Kaia: A New Blockchain Ecosystem Created by Asia's Social Media Giants

1. Background Overview of Kaia

1.1 Project Introduction

1.1.1 Establishment and Development History

On January 16, 2024, Asia's two leading blockchain platforms, Klaytn and Finschia, announced the launch of a unified mainnet. This is a very unusual project in the Web3 ecosystem, especially considering that these two mainnets originate from Korea and Japan's two major internet giants, Kakao and LINE. On August 29, 2024, the merged Kaia mainnet will officially go live. By combining their respective ecosystems and assets, Kakao and LINE plan to create a giant blockchain in Asia and gradually lead the global Web3 market.

The chairman of the Kaia Foundation is Sam Seo, who has been deeply involved in Bitcoin and Blockchain since 2017 and holds a PhD in high-performance computing. Previously, Sam served as CKO at KrustUniverse, leading the development and operation of Klaytn. Additionally, he was the Chief Technology Officer at GroundX (Kakao's blockchain subsidiary) and worked as an assistant computer scientist at Argonne National Laboratory.

The joint support of the two giants Kakao and LINE has injected strong momentum into the development of Kaia. Kakao's usage rate in South Korea reaches 96%, and it also has a significant impact in Vietnam. LINE is favored by users in Japan, Taiwan, and Thailand, and together, the potential user base for Kaia exceeds 250 million, significantly enhancing its global coverage. With such a large user base, Kaia is expected to greatly improve the popularity and acceptance of Blockchain technology in the East Asian market, laying a solid foundation for the large-scale application of Blockchain technology; further creating a large-scale and vibrant Web3 ecosystem in Asia. Other investors in Kaia include Hashed, IDG Capital, and others.

1.1.2 Important Time Nodes

• January 16, 2024: Klaytn and Finschia announce merger plans
• August 29, 2024: Kaia mainnet officially launched

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 17k employees, and its operating profit for Q3 2024 was 130.5 billion won (93.48 million USD), a year-on-year increase of 5%. The platform division, which includes Kakao Talk, achieved growth, with revenue increasing by 7% to reach 943.5 billion won (707.63 million USD).

Klaytn has been built from the ground up for DApp developers and enterprises. This ecosystem enables developers to unleash creativity and enhance user experience. This provides a strong technical foundation for Kaia. Klaytn's cumulative transaction volume is $376 billion, with over 29 million Web3 wallet users, more than 240k community members, and an ATH Onchain TVL exceeding $1 billion, in addition to its strong influence in Singapore and Vietnam.

The South Korean market is already crypto-friendly, and its local exchange Upbit has become a leading exchange in the crypto industry, with Web3 projects taking pride in being able to list on Upbit. Against the backdrop of widespread cryptocurrency trading among South Korean users, the ceiling of Kaia will undoubtedly bring us endless imagination.

1.1.4 Line and Finschia

As the most popular communication platform in Japan, LINE covers 70% of the Japanese population and also occupies a dominant position in markets such as Thailand and Taiwan. Among them, Japan's monthly active users reach 92 million, while the number of users in Thailand exceeds 51 million (making it the most popular social platform in Thailand), Taiwan has 21 million users, and the Indonesian market also has 13 million users. This high user penetration rate provides a solid foundation for its advertising, payment, and content services. For example, a large survey conducted by Nielsen in 2024 found that 92.1% of Taiwanese people aged 15-65 used LINE in the past seven days, with nearly half of the users being heavy users, checking LINE an average of 14 times a day for messages.

Compared to other social platforms, LINE's unique ecological integration capabilities are particularly prominent. Users can consume its rich content products on LINE, including over 300,000 comic books and 9 games that integrate social interactions. This diversification of features gives LINE a significant advantage in maintaining user activity. Additionally, an average usage time of over 4 hours per week highlights its irreplaceability in users' daily lives.

This comprehensive ecosystem provides Kaia with a unique strategic advantage. LINE's user base is highly concentrated and active, and its integration of advertising and payment features allows brands and services to accurately reach their target audience. In addition, LINE's regionalization strategy ensures that the content on its platform closely matches the cultural needs of its users, which will create efficient pathways for Kaia's localized promotion.

LINE's payment ecosystem also demonstrates its potential in the blockchain economy. With 40 million monthly active payment users and an annual transaction volume exceeding $12 billion, LINE Pay has provided its users with a seamless digital payment experience. This payment infrastructure, combined with its highly refined advertising capabilities (with an average monthly reach of over 200 million users), offers a natural advantage for blockchain projects to land and expand in the Asia-Pacific market.

Particularly noteworthy is the LINE Miniapp plan, which serves as a bridge connecting Web2 and Web3. This feature not only allows existing users to easily access decentralized applications but also creates a highly compatible development environment through deep integration of its payment, advertising, and communication ecosystem.

Finschia, a blockchain under LINE, was launched as early as 2018. After about 5 years of development, it 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 in the future Web3 world, it will not only be a participant but also a promoter and accelerator, helping the entire industry to bridge the critical gap from technology to mainstream applications.

Currently, Kaia has confirmed the launch of the Line mini program SDK and will release the first batch of Line mini program applications in January 25, while meeting regulatory requirements. On the Kakao side, among Kaia's 6 council members, 3 are from Kakao's blockchain Klaytn. In addition, Kakao and its affiliates hold about 9.8% of Kaia's total supply and actively participate in its governance. However, the current regulatory uncertainty in South Korea hinders Kakao from playing a more active role in blockchain projects, such as launching mini dApps like LINE. However, once these regulatory uncertainties are resolved and LINE's mini dApp service succeeds, Kakao is expected to fully embrace blockchain integration.

1.2 Token Economics

1.2.1 Token $Kaia

Kaia's native token KAIA plays a central role in the blockchain economy, used to pay transaction fees when creating or executing smart contracts or transferring KAIA. It is not only a means of payment for transactions but also provides the necessary power for the normal operation of the entire system:

1. Incentive Mechanism: Customers of the platform incentivize Consensus Nodes (CNs) by paying KAIA, as these nodes are responsible for validating transactions and executing smart contracts. In simple terms, the nodes provide computing power and resources, and users pay KAIA in return, creating a mutually beneficial relationship.

2. Promote Development Quality: The fees paid using KAIA are proportional to the complexity and resource consumption of the smart contracts. If a developer's code is too inefficient or redundant, executing that code will be more expensive. This mechanism encourages developers to optimize code quality and avoid wasting computational resources.

3. Maintain network health: CN nodes support the operation of the network by consuming computing power and bandwidth. The rewards of KAIA can incentivize more nodes to participate in the consensus process, thereby ensuring the decentralization and stability of the network.

Each new Block will automatically issue 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%

This distribution model can both incentivize network participation and support the growth and development of the Kaia ecosystem.

The on-chain governance system implemented by Kaia aims to achieve fairness and inclusivity:

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

From the perspective of coin price, Kaia's performance has also been very impressive. Since Klay was renamed to Kaia and went online on a certain trading platform, it has been on the rise.

1.2.2 Governance Council

With technological advancements driving the rapid growth of the metaverse, decentralized autonomous organizations (DAOs) and developers are becoming significant forces in the new economic paradigm. Kaia is keeping pace with this trend by launching the Kaia Governance Council (GC), composed of 31 trusted early members, most of whom are top-tier institutions. These include: Kakao, a certain trading platform, Google Cloud, GS HomeShopping (the number one multimedia retailer in South Korea), LG Uplus (a subsidiary of South Korea's largest enterprise LG Corporation), Hanwha Systems (the second largest non-bank financial group in South Korea), Everrich Group (a real estate developer primarily focused on South Korea, Taiwan, and Southeast Asia), HashKey (a leading fintech group headquartered in Hong Kong that focuses on blockchain development), and NEOPLY (a leading startup accelerator under NEOWIZ, a large South Korean online gaming company specializing in blockchain investment).

Through this choice, the Kaia platform has successfully achieved stable operation of the mainnet, ensuring rapid and efficient advancement of technological stability and operational implementation in the early stages of the platform's development, laying a solid foundation for the innovation of subsequent governance models.

Moreover, Kaia expands GC membership from traditional enterprises to DAOs and builders to meet the demands of the new era. Kaia's ultimate vision is to become a fully decentralized "DAO of DAOs", unifying the voices of all governance entities through on-chain mechanisms. This is not only a technological innovation but also represents a true transformation of governance structures—empowering all stakeholders with a greater voice and setting a new benchmark for the decentralized development of the metaverse.

Kaia's governance framework is not only a core pillar of its platform development but also a key highlight in attracting global developers, communities, and organizations to participate. With a governance mechanism that combines foresight and flexibility, Kaia is laying a solid foundation for the sustainable growth of the Blockchain ecosystem.

In addition, Kaia has also closely collaborated with government departments. For example, 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 (Byzantine Fault Tolerance, referring to decentralized networks in the presence of malicious nodes or failures.