What is Klaytn?

The Klaytn public chain was officially launched in June 2019, focusing on creator economy, GameFi, and the metaverse. Currently, the chain is expanding its global operations. This expansion is supported by the Klaytn Development Foundation, a non-profit organization established in August 2021, which is dedicated to developing the ecosystem built on Klaytn and is headquartered in Singapore.

History

In June 2019, GroundX, the blockchain subsidiary of South Korea’s largest mobile platform Kakao, developed and launched the Klaytn blockchain. After two years of successful operation in South Korea, the Klaytn Foundation, a non-profit organization dedicated to the Klaytn network and its ecosystem, was established and began global expansion.

The Klaytn Foundation is a non-profit entity that promotes Klaytn worldwide and develops its application ecosystem. It manages the Klaytn Growth Fund and operates jointly with Krust, a subsidiary of Kakao and investor in Klaytn projects.

Klaytn’s Operations: Customizable L2 Solutions and IBFT

Klaytn cryptocurrency features a range of unique attributes. The network offers a metaverse package that includes customizable L2 solutions, smart contract libraries, blockchain explorers, crypto wallets, bridges, and oracles, along with supporting services like NFT marketplaces and stablecoin integration.

These tools make Klaytn a versatile aggregator for those looking to create within the metaverse, such as Play-to-Earn (P2E) games. Klaytn employs a consensus algorithm called Istanbul Byzantine Fault Tolerance (IBFT), which enables transactions to be completed within a second, allowing for near-instant finalization of transactions, like real-time NFT minting for in-game drops.

Klaytn supports the Ethereum Virtual Machine (EVM) for its metaverse and Web3 development work. The network adopts EVM standards, making its tech stack equivalent to Ethereum’s, and builds upon existing Ethereum clients. Additionally, Klaytn supports Ethereum Improvement Proposals (EIPs) and Klaytn Improvement Proposals (KIPs) to contribute to both ecosystems.

The governance structure of Klaytn, known as the Governing Council (GC), consists of members from global enterprises and decentralized autonomous organizations (DAOs). This network of validators provides the benefits of a decentralized public blockchain while maintaining the performance of a centralized permissioned blockchain. Klaytn plans to further decentralize by adding additional DAOs in the future.

Klaytn’s features: from Metaverse Development Packages to End-to-End Metaverse Development Solutions

To simplify metaverse development, Klaytn offers an end-to-end metaverse package that includes customizable L2 solutions, SDKs and smart contract libraries, IPFS solutions, wallets, blockchain explorers, oracles, and bridges, as well as supporting services such as stablecoin integration, NFT marketplaces, and TradFi interfaces.

One-second Precision

Klaytn uses an optimized version of Istanbul BFT, allowing transactions to be completed with one-second precision, enabling responsive user experiences and near-instant, immutable finality for use cases such as real-time minting projects in games. The likelihood of transaction rollback on-chain is minimal, making these blockchains less suitable for mission-critical applications, particularly at scale. Klaytn’s IBFT consensus algorithm ensures that data recorded on the blockchain is accurate and immutable, providing reliability and data consistency for large-scale applications.

Ethereum-equivalent Support

Klaytn’s EVM support is one of the emerging standards for the metaverse and Web3, and it adopts EVM specifications in the following aspects:

• Aligning Klaytn’s tech stack with the Ethereum protocol stack interface and runtime view
• Building on existing Ethereum clients and interface libraries to inherit improvements from its open-source codebase
• Enabling advanced recommendations through Ethereum Improvement Proposals (EIPs) and Klaytn Improvement Proposals (KIPs), contributing to both ecosystems

The Governing Council (GC) embodies Klaytn’s decentralization. GC members come from leading global companies and DAOs across various regions and industries, forming a compact network of validators that provides the advantages of a public blockchain while maintaining the performance of a permissioned blockchain. In the future, Klaytn aims to further enhance decentralization by integrating more DAOs into the GC, creating a “DAO of DAOs.”

Integration Scalability Achieved Through Service Chains

Klaytn employs a hub-and-spoke model, widely regarded as one of its primary scalability solutions. Klaytn’s spokes or service chains can be customized based on specific DApp requirements, such as high throughput, specialized node configurations, or custom security levels. Additionally, support for nested service chains will provide the exponential scalability needed for widespread adoption of the metaverse.

$1 Billion Protocol-level Ecosystem Fund

By combining the initially issued KLAY reserves with 66% of newly minted KLAY for on-chain reinvestment, Klaytn has allocated a total of $1 billion to support its evolving ecosystem. The funds are distributed across a range of grants and incentive programs, including the following:

• Klaytn Innovation Reserve (KIR) funds are allocated for infrastructure, tools, and services to enhance the quality of the Klaytn network.
• Klaytn Leader (KGF) provides additional support for projects that are likely to have a positive impact on Klaytn.
• The Proof of Contribution (PoC) Program rewards smart contract developers who contribute to the development of on-chain operations on Klaytn.

Preferred Enterprise Blockchain

Klaytn is the preferred blockchain for enterprises and enterprise-level use cases, including industry giants such as Japan’s GMO Internet, Indonesia’s Salim, and mobile game leader Netmarble. Klaytn, in partnership with WeMade, is also the official blockchain partner for South Korea’s central bank digital currency (CBDC) project, operating a private modified version of Klaytn.

Klaytn BApp Ecosystem

On the other hand, Klaytn refers to its service chains as blockchain applications, whereas other blockchain systems refer to their hosted services as decentralized applications (DApps) or BApps.

Klaytn’s website describes BApps as “first-class citizens in the Klaytn world.” This is because, unlike other host blockchains, BApps do not need to operate decentralized network services on service chains. As a result, beginners can opt for the POS consensus mechanism.

The first batch of BApps was launched on the Klaytn mainnet in June 2019 to promote the growth of the Klaytn BApp ecosystem. Among these BApps is Klaytn Horizon, a program that allows developers from around the world to create applications on Klaytn, and Klaytn Hackathon, a virtual hackathon that enables developers to build valuable projects on Klaytn’s public testnet. In both cases, candidates are evaluated based on their ability to provide useful services and direct blockchain experiences. The Klaytn Horizon Championship in 2019 had a $1 million prize fund, with winners receiving cash rewards.

Klaytn’s public mainnet and its supporting blockchain’s transparency and security benefit both centralized and decentralized BApps. Historically, these BApps were previously known as ISPs. As of 2020, there were approximately 24 BApps on the Klaytn mainnet.

Klaytn Innovation Reserve (KIR)

Klaytn Innovation Reserve (KIR) is the platform’s incentive system, compensating developers who significantly contribute to the network.

The KIR protocol can reward council members who propose ideas that benefit the entire network or improve user experience. Additionally, KIR allows partners to quickly and predictably integrate cutting-edge smart contract-based applications.

The Korean blockchain service company Ozys, which created the Klaytn Swap decentralized token exchange mechanism, was the first partner to receive KIR funding. Ozys also developed new features for Klaytnscope, a multi-purpose blockchain explorer that tracks block activity on the Klaytn platform.

In addition to compensating contributors to the enterprise ecosystem through the Proof of Contribution (PoC) evaluation mechanism, Klaytn is exploring ways to use PoC to encourage and reward platform end users.

Klaytn’s Governing Council (GC)

Klaytn is an enterprise-centric blockchain platform that provides many large companies and organizations with most of the operational services related to improvements and activities within its ecosystem.

The Governing Council members come from global companies and organizations. Consequently, council members can vote on and propose changes to the platform and its node network’s performance.

Specifically, council members are responsible for ensuring the expansion and enhancement of the platform’s healthy ecosystem.

Klaytn’s Use Cases

Klaytn aims to provide a broad development path that supports various use cases at various stages of blockchain development. The blockchain primarily introduces enterprises through the Klaytn blockchain.

Klaytn serves businesses of all sizes, ensuring that large and small enterprises can connect their technological foundations to the blockchain network.

Additionally, companies supported by the Klaytn ecosystem can benefit from public and private blockchains. The network’s private blockchain features ensure discretion, making the platform popular among many users. Klaytn also offers top-level protection for critical data, enhancing the network’s scalability.

Simultaneously, Klaytn’s public blockchain ecosystem achieves data decentralization, ensuring distributed governance. The public blockchain provides essential components for the Klaytn network platform, maximizing scalability and user-friendliness.

Klaytn Ecosystem

Klaytn is a rapidly growing cryptocurrency ecosystem, with hundreds of third-party services being developed on its network. According to Binance Research, its user base reached 11 million last June. The latest ecosystem summary on Twitter highlights that Klaytn has 267 partners across DeFi, NFT, and gaming sectors, which is impressive.

Originating in South Korea, the Klaytn and Ground X teams want to expand into markets beyond Asia. The network is poised to form partnerships across various blockchain-related industries, including enterprise and entertainment services, solutions, as well as managed and unmanaged wallets, oracles and bridges, liquidity protocols, and DeFi.

In the image below, you can see a range of prominent projects within the Klaytn ecosystem, created by creators, studios, and enterprises who are realizing their metaverse ambitions on Klaytn.

Source：Klaytn’s Twitter

What is KLAY Token?

KLAY is the native token of the Klaytn network, primarily used to transfer value within the network or pay for transaction fees on Klaytn. KLAY is a utility token that allows users to pay for the advantages and services provided by Klaytn and its service chains. The current supply of KLAY is set at 10,782,297,981 KLAY, issued in the genesis block. However, the decentralized governance of the project could decide to increase the token’s supply, making KLAY an inflationary token.

On the other hand, KLAY is crucial for project financing. With each new block, 9.6 KLAY are minted, resulting in the annual production of 300 million KLAY, which corresponds to a 3% annual inflation rate. The following predefined ratios determine the distribution of these rewards and commissions:

• 34% goes to the Klaytn Governing Council or block supporters.
• 54% is allocated to the Klaytn Growth Fund (KGF).
• 12% is designated for the Klaytn Innovation Reserve (KIR).

This allocation helps sustain community development and fosters additional growth opportunities for the platform. Since Klaytn employs a proof-of-stake structure, nodes are created through staking. Establishing a Klaytn node requires 5 million KLAY tokens. As of this writing, 5 million KLAY tokens are valued at approximately $5.1 million.

Development Plan: Klaytn 2.0

Klaytn is being restructured as a metaverse-scale blockchain platform. Here are the planned improvements for the next two years:

Support for Ethereum Equivalence

For Web3 and the metaverse, coordination and open standards are crucial. EVM has undoubtedly become a standard for many blockchain ecosystems, and Ethereum equivalence provides a clear path forward. To achieve this, Klaytn will adopt EVM standards through the following means:

• Align Klaytn’s technical foundation with the current Ethereum base in interface and execution.
• Build upon the open-source codebase of current Ethereum clients and interface libraries to inherit any updates made to them.
• Enable Klaytn Improvement Proposals (KIP) and Ethereum Improvement Proposals (EIP) to contribute to both ecosystems.

Achieve Vertical Scaling Through Service Chains

Regarding scaling solutions, Klaytn employs a hub-and-spoke design to ensure its ecosystem maintains performance as it scales. The “spokes” they refer to are service chains, which can be customized according to the needs of specific dApps and are similar to other L2 solutions, ensuring security by anchoring to the main chain. As Klaytn scales, they will:

• Use chain bridges to increase service support, enabling seamless user interoperability within our ecosystem.
• Add more service chains and supporting infrastructure to expand the scale of our interoperability network.
• Make service chains hubs for other service chains to enable nested service chains, significantly enhancing scalability.

Consensus Optimization

In the hub-and-spoke design, improvements in TPS act as performance multipliers. Therefore, Klaytn will optimize its consensus process while aiming to increase our chain’s TPS.

Open and Developer-Friendly Environment

• A comprehensive metaverse package, including a range of standardized contracts.
• An ecosystem explorer for blockchain data retrieval and visualization.
• SDKs for interacting with various parts of the ecosystem, including the blockchain.
• A free and open-source IPFS gateway for Klaytn’s metaverse, NFT, and gaming.
• An open-source DEX and NFT marketplace for assetization and trading.
• An open-source wallet, based on mobile and browser platforms, for interacting with dApp components and ensuring asset security.

Transition to Decentralization

A fundamental principle of the metaverse and the future economy is decentralization. As one of the projects gradually transitioning to decentralization, Klaytn firmly believes in achieving this global shared vision. Key aspects of its upgraded governance plan are as follows:

• Allocate 30% of the governing council to DAOs (future organizations) to create a DAO of DAOs that will oversee Klaytn’s fundamental development.
• Remove the Gini coefficient from the voting algorithm to increase the influence of DAOs on the governance council’s development.
• Modify the selection criteria for the governing council to prioritize individuals committed to enhancing and expanding the Klaytn ecosystem.

Expand the Governing Council

In addition to the governance improvements, Klaytn will also increase the membership of the Governance Committee as part of the plan to further decentralize the Klaytn network.

• The Governance committee is to be increased by 50 members, with preference given to leading DAOs to join.
• The number of Governance Board members can be doubled to 100 after the network is enhanced

Kaia, the New Mainnet

Kaia is the result of the merger between Klaytn and Finschia, the blockchain developed by Japanese telecom giant LINE, forming the next-generation blockchain platform for Klaytn and marking the beginning of a new era. The official launch of the Kaia mainnet introduces a series of innovations and improvements aimed at advancing blockchain technology to a higher level. This provides existing users with faster, more secure, and scalable services and offers developers a more efficient smart contract execution and optimized resource management experience.

Kaia’s interoperability features make cross-chain transactions and communications more seamless. In terms of security, the Kaia mainnet ensures network stability and user asset protection by introducing advanced encryption technologies and security protocols. It also emphasizes compliance and standardization, maintaining communication with global regulatory bodies to ensure the platform’s healthy development and widespread adoption.

Kaia’s Features and Plans

1. New Token KAIA: Kaia will merge Klaytn’s KLAY token and Finschia’s FINSCHIA token to launch a new unified token, KAIA. Existing holders of KLAY and FINSCHIA will be able to exchange their tokens for KAIA upon its release.
2. Ecosystem: Kaia hosts over 420 decentralized applications, making it the largest Web3 ecosystem in Asia. It aims to drive the growth of Web3 in the Philippines and Asia and plans to launch multiple Web3 games, including Infinite Shooting.
3. User Experience Optimization: Kaia will collaborate with LINE NEXT to enhance user experience, particularly in the development and operation of Kaikas, Klaytn’s official digital wallet, aiming to make it an intuitive gateway into the Kaia ecosystem.
4. Governance and Participation: Kaia will introduce a public delegation feature, allowing users to delegate their KAIA tokens to selected validators, thereby participating in governance and earning block rewards.

Introduction and Functionality of Hydra

Hydra is Stargate’s Bridging as a Service (BaaS) solution, designed to enhance the efficiency and security of cross-chain asset transfers. This technology allows users to transfer assets between Kaia and other Stargate and Hydra chains, ensuring high transaction speeds, low fees, and minimal slippage.

1. Batch Processing: Stargate V2 leverages LayerZero V2 technology, allowing users to batch-process cross-chain messages. This means users can pay a portion of the total transfer fees instead of the full amount, thereby reducing transaction costs.
2. Liquidity and Security: Hydra is designed to ensure liquidity stability during asset transfers. All assets are securely locked in Stargate’s core liquidity pool during the transfer process, maintaining liquidity and reducing the need for incentives on new assets, thereby enhancing the protocol’s economic sustainability.
3. User Flexibility: Hydra users can freely transfer assets across multiple chains and exchange them through any core Stargate chain. This flexibility significantly increases asset availability and usability.

As the first application chain to utilize Hydra, Kaia leverages Hydra’s technological advantages to achieve more efficient asset liquidity and cross-chain operations. Its integration within Stargate provides a robust bridging solution, further advancing cross-chain technology and offering users a more efficient, secure, and flexible asset transfer experience.

Is Klaytn a Good Investment?

Klaytn, launched by a prominent telecommunications operator, focuses on providing enterprise solutions rather than strictly adhering to decentralization principles. It adjusts its blockchain solutions to meet modern use cases and facilitate extensive partnerships with established companies. Klaytn has proven successful in supporting enterprise blockchain technology.

Currently, this promising blockchain is working towards achieving global blockchain adoption and aims to provide lasting value to all members of its ecosystem.

How to obtain KLAY？

You can purchase and hold KLAY on centralized cryptocurrency exchanges like Gate.io. First, you need to register an account on Gate.io and complete the identity verification process. Then, add funds to your account. You can follow the steps to buy KLAY on either the spot or derivatives market.

Klayt News

On October 21, 2022, the Klaytn team detected abnormal fluctuations in on-chain liquidity and decided to buy back KLAY from the market to stabilize the Klaytn ecosystem.

The buyback process is currently underway, and the specific steps are as follows:

• The funds used for the buyback come from the stablecoin reserves held by the Klaytn Foundation, which were previously acquired from strategic partners.
• The buyback is limited to direct spot purchases from the market (centralized exchanges) and is being executed strategically to minimize market fluctuations.
• All KLAY acquired through the buyback will be burned.

The decision to buy back KLAY was made to mitigate risks associated with external factors. The Klaytn team believes this is the right decision and will contribute to building a robust ecosystem.

Useful References

For more information about Klaytn, please check the following links.

• Klaytn Official Website
• Medium
• Twitter
• Reddit
• Telegram
• Discord
• Instagram
• Facebook

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