Kaia: A new blockchain ecosystem created by Asian tech giants.

1. Background Overview of Kaia

1.1 Project Introduction

1.1.1 Establishment and Development History

On January 16, 2024, the two leading Blockchain platforms Klaytn and Finschia announced the launch of a unified mainnet. This merger originates from the two major internet giants in Korea and Japan, Kakao and LINE. On August 29, 2024, the merged Kaia mainnet officially went live. Kakao and LINE plan to create a giant Blockchain in Asia, gradually leading the global Web3 market.

Sam Seo, the chairman of the Kaia Foundation, holds a PhD in high-performance computing and previously served as CKO at KrustUniverse, overseeing the development and operation of Klaytn. He also worked as the Chief Technology Officer at GroundX and as an Assistant Computer Scientist at Argonne National Laboratory.

The joint support of Kakao and LINE injects strong momentum into Kaia. Kakao has a usage rate of up to 96% in South Korea and also has influence in Vietnam. LINE is very popular in Japan, Taiwan, and Thailand. The potential user base of both exceeds 250 million, significantly enhancing global coverage. Kaia is expected to greatly improve the popularity of Blockchain in East Asia, laying the foundation for large-scale applications. Other investors include Hashed, IDG Capital, and others.

1.1.2 Important Milestones

• January 16, 2024: Klaytn and Finschia announced the launch of a unified mainnet.
• August 29, 2024: The merged Kaia mainnet officially launches
• January 2025: Plan to launch the first batch of LINE Mini DApps

1.1.3 Kakao and Klaytn

Kakao Talk is one of the most popular instant messaging applications in South Korea, with nearly 49 million monthly active users in Q3 2024, 90% of whom are from South Korea. The company has over 17,000 employees, and its operating profit in Q3 2024 was 130.5 billion KRW, a year-on-year increase of 5%. Revenue from the platform division grew by 7%, reaching 943.5 billion KRW.

Klaytn is designed for DApp developers and enterprises. The total transaction volume is $376 billion, with over 29 million Web3 wallet users and more than 240,000 community members. The ATH Onchain TVL exceeds $1 billion, with a strong influence in Singapore and Vietnam.

1.1.4 LINE and Finschia

LINE covers 70% of the Japanese population and dominates markets in Thailand, Taiwan, and other regions. Japan has 92 million monthly active users, Thailand has 51 million, Taiwan has 21 million, and Indonesia has 13 million. Users show high stickiness, using the app an average of 14 times per day.

The LINE ecosystem has outstanding integration capabilities, offering a rich variety of content products such as comics and games. The average weekly usage time exceeds 4 hours. The integration of advertising and payment functions allows brands to accurately reach their target audience.

LINE Pay has 40 million monthly active users, with an annual transaction volume exceeding 12 billion USD. LINE Miniapp plans to bridge Web2 and Web3.

Finschia was launched in 2018, has 5.6 million Web3 wallet users, 170,000 community members, and holds significant positions in Japan, Taiwan, Thailand, and Abu Dhabi.

Kaia has confirmed the launch of the LINE Mini Program SDK, with the first batch of applications set to be available in January 2025. Kakao holds 3 out of 6 council seats in Kaia, owning approximately 9.8% of the total supply and actively participating in governance.

1.2 Token Economics

1.2.1 Token $Kaia

Kaia's native token KAIA plays a core role in the Blockchain economy:

1. Incentive Mechanism: Users pay KAIA to incentivize consensus nodes to validate transactions and execute smart contracts.
2. Promote development quality: Costs are proportional to contract complexity, encouraging developers to optimize code.
3. Maintain network health: reward nodes for participating in consensus to ensure decentralization and stability.

Each new Block automatically issues KAIA, with an initial annual inflation rate of 5.2%. Block reward distribution:

• 50% for CCO and community ( 20% creator rewards, 80% staking rewards )
• 25% to KEF( Ecosystem Fund )
• 25% to KIF( Infrastructure Fund)

On-chain governance system achieves fairness and inclusiveness:

• Voting rights are proportional to the number of KAIA.
• Set a voting power limit to prevent minority opinions from being suppressed
• Allow delegated voting rights
• All proposals are recorded on the Blockchain to ensure transparency.

Since being renamed to Kaia and listing on Binance, the token price has performed impressively, rising steadily.

1.2.2 Governance Council

The Kaia Governance Committee consists of 31 early members, including Kakao, Binance, Google Cloud, GS HomeShopping, LG Uplus, Hanwha Systems, Everrich Group, HashKey, NEOPLY, and others.

This choice ensures the stable operation of the mainnet and lays the foundation for future governance innovations. Kaia plans to extend membership to DAOs and builders, with the ultimate vision of becoming a fully decentralized "DAO of DAOs."

Kaia has also closely collaborated with government departments, such as the Bank of Korea choosing its parent company Ground X as the main technology provider for the digital won simulation.

1.3 Technical Architecture Principles

Kaia is a highly optimized, BFT-based public Blockchain that meets enterprise-level reliability and performance standards:

1. 1 second block generation and confirmation time
2. Process 4000 transactions per second
3. Gas price is about 1/10 of Ethereum.
4. EVM compatible, supports Solidity contracts
5. A governance committee composed of globally renowned enterprises governs.

The network structure is divided into three logical subnets:

1. Core Unit Network (CCN): responsible for transaction validation, execution, and Block creation.
2. Endpoint Node Network ( ENN ): Handling RPC API requests and servicing chain data
3. Service Chain Network ( SCN ): An auxiliary Blockchain operated independently by DApp.

1.3.1 Consensus Algorithm

Kaia adopts an optimized version of Istanbul BFT, with three types of nodes:

1. Consensus Node (CN): Responsible for generating Block.
2. Proxy Node ( PN ): Transmitting data between users in CN
3. Core Unit (CC): composed of 1 CN and 2 PN
4. Terminal Node ( EN ): Processing API requests and data handling
5. Guide Node: Help new nodes join the network

Solve the communication overhead problem in the BFT algorithm through a randomly selected committee:

1. Randomly select committee members using VRF
2. The selected proposer generates a new Block
3. The validator reviews and signs off on the Block.

1.3.2 Block generation and propagation

1. Generate a Block within 1 second for each round.
2. The election of proposers and committee members is random but verifiable.
3. More than 2/3 of the committee members' signatures are required for joining the Blockchain.
4. Blocks and transactions are propagated through independent channels, reducing latency and conflicts.

1.3.3 Kaia Virtual Machine ( KVM )

1. Based on the Ethereum Virtual Machine, compatible with all Ethereum smart contracts.
2. Increase dedicated precompiled contracts to enhance the efficiency of specific operations.
3. Compatible with Ethereum development tools such as Remix, Hardhat, and Foundry.
4. Ethereum contracts can be deployed to Kaia with minimal modifications.

1.3.4 Security Measures

1. Use VRF to randomly select Block proposers
2. Validators separate the validation key and the reward key.
3. The verification process for committee members is open and transparent.

1.3.5 Interoperability

1. Support for Ethereum smart contract language Solidity
2. Can interact with other EVM-SDK based Blockchains
3. Designed a mechanism for collaboration with other Blockchain systems.

1.4 Competitors

Comparison with Telegram-based TON:

TON originated from the proposal by the founder of Telegram in 2017 and was continued by the community after the SEC lawsuit. The mainnet launched in 2021, utilizing sharding technology and a PoS consensus mechanism.

TON offers features such as TON DNS, TON Storage, and instant payment channels. As of 2024, it has attracted over 800 applications, including stablecoins, NFTs, DeFi, and more.

Comparison Metrics:

• MC/TVL: KAIA is significantly low, suggesting that market potential has not been fully tapped.
• User Base: KAIA relies on the vast ecosystems of LINE and KakaoTalk
• Technological Innovation: TON's high valuation reflects the market's recognition of its technology.
• Ecological Development: KAIA's endogenous growth model provides natural stickiness and vitality.

Preliminary value assessment 1.5

KAIA occupies an irreplaceable position in the Asian market and is expected to be a key force in promoting the adoption of Web3. Its relatively low valuation suggests huge potential, especially as the benefits of social payments have not yet been fully realized.

The LINE mini app to be launched in Q1 2025 will be an important opportunity to test the value of the KAIA ecosystem.

2. Kaia's Ecosystem

2.1 DEFI track

Kaia has launched the D2I program to revitalize the DeFi ecosystem, selecting three DEX partners: Dragonswap, Kaiaswap, and CapyBara. Current results:

• Total trading volume exceeds 710 million US dollars
• TVL exceeds 39 million USD
• Over 3.1 million transactions
• The total number of users exceeds 260,000
• Burned 245,000 KAIA

In the future, Avalon Finance will be introduced, focusing on LSDfi, LRTfi, and yield stripping derivatives.

2.1.1 Neopin

Neowiz's licensed DeFi protocol has a TVL of $240 million, supports 59 tokens, and has 22 nodes.

2.1.2 Lair Finance

Kaia Liquidity Staking Protocol, offering DeFi yield opportunities.

2.1.3 CapybaraExchange

Kaia is the largest DEX on the blockchain, and its TVL has seen significant growth recently, surpassing 40 million USD.

2.1.4 Avalon Labs

A lending ecosystem centered around Bitcoin, connecting DeFi, CeDeFi, and RWA.

2.1.5 DragonSwap

The DeFi hub on Sei has a TVL exceeding 55 million USD and nearly 120,000 users.

2.2 Payment Track

2.2.1 Alchemy Pay

Global payment gateway, supporting payments in 173 countries, providing zero-fee bridging services in collaboration with Kaia.

2.3 AI track

2.3.1 FlareAI

Kaia's first AI-driven DApp, integrating AI and Blockchain technology.

2.3.2 FDN

AI facial recognition network, utilizing Web3 incentive characteristics to obtain facial data.

2.4 MINI DAPPS on LINE

LINE announced the first batch of Mini Dapp launch list, including:

1. Bombie: Shooting Zombie Mini Game
2. Bullet Storm: Arcade Shooting Game
3. Captain Tsubasa: Football Little General Theme Game
4. Contentverse: A farming game with cross-chain technology and SocialFi elements
5. Elderglade: AI-driven Fantasy World Game
6. Frog Defense: Frog Defense Mini Game