Meet Klatyn – a hybrid Layer 1 Blockchain made by the biggest tech company in South Korea.
Their goal? Initially, it was to be the blockchain that allows businesses and startups to get into crypto. Now? To be the blockchain that allows businesses to dip their toes into the metaverse.
Klaytyn was founded by Ground X (a subsidiary of Kakoa) which is a South Korean tech empire. They own Kakoatalk (one of the biggest social media platforms), Kakaotaxi (the biggest South Korean taxi service) and KakoaBank! Essentially a monopoly of many industries in South Korea.
So … what is it?
In its basic components, Klaytn is a carbon copy of Ethereum with a slight twist. What twist, you may ask? They don’t use a standard proof of stake or proof of work mechanism (if you don’t understand what either of these terms mean, check this article out).
Instead, they use something called the Istanbul Byzantine Fault Tolerance (we’ll explore this in more detail later). In simple terms, it’s a mechanism that claims to solve the issue of finality.
In a blockchain like Bitcoin, there is a small chance that a transaction can be reversed. With the Istanbul BFT, new transactions are added and finalised on the same block. This means that data cannot be changed.
So how can Klaytn help enterprises and businesses?
Klaytn tries to make joining the metaverse easy by providing a kind of starter pack for companies trying to get into crypto. Here’s what they offer:
- A game developer program.
- Klaytn is EVM (Ethereum virtual machine) compatible, meaning that projects built with the EVM can migrate over to the Klatyn network with ease.
- Financial support for projects with global potential.
- Klaytn uses a hub and spoke model (like polkadot) in which blockchains can benefit from the security of the Klaytn Mainnet but are not restricted when it comes to design (i.e. they can build projects on top of Klaytn that cater to different goals and utilities).
- Klaytn has put aside $1 Billion to support growth in the crypto community.
What are the nitty-gritty details of Klaytn?
Other than making it easy for metaverse developers to build on Klaytn, here are some nitty-gritty details that you may want to know:
- Klaytn has 1 second finality (i.e. data on the blockchain is finalised almost immediately, making it nearly impossible to change the records).
- Klaytn is backed by an already big tech company in the form of Kakoa aswell as well as being backed by LG, Union Bank and FSN.
- Klaytn has low gas fees and high transaction speeds in comparison to the likes of Ethereum (1-second block generation and a capability of having 4000 transactions per second). That being said, this has never really been tested, so take these stats with a grain of salt.
What consensus mechanism does Klaytn use?
As mentioned, Klaytn uses a complex consensus mechanism called the Istanbul Byzantine Fault Tolerance. We’ll try not to get too technical here, but a Byzantine fault is a system that is able to continue operating even if some of its nodes (computers) act maliciously or fail.
Think about it like a group of generals; they’re in a war and want to decide whether to retreat or attack. The generals communicate together and reach an agreement on how to act.
However, what can happen is that one general could be corrupt and cause confusion amongst the group. This could result in a decision that was not meant to happen.
In consensus mechanisms such as Proof of work and Proof of stake, there is a tiny fragment of time where transactions can be changed (it is very minute). The Istanbul BFT is a solution to this. So this doesn’t happen; 5 stages are used:
Request, pre-prepare, prepare, commit and reply.
In consensus mechanisms such as proof of work, there is no exchange of messages amongst the nodes (computers). With the Istanbul BFT, each node communicates with one another to reach a consensus (agreement).
We’re going to save the complexities for another piece, but by doing so, it removes the chance of ‘bad operators’ and allows transactions to have instant finality (i.e. be approved instantly).
Who’s responsible for Klaytns Future?
One red flag of this project is who decides what happens and what doesn’t. This is done by Klaytns governance council. Klaytns governance council is a group of companies (most are affiliates of Kakoa) such as LG, Unionbank and many more.
The governance council is responsible for what proposals get approved and what get rejected. That doesn’t sound very ‘Decentralised’, right?
One other MAJOR red flag? The chairman of this governance council is the only one who can decide whether something that is approved actually gets implemented. This ‘Chairman’ also has permission to freeze the blockchain at any time!
Once again, it brings up the question of whether this project really is decentralised…
But what is the KLAY Token?
The Klay token is the token used in the Klaytn ecosystem. Think SOL on the Solana network (it’s the fuel that runs the city).
The Klay token has two main use cases:
- Pay for transaction fees (when creating and executing smart contracts).
- Compensates the consensus node operators (the guys who come to an agreement of the new blocks).
With every new block, the sum of the transaction fees are divided up in three ways:
34% is allocated to the governance council.
54% goes to proof of contribution (i.e. the DeFi protocols that are providing value on the network, this is used to incentivise businesses to join).
12% goes to the Klaytn Improvement Reserve (where new proposals are implemented).
The future of Klaytn?
Klaytn is currently in a transition phase. They are shifting their focus towards gaming and the metaverse and moving their main base to Singapore.
Made from tech giant Kakoa, it is definitely something to keep an eye on; however, there are several red flags that are important to be aware of:
The governance council is filled with companies affiliated with Kakoa – very centralised.
Gas fees are 1/10 of ETH but with projects like Solana, is that something to shout about?
The chairman’s power isn’t even a red flag; it’s china!
Yet it does have firm backing and has already made partnerships with the likes of OpenSea.
So who knows…
Share your thoughts below!
Disclaimer: THIS IS NOT FINANCIAL OR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make, and only you are accountable for the results.