10
The Nature of a Nurturer: Reflecting on the Klaytn Journey
I have always been a person who has enjoyed setting up or growing ecosystems in the blockchain/crypto space. A lot of my friends in the industry describe me as a “zero to one” kind of guy. So, when I was asked in early 2021 to meet with one of the Co‐Founders and Vice Chairman of Kakao Group to discuss an opportunity to join Klaytn (Kakao's blockchain), to help globalize the platform, I was thrilled. For those of you who don't know Kakao, the simplest way to explain it is that it's Korea's version of WeChat. Over 95% of the population has a KakaoTalk account. KakaoTalk was their first product that they created and the first chat application to have a group chat feature. Subsequently, off the back of their success in launching what is now technically Korea's national communication app, they started to expand their platform business into other areas like gaming, entertainment, ride‐hailing, internet banking, and Web3/blockchain.
It was an absolute honor and pleasure to have been asked to take the role as Head of Global Adoption at Klaytn. Consequently, with the growth of the team and expanded responsibilities, I took on an expanded mandate of Global Group Head, which was my last official title before leaving Klaytn in December 2022. For a year and half, I put all my energy and effort in pulling together a global strategy, team, and structure that would help Klaytn go from an obscure local Korean blockchain project to a globally recognized and prized platform for Developers, Investors, and Partners to want to be a part of. By far it was the biggest challenge that I had faced up to that point in my career. To build international momentum around a project that was really only known to Koreans onshore while restructuring the identity of Klaytn from a decentralized finance (DeFi) centric ecosystem to a blockchain focused on the metaverse, gaming, and the creator economy, this was a tall task that required a lot more than the traditional resources needed to build up and scale a Layer 1 blockchain.
It was around August–September 2021 and I remember having some anxiety leading up to a big presentation I was asked to make, where the whole organization was waiting to hear my view on Klaytn's new global plan. Korean users and Klaytn have generally been more “DeFi” centric and less geared to “Web3” projects which can be associated with use cases such as gaming or entertainment. This meant that there were historically more projects that were building DeFi trading infrastructure on Klaytn than for instance games or non‐fungible token (NFT)‐driven applications. To convince the organization that we would be making a complete shift was not only a tall order but also a risky proposition if it didn't work out. At that time, I recall that one of the largest projects on Klaytn was a platform called Klayswap, a DeFi application. By the time I left, one of the growing projects on Klaytn in addition to Klayswap was a game called DeFi Kingdoms. This is relevant as DeFi Kingdoms is a prime example in representing the transformation that the global team led which ultimately attracted such a large US‐based project to migrate their game to Klaytn from a competitor.
The competition for onboarding good projects in the blockchain industry is fierce. There is a lot of work in attributing the right resources and focus to bring projects in and to ensure that they see success. One critical resource is marketing. When I joined Klaytn there was no real marketing team. This was a function that I've always said is as important if not more important than the engineering function. As a blockchain ecosystem, it is imperative to be able to have channels on social media, at physical events, traditional media outlets, and other communication platforms (Telegram, Discord, etc.), so that communities are engaged and announcements can be amplified. It was a priority for me to have the right marketing capabilities in place on Day 1 to ensure a proper echo chamber was created which was necessary to increase the global adoption of Klaytn. Consequently, one of the earliest things that I did was to convince the decision makers at Klaytn in Korea that we needed marketing to be done out of Singapore and not onshore in Korea. With their blessing, I started to build a team in Singapore as a launch pad for developing marketing strategies such as community management, event management, growth, communication management, thought leadership advocacy, and developer relations. All these key components were necessary in getting Klaytn to a competitive space to be able to compete with the likes of other large global blockchain projects.
Finally, one other function that was important to the global strategy was to internationalize the voice of the Klaytn engineers which were predominantly native Korean speakers prior to my arrival. If we wanted to be global, we needed to ensure we had the right level of cultural diversity with developer/engineering support representing all the different regions that we wanted to be part of. So, I created the Ecosystem Development (Eco Dev) team which was a subset of the Core Developers that Klaytn had within the engineering group. The idea was that I would build the Eco Dev team and then hand the team off to the Head of the Core Developer group once all the relevant hires were made and the structure was set. It was natural for me to lean on my history with people that I met in my 10‐year journey in crypto/blockchain to find the right people to trust with this key function. It took an American engineer living in Korea and a Hong Kong engineer living in the United Kingdom to set the wheels in motion as the two leads to build the Eco Dev team around. The team continues to be a critical function in the Klaytn ecosystem supporting projects and leading developer advocacy while expanding the onboarding journey into Klaytn and increasing developer awareness globally.
As I reflect on my time and impact on Klaytn as an organization and an ecosystem, I'm proud of all those who worked alongside me, joining me in the journey and trusting me to lead them. It was a privilege and an honor working with some of the most talented people in the Web3 space that I was lucky enough to convince to join the ride. In addition, the motivation that I personally had to fulfill a promise made to the Vice Chairman of the Kakao Group ended up being a key driver for me to push even as the industry was going through a bear market, mounds of volatility, and many, many internal obstacles and challenges along the way. Looking back at my time with Klaytn, it was truly the global team that led the overall organization to see that it is possible to compete for and win large global projects like DeFi Kingdoms and that pivoting away from trading‐based speculative use cases to a more diverse utility‐based environment was ultimately the right thing to do.
A Blockchain to Connect All Blockchains
There are at least a thousand blockchain projects in various stages of progress1 and over 21 000 cryptos2 in existence today. However inspiring that figure is, where we are right now is far from where we should be.
The industry has seen too many exponential ups and downs, most recently with the twin crashes of Terra (Luna) and FTX that took down a huge chunk of the industry. Market volatility has led to the number of blockchain companies dropping from the year 2018 when there were 8112 blockchain companies to the 492 players that still stand in the first half of 2022.3
To clear the chaos, the Klaytn blockchain was created with the intention to nurture and scale new players in the market by providing the right tools to build and support metaverse and cryptocurrency ecosystems.
In 2019, Ground X, a subsidiary of the Kakao Group – one of South Korea's leading software enterprises – created the Klaytn blockchain as a scalable and user‐friendly blockchain environment for decentralized applications (dApps) and services including metaverse gaming and gaming finance (GameFi), decentralized exchanges, marketplaces, and more. In total, the Klaytn ecosystem has 167 projects in these areas, including 52 centralized crypto exchanges (CEX) or payments protocols.
Klaytn offers builders a comprehensive package of tools and financial and managerial support including in‐built Layer 2 solutions such as software development kits (SDKs), wallets, oracles, chain explorers, bridges, Decentralized Autonomous Organizations (DAOs), and NFT marketplaces. By simplifying user interface, Klaytn allows new developers to bypass complex technology and get their projects moving.
Source: Klaytn Light Paper: https://klaytn.foundation/wp-content/uploads/Lightpaper.pdf
The Ethereum blockchain is seen as the industry standard; hence, Klaytn gives full attention to Ethereum equivalence, ensuring that its system is compatible and on‐par with Ethereum's tech stack. This way the Klaytn blockchain will benefit from advancements made on Ethereum.
As an Ethereum Virtual Machine (EVM) Layer 1 blockchain, Klaytn is designed to be practical and reliable, focusing not just on technology and business but also on transformative change that will create public accessibility and a much‐needed layer of trust in the age of Web3. All while providing a powerful infrastructure that is capable of processing more than 10 000 transactions‐per‐second (TPS) with just a few nodes, and with a gas fee that is lower than Ethereum's.
The Klaytn blockchain supports DeFi services including earning interest, borrowing, lending, and trading. BINANCE Staking and Kai Protocol operate on Klaytn and the chain has strategic partnerships with Netmarble, GMO Internet Group, and ConsenSys – whose popular Metamask wallet can be linked to the blockchain. As of January 2022, Klaytn has a total value locked (TVL) of US$172.14 million based on DeFiLama and is one of only eight blockchains integrated to OpenSea, the leading NFT marketplace.
Aside from investing in promising blockchain projects to grow the ecosystem and creating the infrastructure for the metaverse to interact with the real world, the Singapore‐headquartered organization works tirelessly for sustainable global adoption.
After strengthening its internal processes, Klaytn is now set to move into its roadmap 2.0 phase which will see exciting developments as it moves to include more decentralization via increased governance by DAOs.
Source: Klaytn website: https://www.klaytn.foundation/roadmap/
Klaytn 2.0 will also see more developer tools being supported on the network including Witnet which have integrated their oracle services onto the blockchain.
The ecosystem will also add support for applications in the form of investment funds, performance incentives, treasury advisory, and community building.
But to fully understand Klaytn's role in the next step of Web3, we will have to take a closer look at what makes it tick – from its technology to its governance.
TPS is King
Convenience will always be a determining factor in mass adoption. As such, Klaytn is dedicated to keeping its promise of having a one‐second deterministic finality for all transactions. Settled quickly and irreversibly, it is consumer‐friendly and secure.
Klaytn uses a hybrid consensus algorithm, a combination of Byzantine Fault Tolerance (BFT) and proof‐of‐stake (PoS), giving it high speed and efficiency while maintaining a high level of security.
BFT is used for initial block validation and PoS for final block confirmation. The duality of decentralized public blockchains and highly scalable private blockchains that is prevalent in Klaytn makes it a hybrid ecosystem, leveraging off the best of both worlds.
By customizing its own frameworks, such as the consensus algorithm called the Istanbul Byzantine Fault Tolerance (IBFT) framework, which is also used by Ethereum, the Klaytn blockchain is able to zip through processing transactions at lightning speed.
The IBFT contains three nodes that communicate with each other to verify and reach consensus. Consensus Nodes, Proxy Nodes, and Endpoint Nodes play unique roles in a block's generation and the synergy of the nodes enables consensus to be achieved quicker.
Klaytn's optimized version of the IBFT is able to process up to 4000 TPS with its one‐second transaction finality, meaning it has the strength to be the foundation to the numerous Web3 projects that have been birthed on its platform, and heavy user transaction traffic.
Another growth factor is Klaytn's scaling through Service Chains. Called “spokes,” Service Chains can be tailored for individual dApp requirements, and just like other Layer 2 solutions, “spokes” can be anchored to Klaytn's main chain for greater security. By building support for Service Chain bridging to enable seamless interoperability between participants in our ecosystem, the opportunity to size‐up fast is abundant.
So far, Klaytn's “spokes” have been a great help in increasing efficiency. Eventually, the plan is to have nested Service Chains, allowing clusters of “spokes” to form as hubs for other Service Chains which could mean exponential growth in scalability.
TPS improvements act as a performance multiplier in a hub and “spoke” architecture, which is why optimization of Klaytn's consensus mechanism to boost the TPS remains a commitment of the Klaytn team.
The latest update from Klaytn, on 23 December 2022, states that the network will evolve into an open blockchain ecosystem where anyone can act as a block validator if they meet certain qualifications while maintaining the existing Governance Council structure and roles. This shift aims to enhance business opportunities, profit‐sharing structures, and network security while ensuring openness, transparency, and censorship resistance. Consensus algorithms will be improved to allow for the participation of as many validators as possible without compromising Klaytn's performance.
Any scaling endeavor will require extensive testing for obvious security reasons before it is implemented, which is why it is equally important to have the capability to keep up with the industry standard that is set by the Ethereum blockchain's tech stack.
Building on Top of The World's Blockchain
While the Bitcoin blockchain was meant to decentralize finance, Ethereum's aim is to decentralize the world; hence, its flexibility and limitless applications into real‐world matters as discussed in previous chapters.
All that complicated tech that makes the Ethereum blockchain work is not something that is accessible to the common developer. As such, Klaytn's goal is to bridge that gap, targeting new builders who want to explore the metaverse as a platform for their projects.
With full compatibility with Ethereum‐based software, a set of user‐friendly tools enables new developers to build metaverse infrastructure, while customized Layer 2 solutions, SDKs and smart contracts, wallets, chain explorers, bridges, and oracle support, regulate and connect projects to the real world.
Source: Klaytn Light Paper: https://klaytn.foundation/wp-content/uploads/Lightpaper.pdf
The Klaytn blockchain not only welcomes dApps, but also any app that wants to leverage off blockchain technology. It is not a must for dApps to offer decentralized web services.
Whatever the project may be, from GameFi to dApps, compatibility with Ethereum is always going to remain a key factor for the foreseeable future. Tweaks to Klaytn are often to complement Ethereum rather than complicate an already busy blockchain. The aim is that projects built on Klaytn can enjoy the same tech stack as Ethereum with a more user‐friendly approach.
However, Klaytn's Ethereum equivalence goes beyond matching the blockchain giant's tech stack as Ethereum Improvement Proposals are a two‐way conversation, meaning both Klaytn and Ethereum exchange ideas on how to improve the Ethereum blockchain, which once successful, will bring benefit to Klaytn as well.
Shared Governance of a Shared Ecosystem
After governing Klaytn under strict protocol for several years that saw stable growth, the blockchain is now incorporating a more decentralized structure to distribute power equally.
Decentralization is shared global vision and, thus, should be at the core of blockchains. Klaytn's amendments to its governing structure include having 30% of its Governance Council comprising DAOs – or a DAO of DAOs – to lead the blockchain's core development.
Planning to abolish the Gini Coefficient in Klaytn's voting algorithm to give DAOs in the Governance Council more influence as they grow and shifting Governance Council requirements to prioritize candidates who are committed opens new possibilities in the direction that Klaytn could go in being an all‐inclusive blockchain.
Pushing toward greater decentralization, Klaytn will be increasing its Governance Council to 50 members, with a focus on onboarding leading DAOs, followed by network upgrades to double the maximum number of Governance Council members to 100.
Source: Klaytn Light Paper: https://klaytn.foundation/wp-content/uploads/Lightpaper.pdf
Shared governance by DAOs, builders, enterprises, and institutions are the key to Klaytn's progress in as a decentralized platform, as such Klaytn's governance protocol does not allocate voting privileges to just anyone who holds KLAY, its native token.
Only those who are committed to actively developing and growing the Klaytn ecosystem are granted a seat on the Council. Validators must stake at least five million KLAY and Council members can have their stake slashed if they misbehave. To grow sustainably, new Council members are only confirmed after every 86 400 blocks are generated.
KLAY is used in various transactions both on and off Klaytn's blockchain, including with various projects connected to the Ethereum blockchain. To facilitate higher adoption, loyal users receive rewards in the form of KLAY tokens.
As of November 2022,4 Klaytn mints 6.4 KLAY per new block and allocates a generous amount of its total emissions toward the development of its ecosystem – the breakdown: the Klaytn Governance Council Reward receives 50%, the Klaytn Growth Fund gets 40%, and the Klaytn Improvement Reserve 10%.
At time of writing (25 December 2022), Klaytn is ranked #64 by CoinMarketCap with a market cap of US$498 250 823 and a circulating supply of 3 069 022 085 KLAY coins.5
In addition to Klaytn’s continuous growth and quest for DeFi inclusivity, the chain’s updated tokenomics reinvest 50% of newly minted KLAY.
Growing the ecosystem by incentivizing builders, funds are distributed via grants and rewards programs by the Klaytn Improvement Reserve to developers who create infrastructure, tools, and services that can improve the Klaytn network; by the Klaytn Growth Fund to reward promising early‐stage projects based on Klaytn; and by the Proof of Contribution (PoC) program that recognizes builders of smart contracts that enable or simplify more on‐chain activities to increase Klaytn’s utility and KLAY’s liquidity.
As a blockchain that was founded by the subsidiary of a software giant, Klaytn is as corporate‐friendly as it is builder‐friendly. Klaytn is looking to be the preferred blockchain for enterprises and enterprise‐level use cases, and with industry titans such as Japan's GMO Internet Group, Indonesia's Salim Group, and mobile gaming leaders Netmarble and WeMade among its partners, Klaytn has the potential to achieve this.
There is a lot of hope for Klaytn, with its solid reserves and financial foresight and planning, the blockchain might just become a household name in years to come. But perhaps what is truly the cherry on top of this multi‐layered cake is that Klaytn is also the official blockchain partner for Bank of Korea's Central Bank Digital Currency (CBDC) project, which will find its proverbial home on a private, modified version of Klaytn.