000 validators. Additionally, Crust’s mainnet is not connected to other parachains via Kusama’s relay-chain so as it stands it cannot seamlessly communicate with networks like Karura or Moonriver. By becoming a Kusama parachain Crust Shadow will become more secure and will be able to extend its services to the entire ecosystem.
Crust Shadow’s decentralized storage network operates using a trusted execution environment (TEE) which is a meaningful proof of work (MPoW) protocol that secures and verifies storage resources from node operators. This MPoW is just one of three layers that comprise the Crust Shadow ecosystem; the other two layers are guaranteed proof of stake (GPoS) and the decentralized storage market (DSN). In the MPoW layer, node operators offer their hardware to the network where users can pin their IPFS-hashed files. Upon receiving an order, a node operator stores the file locally and requests a storage worker (sWorker: often another node operator) to seal it. Once it is sealed, the sWorker generates a work report and publishes it to the blockchain. This sWorker uses the TEE to verify that the node operator actually stored the file and also reports how much storage remains available on that node. This process ensures that a node operator faithfully stores files since the work report is generated and published by an independent party using a non-interactive mechanism. Here is a schematic of MPoW in action within the Crust Shadow network:
Node operators who offer their storage to the network are required to have a software guard extension (SGX) enabled CPU. It’s not important to know exactly how SGX works, it is merely a set of instructions that further secures the storing of files on a machine. But if you’d like to dig in deeper about how SGX protects files you can read the wikipedia page about it. But all you really need to know is that Crust Shadow requires this extra layer of security to keep user files safe.
The second layer, GPoS, acts as an incentive mechanism for all the resources being offered to the network. The more storage space a node offers to the network the higher the staking limit on their validator. Staking limits are determined by the work reports submitted to and verified by the network so the incentives are always aligned with the verified amount of storage being offered by node operators. This ensures that nodes offering more storage space are more likely to write blocks for the network and are thus compensated more than nodes offering less storage. It also makes it difficult for an attacker to commandeer the network since they would need more storage space and more CSM (Crust Shadow’s utility token) than half of the network.
The final layer provides functionality for users to utilize the network’s decentralized storage. The DSM has four major mechanisms: pricing, storage orders, file orders, and retrievals. These mechanisms ensure fair workload for storage providers and fair compensation for the work done. It is important to understand the details of the DSM mechanisms, but this article will not parrot what the Crust Wiki has already written out so well. I encourage everyone reading this article to visit that link and read about the DSM in detail. But for those who are particularly lazy, here is a schematic of the DSM:
The CSM Token
CSM is Crust Shadow’s utility token that can be used for governance, staking, network storage resources, paying transaction fees, and paying for storage orders. Crust currently utilizes CRU, an ERC-20 asset that powers the mainnet and though CSM does not currently have any utility it is also available as an ERC-20 asset. Perhaps the team created the CSM token on Ethereum to enable early-stage price discovery and project funding, or perhaps they originally intended to launch on Ethereum but changed course once they discovered Kusama and Polkadot. In any case, I imagine that once Crust Shadow secures a parachain slot there will be a bridge to get ERC-20 CSM turned into relay-chain CSM tokens since Crust mainnet has such a bridge for CRU.
While Crust is currently operating without a parachain slot, their plan is to secure a slot on both Kusama and Polkadot. Once migrated to the Kusama/Polkadot ecosystem, all ERC-20 CSM will need to be bridged. While this adds a cumbersome and expensive layer to accessing token utility, it does open the network to ETH and MOVR holders.
The total supply for CSM is 200 million which is 10 times more than the supply of the mainnet token CRU. As of writing this article, CSM is available on Uniswap for ~$0.035.
The Crowdloan Reward
- 80,000,000 CSM + 80,000 CRU maximum (40% of CSM supply + 0.4% CRU supply)
- 1,000 CSM + 1 CRU:1 KSM ratio
- 30% of the reward will be released immediately, and 10% will be released for each subsequent lease period
Crust Shadow has a crowdloan cap of 80,000 KSM, however their registered crowdloan on Kusama shows a cap of 200,000 KSM. I’m not exactly sure what Crust Shadow will do if they receive a crowdloan more than 80,000 KSM but I find that very unlikely since they have only raised ~1,000 KSM as of writing this; perhaps investors will rush in only when they are the imminent winner.
Since rewards are fixed, we can speculate on potential returns for varying prices of CSM:
These are purely speculative estimates and they are not price predictions. However, CRU is trading at $25 and has 10 times less the supply of CSM. If we assume linear scaling (unlikely), that would put the price of CSM at $2.50.
Overall Evaluation
Risk: Very Low
Reward: High
Novelty: Medium
Utility: High
Crust Shadow is well-poised to be one of the most important parachains in the Kusama ecosystem. They have proven concepts with their web application and their ERC-20 tokens. Since they began with Ethereum-based assets it puts them in a good position to access the wealth from all ERC-20 tokens which should introduce a lot of new people to the Kusama network via Crust Shadow. It is my opinion that the risk for this project is very low since they are already well established. But despite the low risk, the crowdloan reward is quite high with 40% of the total CSM token supply set aside for all contributors and it has a good chance of out-performing native KSM staking over the 48-week locking period. While cloud storage is not a new idea, it is very much needed in the Kusama ecosystem so this project earns a medium novelty and a high utility evaluation. Khala offers similar storage services but more for the purpose of cloud computation. With Crust Shadow as Kusama’s own dedicated cloud storage service, I can see the parachain developing into the standard for storage on the relay-chain.
