Klaytn (KLAY), Tech Giant Kakao’s Blockchain for Businesses

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Klaytn (KLAY), Tech Giant Kakao's Blockchain for Businesses
Klaytn (KLAY), Tech Giant Kakao's Blockchain for Businesses

Klaytn (KLAY) presents itself as a blockchain hub intended to offer its services to companies. This project was able to convince and was able to form a governance board made up of the largest companies in South Korea, working together to offer a high-performance and secure platform for professionals. Building on this success, Klaytn is now embarking on the metaverse race with Klaytn 2.0. Zoom on this successful South Korean project.

What is Klaytn (KLAY)?

Klaytn  (KLAY) defines itself as a public blockchain platform. It is developed by Ground X, the blockchain branch of Kakao Corp., a technology giant in South Korea offering mobile services ranging from messaging to finance, video games, music and transport.

It is a business-oriented project; that is to say, its solutions are designed above all to be offered to companies. It is a Layer 1 blockchain having its own Layer 2 solutions through its service chains.

Klaytn combines the characteristics of a public blockchain and those of a private blockchain in order to benefit from the best of both. Namely decentralization on the one hand and high scalability on the other. It is a project having chosen consensus Istanbul Byzantine Fault Tolerance (IBFT)  Proof of Stake (PoS) consensus.

Thus, the transactions carried out on the Klaytn network benefit from an immediate finality with a generation and a block confirmation time of the order of 1 second. Klaytn is capable of processing 4,000 transactions per second.

This blockchain platform is therefore optimized to meet the requirements of companies. It offers an ergonomic, reliable and simple user experience for businesses.

Within a few years, Klaytn has attracted the interest of many companies. For example, Shinhan Bank, the second largest bank in South Korea, switched from the Ethereum blockchain to that of Klaytn for its blockchain lending service.

Klaytn 2.0 was introduced in February 2022 with the launch of the new Klaytn Foundation headquarters in Singapore. This change marks the project’s turn towards the metaverse and the GameFi.

Kakao continues to look to the future after achieving in South Korea what Meta wanted to do in the United States. This turn echoes the turn that Meta also took in October 2021, with the race for metaverses potentially being one of the most promising sectors of this decade.

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Logo of Klaytn (KLAY)

The Klaytn Ecosystem (KLAY)

Klaytn can be divided into three subnets by classifying them according to their role.

The following two subnets make up the main Klaytn blockchain:

  • Core Cell Network (CCN): its purpose is to verify and execute transactions submitted by Endpoint nodes. It is, therefore, by this means that the blocks are created and distributed on the network;
  • Endpoint Node Network (ENN): These nodes submit transactions to the CCN, handle API requests, and process service chain data requests.

And finally, service chains complete this infrastructure.

  • Service Chain Network (SCN): they are composed of auxiliary independent blockchains operated by blockchain applications (BApps). These service chains are connected to the main chain through the Endpoints nodes.
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Figure 1: Klaytn Infrastructure 

BApps can be deployed on the main Klaytn blockchain. They can also operate their own independent blockchain through service chains.

Thus, for a company wishing to benefit from an environment guaranteeing high scalability and the possibility of defining its own governance rules, the service chains are particularly interesting.

Klaytn uses the term BApp instead of DApp since the team behind the project believes that there is much more than the notion of decentralization behind applications on the blockchain, such as transparency, traceability or even immutability.

Klaytn’s Decentralized Finance (DeFi) Ecosystem

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Klaytn’s mobile wallet is directly integrated with Kakao Talk, the most popular messaging app in South Korea, used by over 90% of the population. This wallet focuses on cryptocurrencies from the Klaytn ecosystem. At the time of writing these lines, it supports 45 cryptocurrencies on Klaytn and many non-fungible tokens (NFTs).

Kaikas

Kaikas is a wallet that works as a browser extension like MetaMask. It allows interaction with the Klaytn network from other platforms such as OpenSea.

Orbit Bridge

It is a decentralized platform based on Inter Blockchain Communication (IBC), an open source technology developed by Cosmos, allowing independent blockchains to communicate with each other. This makes it possible to bridge KLAY, Klaytn’s native cryptocurrency, to other blockchains such as Ethereum, Terra, BNB Chain or Avalanche.

KLAYswap

It is a token swap protocol that operates with an on-chain liquidity pool. This means that liquidity is guaranteed by automated market makers (AMM). It gives the possibility to any user holding KLAY or other KCT tokens, which is the standard of tokens compatible with Klaytn, to provide liquidity to earn interest of up to 30% per year. This protocol handles the majority of the liquidity in the ecosystem.

Clay Station

It is a platform allowing you to stake your KLAY with rewards ranging from 6% to 8% annual interest rates depending on several factors such as the chosen node, the number of staked tokens or the lock period.

By staking KLAY, the user receives in exchange for sKLAY, a liquidity token that can be used to generate additional revenue on Klaytn’s DeFi solutions.

Klaytn 2.0 and the turn of the metaverse and GameFi

As we have seen, in February 2022, Klaytn made a turning point in the life of the project by now focusing on metaverses and GameFi.

To do this, the Klaytn 2.0 strategy is based on a “metaverse and GameFi pack”  and various objectives to improve the network and make it more attractive.

This pack is based on:

  • A primary infrastructure offering tools to easily develop on the Klaytn network, in particular via its native Layer 2 solutions (service chains) and the interoperability of its network;
  • A secondary infrastructure with an ecosystem capable of supporting the products and services thus deployed, such as Klaytn ‘s DeFi ecosystem, non-fungible token (NFT) marketplaces and the integration of various services.

Klaytn 2.0 also plans to improve the scalability of its network beyond 4,000 transactions per second while keeping its finality of 1 second. The project also relies on its user interface, offering comfort and ease of use superior to competitors.

Decentralization is also at the heart of Klaytn 2.0, the goal being to have Decentralized Autonomous Organizations (DAOs) for each Klaytn community, therefore, for each service chain. The end goal for Klaytn would be to become a DAO of many DAOs.

Klaytn will also integrate an Interplanetary File System (IPFS) portal in order to benefit from decentralized storage.

Finally, Ethereum will be fully supported by Klaytn 2.0 through the integration of developer tools with the Ethereum Virtual Machine (EVM) to allow decentralized Ethereum applications to be deployed on the Klaytn network without any modification.

Different funds will support the growth of Klaytn 2.0:

  • Klaytn Growth Fund  (KGF): $500 million to support the growth of the ecosystem by investing in projects with the potential to have a positive impact on the ecosystem. This fund also finances the marketing of the project;
  • Klaytn Improvement Reserve  (KIR): Supports infrastructure, tools and services that can improve the quality of Klaytn’s main (L1) blockchain.

These two funds are notably financed by the new tokens issued on the market by the reserve: 54% are used to finance the KGF and 12% to finance the KIR.

What are the Roles of the KLAY Token?

KLAY is the native cryptocurrency of Klaytn. This token is primarily used to pay for any transaction on the Klaytn network.

Companies that are members of Klaytn’s governance board also need a minimum amount of KLAY in order to operate a node there, which will be detailed a little further down in the article.

Another utility is non-fungible tokens (NFTs). Indeed, Klaytn has a partnership with OpenSea; indeed, it is one of the three channels available on OpenSea alongside Ethereum and Polygon.

It is, therefore, possible to use OpenSea to take advantage of Klaytn’s NFT marketplace. Other NFT marketplaces are also available such as EASTNFT.

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Figure 2: Overview of the OpenSea NFT Marketplace on Klaytn

Finally, the KLAY token can be staked on Klay Station (between 6% and 8% interest rate per year) or be used to provide liquidity on the pairs of the KLAYswap platform.

Klaytn (KLAY) fundraising

Two private sales took place in which many companies participated, the first at the end of 2018 with a rate of 1 KLAY for 0.03 dollars, and the second in April 2019 at the rate of 1 KLAY for 0.08 dollars.

There was no public sale for Klaytn, this being a business-oriented project.

The total supply of Klaytn is pegged at around 10.7 billion KLAY. At the time of writing, 2.64 billion KLAYs are in circulation or 24.6 % of the total supply.

The issuance rate of new tokens is fixed at 9.6 KLAY per block, which corresponds to  300 million new KLAY issued per year. That’s inflation of about 11% per year as of this writing.

Klaytn Team and Partners

Klaytn’s Team

The company behind Klaytn is GroundX, Kakao’s blockchain subsidiary. Based in Seoul, South Korea, it has 87 employees listed on LinkedIn.

  • Jaesan Han: Founder and CEO of Ground X, he has a doctorate in computer science from the prestigious University of KAIST. He founded several successful startups before Ground X;
  • John Cho: Marketing and Communications Director;
  • Junghyun: development manager of Klaytn;
  • Kyungup Kim: Director of MNBC division.

The Klaytn Foundation is a non-profit organization managing the $500 million Klaytn Growth Fund. This aims to support and accelerate the growth of the Klaytn ecosystem. Based in Singapore, it has 48 employees, according to LinkedIn:

  • Carolina Lios-Florez: director of partnerships;
  • Terry Wilkinson: Klaytn Ecosystem Development Manager;
  • David Shin: Responsible for the global adoption of Klaytn.

The Klaytn Governance Council

The Klaytn project has its own governance board made up mainly of South Korean companies.

It includes some of the best-known companies in South Korea, such as LG, SK, Shinhan Bank, Kakao, Amore Pacific, Hanwha and Celltrion.

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Figure 3: Klaytn Governance Council (March 2022)

This council is responsible for the governance of the Klaytn project and operates nodes of the Core Cell Network (CNN). Each member of this council must stake at least 5 million KLAY in order to have the possibility of operating a node. It also has the task of supporting the growth of the Klaytn ecosystem.

Klaytn and South Korea’s Central Bank Digital Currency (MNBC)

In summer of 2021, Ground X was selected by the Bank of Korea to craft the digital won, ahead of giants like conglomerate SK and LinePlus. This project will use the Klaytn platform to be implemented.

Ground X being a subsidiary of Kakao, works in cooperation with other Kakao subsidiaries such as Kakao Pay and Kakao Bank. The startup has also signed a partnership with ConsenSys for this project, the latter also working on MNBC projects in Australia, Hong Kong and France in particular.

How to Buy KLAY tokens?

KLAY is available on South Korean exchanges such as Bithumb and Coinone but also on more traditional exchanges such as Binance, KuCoin or Gate.io.

Explanations for buying KLAY on Binance

  1. Register on Binance;
  2. You will receive an email and need to click on a link to verify your account;
  3. Deposit funds on the platform;
  4. Click on the Market menu and look for the KLAY/USDT pair ;
  5. All you have to do is buy KLAY for the amount of your choice;
  6. Congratulations, you are now in possession of KLAY tokens.

Ratings and Reviews on Klaytn

Klaytn is a very serious project, supported by a very large company (Kakao) and offering high-performance technology, as evidenced by its selection to develop the future MNBC of South Korea. Its solutions have convinced the most important local companies, as we have seen with the members of the governance council. Klaytn succeeded where Meta’s Libra project failed.

It is worth wondering if Klaytn will succeed in seducing internationally and, therefore, outside his country, South Korea. Indeed, Kakao is a company operating mainly in the South Korean market, and Klaytn is a project that is still little known internationally.

However, with phase 2 of his project, Klaytn intends to become a benchmark in the metaverse and GameFi sectors.

This ambitious turn seems promising, wanting to ride the new wave of the metaverse, as well as the popularity of video games in South Korea.

Klaytn is already a leading blockchain platform in South Korea when it comes to business solutions. Everything suggests that Ground X does not intend to stop there by also making Klaytn the reference blockchain for metaverses and GameFi in the future and that it will succeed, at least in South Korea.

Will the project succeed in attracting international companies with so much competition? That remains to be seen, but it’s part of Klaytn’s goals, evidenced by the recent partnership with metaverse Animal Concert (January 2022). The latter will host virtual concerts, and it will be possible to mint NFTs on the Klaytn network.

Its partnership with OpenSea, the world’s leading NFT marketplace, also puts Klaytn in an excellent position to enter the race for metaverses and GameFi.