As the world stands on the cusp of a technological revolution with the rapid emergence of the metaverse, Klaytn has carved a niche for itself as a scalable and user-friendly solution for enterprises and institutions looking to harness the power of blockchain technology.
This guide will take you on an enthralling journey through Klaytn’s innovative ecosystem, shedding light on its unique features, the KLAY token, and the platform’s decentralized governance structure. So, fasten your seatbelts and get ready to embark on a thrilling exploration of the blockchain, where cutting-edge technology, visionary governance, and an inclusive token economy come together to create the future of decentralized applications.
The origins of Klaytn can be traced back to KaKao, a well-known publicly traded technology company based in South Korea. KaKao, led by CEO Yeo Min-Soo, is recognized for providing various services, including the deployment of a mobile messaging application called ‘KaTalk’ for smartphones.
In 2017, during the significant bull run of Bitcoin and other altcoins, KaKao became increasingly interested in the cryptocurrency industry. This growing interest mirrored that of major corporations like Facebook and others who were entering the space. Consequently, KaKao decided to develop its own cryptocurrency, leading to the creation of Klaytn.
What is Klaytn?
Klaytn is a public blockchain platform that focuses on providing enterprise-grade reliability and optimizing performance for real-world use cases. Launched on June 27, 2019, with its mainnet called Cypress, Klaytn has the following features:
- Immediate finality
- High transactions per second (4,000 TPS)
- Low cost of running blockchain applications
- Lower barriers to entry for end-users
- Simplified technology adoption process for the industry
Klaytn’s ecosystem comprises three logical subnetworks: the Core Cell Network (CCN), Endpoint Node Network (ENN), and Service Chain Network (SCN). These networks work together to verify and execute transactions, handle API requests, and manage auxiliary blockchains for decentralized applications (dApps).
How Does Klaytn Work?
Klaytn is designed with a focus on enterprise use, and instead of relying on traditional consensus mechanisms like Proof-of-Work (PoW) or Proof-of-Stake (PoS), it utilizes an enhanced version of Istanbul Byzantine Fault Tolerance (IBFT). This practical BFT approach allows Klaytn to operate a hybrid infrastructure that combines the benefits of both private and public blockchains.
In contrast, the same underlying infrastructure of the protocol cannot be achieved with PoS or PoW implemented individually. However, Klaytn still permits beginners to use the PoS consensus mechanism, which supports a limited number of validators.
The blockchain adopts Ethereum‘s virtual machine and functions similarly to the Ethereum network, but at a much faster pace. For example, Klaytn’s virtual machine for smart contracts can process at least 4,000 unique transactions in just one second, with a gas rate less than 1/10 of Ethereum’s.
Klaytn addresses scalability concerns, particularly at the enterprise level, through its adoption of BFT. This is crucial as widespread institutional adoption of blockchain technology has been limited by these concerns.
Additionally, Klaytn offers DX features that enable interoperability among hosted services and provide an integrated development environment for developers.
One of the most significant advantages Klaytn has over other host blockchains is its fixed transaction fees, making them predictable. This addresses a major concern for enterprise-level blockchain adoption, as unpredictable transaction fees can be a significant obstacle.
Klaytn Token ($KLAY)
KLAY is the primary internal transferable cryptocurrency of the Klaytn blockchain. It is used to pay transaction fees when creating or executing smart contracts or when transferring KLAY. As a vital component or “fuel” for operating the Klaytn distributed application platform, KLAY acts as a form of payment made by clients to the consensus nodes (CNs) executing the requested operations. In essence, KLAY serves as an incentive, ensuring that developers write high-quality applications and that the network remains healthy, as CNs and RNs are compensated for the resources they contribute.
As the default and native token on the Klaytn blockchain, KLAY functions as the utility token for all platform transactions and other blockchain applications on the network. It is used to pay and exchange for all applications that run within the ecosystem. As of the first quarter of 2021, there were approximately two billion KLAY in circulation, with interest from industry players on the rise.
Klaytn as the Trust Layer for the Metaverse
Klaytn aims to be the foundational trust layer for the metaverse, fostering collaboration and empowering communities. The platform’s primary design principle focuses on helping pioneers build applications and organize communities in a scalable manner. Klaytn achieves this by addressing the following requirements:
- High Performance: Klaytn’s main chain supports at least 4,000 TPS with immediate transaction finality and a one-second block generation time.
- Scalability: Service chains, the default Layer-2 solution for Klaytn 2.0, provide customizable and easily deployable auxiliary blockchains. Other scalability solutions like sharding or rollups are planned for future implementation.
- Low Cost: End-users face stable and affordable transaction fees, with costs determined by transaction complexity rather than external factors.
- Rapid Development: It offers Ethereum compatibility, enabling developers to leverage existing Ethereum tools and contribute to both ecosystems through Klaytn Improvement Proposals (KIPs) and Ethereum Improvement Proposals (EIPs).
- Enhanced User Experience: It supports features like fee delegation, allowing application operators to subsidize user transaction fees and implement flexible business models.
Klaytn is backed by the Klaytn Growth Fund, managed by the non-profit Klaytn Foundation based in Singapore. The platform is gaining global recognition, and its native cryptocurrency, KLAY, ranks among the top 50 cryptocurrencies by market capitalization.
Klaytn Governance aims to take the first step towards decentralization by incorporating trusted organizations and non-traditional entities, such as Decentralized Autonomous Organizations (DAOs) and builders, into its decision-making process. The Klaytn Governance Council has the right to decide on various governance matters, with its early members consisting of trusted organizations to ensure efficiency during the platform’s development and stabilization stages.
As the world transitions towards the growth of the metaverse, Klaytn governance aims to align with this change by reorganizing its governance structure to accommodate non-traditional entities. The chain will introduce a stake-based governance model and eliminate the Gini Coefficient from its voting mechanism, enabling entities with more support from Klaytn communities to shape the platform according to their preferences.
The main topics that can be decided through the governance structure include technology, economy, and governing rule. The Klaytn Governance Council must make decisions that promote the growth of Klaytn. The governance process primarily occurs on-chain, with votes recorded on the blockchain and results implemented following the vote.
Klaytn’s governance roadmap consists of three phases: development, stabilization, and decentralization. In the development phase, Klaytn Foundation leads the decision-making process, with transparency as a priority. In the stabilization phase, the Klaytn Governance Council begins to hold governing rights on many proposals. During the decentralization phase, non-traditional entities such as DAOs and builders are gradually introduced into the decision-making process.
Klaytn blockchain is a trailblazing platform poised to revolutionize the way enterprises and institutions interact with blockchain technology. As you now understand from our guide, this innovative platform offers a unique blend of scalability, user-friendliness, and inclusivity through its well-designed token economy, decentralized governance structure, and commitment to fostering a thriving metaverse. Klaytn’s ambitious vision, coupled with its robust features and adaptability, makes it a force to be reckoned with in the ever-evolving world of blockchain technology.