Kaia: The Rise of Blockchain Giants in the Asia Region

1. Background Overview of Kaia

1.1 Project Introduction

1.1.1 Establishment and Development History

On January 16, 2024, Klaytn and Finschia announced the launch of a unified mainnet plan. The merger of these two projects, which originate from Korean and Japanese internet giants Kakao and LINE respectively, is extremely rare in the Web3 ecosystem. On August 29, 2024, the merged Kaia mainnet will officially go live. Kakao and LINE plan to create a blockchain giant in the Asia region by integrating their respective ecosystems and assets, gradually leading the global Web3 market.

Sam Seo, the chairman of the Kaia Foundation, holds a Ph.D. in high-performance computing. He previously served as the CKO at KrustUniverse, responsible for the development and operation of Klaytn, and also worked as the Chief Technology Officer at GroundX.

The joint support of Kakao and LINE injects strong momentum into Kaia. Kakao has a 96% usage rate in South Korea and has a significant impact in Vietnam. LINE is very popular in Japan, Taiwan, and Thailand. Together, they have a potential user base of over 250 million, greatly enhancing global coverage. This vast user base is expected to significantly increase the adoption of Blockchain technology in the East Asian market, laying the foundation for large-scale applications and creating the largest Web3 ecosystem in Asia. Other investors in Kaia include Hashed, IDG Capital, and others.

1.1.2 Important Milestones

January 16, 2024: Klaytn and Finschia announce merger plans August 29, 2024: Kaia mainnet officially launched Q1 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 employs over 17,000 people, and its operating profit in Q3 2024 was 130.5 billion KRW, a year-on-year increase of 5%. Revenue from the platform department grew by 7%, reaching 943.5 billion KRW.

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

The Korean market is crypto-friendly, with the local exchange Upbit becoming a leading exchange in the industry. Against the backdrop of widespread cryptocurrency trading among Korean users, Kaia has enormous development potential.

1.1.4 Line and Finschia

LINE covers 70% of the Japanese population and dominates markets such as Thailand and Taiwan. Japan has 92 million monthly active users, Thailand 51 million, Taiwan 21 million, and Indonesia 13 million. The high user penetration rate provides a solid foundation for advertising, payment, and content services. A 2024 survey shows that 92.1% of Taiwanese people aged 15-65 used LINE in the past seven days, with nearly half of users checking LINE an average of 14 times a day.

LINE's integration capabilities are outstanding, allowing users to access a rich array of content products, including over 300,000 comic books and 9 games. The diversification of features gives LINE a significant advantage in maintaining user engagement. An average usage time of over 4 hours per week highlights its irreplaceability.

LINE's payment ecosystem showcases the potential of the Blockchain economy. With 40 million monthly active payment users and an annual transaction volume of $12 billion, it provides users with a seamless digital payment experience. The refined advertising capabilities (with an average monthly reach of over 200 million users) offer a natural advantage for Blockchain projects to establish themselves in the Asia-Pacific market.

The LINE Miniapp plan aims to allow existing users to easily access decentralized applications, deeply integrating payment, advertising, and communication ecosystems to build a highly compatible development environment.

Finschia was launched in 2018, has over 5.6 million Web3 wallet users, and more than 170k community members, holding an important position in Japan, Taiwan, Thailand, and Abu Dhabi.

LINE's strategic direction indicates that it will become a driver and accelerator in the Web3 world, helping the industry bridge the critical gap from technology to mainstream applications.

Kaia has confirmed the launch of the Line mini program SDK, with the first batch of Line mini program applications set to be launched in January 2025. From Kakao's side, of the six council members of Kaia, three come from Klaytn. Kakao and its affiliates hold about 9.8% of Kaia's total supply and actively participate in governance. However, regulatory uncertainty in South Korea has hindered Kakao from playing a more active role in blockchain initiatives. Once the regulatory uncertainty is resolved, Kakao is expected to fully embrace blockchain integration.

1.2 Token Economics

1.2.1 Token $Kaia

Kaia's native token KAIA plays a core role in the blockchain economy, used for paying transaction fees. It is not only a means of payment for transactions but also provides the power for the system to operate normally:

1. Incentive Mechanism: Customers incentivize Consensus Nodes (CNs) by paying KAIA, which are responsible for validating transactions and executing smart contracts.
2. Promote Development Quality: The fees paid using KAIA are proportional to the complexity of the smart contracts and resource consumption, encouraging developers to optimize code quality.
3. Maintain Network Health: CN nodes receiving KAIA rewards can incentivize more nodes to participate in the consensus process, ensuring the decentralization and stability of the network.

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

1. CCO and Community: 50% (20% Block Creator Reward, 80% Staking Reward)
2. KEF (Kaia Ecosystem Fund): 25%
3. KIF (Kaia Infrastructure Fund): 25%

Kaia implements an on-chain governance system:

1. Voting rights are proportional to the amount of KAIA tokens invested.
2. Voting rights limits prevent the opinions of a minority from being suppressed.
3. Allow voting rights delegation.
4. All governance proposals are recorded on the blockchain to ensure transparency.

Since Klay was renamed to Kaia and launched on the trading platform, the coin price has performed brilliantly, rising all the way.

1.2.2 Governance Council

Kaia has launched a Governance Committee (GC) composed of 31 trusted early members, including Kakao, a certain trading platform, Google Cloud, GS HomeShopping, LG Uplus, Hanwha Systems, Everrich Group, HashKey, NEOPLY, and others.

Through this choice, the Kaia platform has successfully achieved stable operation of the mainnet, ensuring rapid and efficient advancement of technology stability and operational implementation, laying the foundation for subsequent innovation in governance models.

Kaia also expands GC membership from traditional enterprises to DAOs and builders. Kaia's ultimate vision is to become a fully decentralized "DAO of DAOs," unifying the voices of all governance entities through on-chain mechanisms.

The governance framework of Kaia is a core pillar of its platform development and a key highlight in attracting global developers, communities, and organizations to participate. Through a governance mechanism that combines foresight and flexibility, Kaia lays the foundation for sustainable growth of the Blockchain ecosystem.

In addition, Kaia is closely collaborating with government departments, and the Bank of Korea has chosen its parent company Ground X as the main technology provider for the blockchain-based 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.

Kaia Blockchain provides:

1. 1 second block generation and confirmation time.
2. Can process 4000 transactions per second.
3. Low gas price, about 1/10 of other public chains.
4. EVM compatible, supports Solidity contracts.
5. The governance is conducted by the Kaia Governance Committee composed of globally renowned enterprises.

The network structure of Kaia is divided into three logical sub-networks:

1. Core Unit Network (CCN): Composed of Core Units (CC) responsible for transaction validation, execution, and Block creation.
2. Endpoint Node Network (ENN): Composed of endpoint nodes (EN), responsible for handling RPC API requests and service chain data.
3. Service Chain Network (SCN): An auxiliary blockchain that operates independently by DApps and connects to the main chain through EN.

These mechanisms make the Kaia Blockchain a platform that combines high performance, security, and compatibility, suitable for application scenarios that require fast transaction processing, compatibility with other ecosystems, and cross-chain interaction needs.

1.3.1 Consensus Algorithm

Kaia adopts an optimized version of Istanbul BFT. In Kaia, there are three types of nodes: CN (Consensus Node), PN (Proxy Node), and EN (Endpoint Node).

1. Consensus Node (CN): Responsible for generating Blocks, managed by Core Node Operators (CCO).
2. Proxy Node (PN): Transmits data between consensus nodes and users. Provides network interfaces, transmits transaction requests, and propagates blocks.
3. Core Unit (CC): Composed of one Consensus Node (CN) and two Proxy Nodes (PN).
4. Terminal Node (EN): Acts as a network endpoint, handling API requests and data processing. Connects users and the network, providing access services.
5. Guide Node: A special node operated by Kaia, used to help new nodes join the network.

Since verification and consensus are conducted for each block, there will be no forks. Once consensus is reached, the finality of the block can be guaranteed immediately.

The issue of increased communication volume in the BFT algorithm is resolved by utilizing a randomly selected committee. The CN collective forms the committee, using VRF to select a portion as committee members at the time of each block generation. The main process is:

1. Randomly selected committee: Use VRF to fairly randomly select the committee responsible for generating and verifying Blocks.
2. Generate Block: The selected proposer generates a new block.
3. Verification and Signature: Validators in the committee review whether the Block is correct. If more than two-thirds of the validators approve and sign, the Block will be added to the Blockchain.

Since the consensus information is only exchanged among committee members, the communication volume will not exceed the design level even if the total number of CN increases.

1.3.2 Block generation and propagation

The block generation and propagation design of Kaia is simple and efficient, ensuring system stability and scalability. The features are as follows:

1. Quickly generate a Block: Generate a Block within 1 second for each operation round.
2. Random yet deterministic election process: Proposers and committee members are elected randomly but verifiably.
3. Two-thirds signature rule: A new Block must be agreed upon by more than two-thirds of the committee members' signatures to be added to the Blockchain.
4. Multi-channel propagation: Blocks and transactions propagate independently, reducing latency and conflicts.

1.3.3 Kaia Virtual Machine (KVM)

Kaia Virtual Machine (KVM) is the core component for running smart contracts, with main features including:

1. Based on other virtual machines: directly inheriting the architecture, all smart contracts can run seamlessly.
2. Extended Functionality: Add dedicated precompiled contracts to enhance the efficiency of specific operations.
3. Compatible Development Tools: Developers can use popular tools such as Remix, Hardhat, and Foundry.
4. Easy Migration: Smart contracts developed on other public blockchains can be deployed on the Kaia platform with minimal modifications.

This makes Kaia part of other ecosystems.