Klaytn (KLAY): the Korean ETH clone?
Klaytn history began with a company called Kakao; one of the largest publicly traded tech companies in South Korea with a market cap of roughly 40 billion USD. Kakao has Kakaotalk, Kakao taxi, Kakao Bank internet-only bank, and dozens of other services that are provided by the Kakao group.
In 2017 Kakao partnered with the software company Dunamu and Bittrex cryptocurrency exchange to launch the UpBit cryptocurrency exchange in South Korea.
In early 2018, Kakao confirmed the creation of a Japanese subsidiary called Ground X which would develop Kakao's cryptocurrency project Klaytn. In late 2018 Dunamu expanded to Singapore and launched the international iteration of the UpBit Exchange followed by Ground X; expanding to Singapore one month later.
Shortly after that Kakao confirmed an ICO for the KLAY to raise capital from private investors in Asia.
Klaytn has the ability to transfer FIAT Stablecoins between users around the world.
By contrast, Klaytn intends to be the backbone blockchain for South Korean businesses including Kakao. Unlike most cryptocurrency blockchains, the Klaytn mainnet launched less than a year after the KLAY ICO in June 2019. Klaytn is actually open-source to repay the blockchain ecosystem.
In June 2020, the Klaytn blockchain became available on KakaoTalk via the Klip Wallet which exists within the KakaoTalk app itself. The Klip Wallet stores the KLAY coin, as well as both fungible and non-fungible tokens on the Klaytn blockchain.
The purpose of the Klip Wallet is to make it possible for businesses to enhance customer experience and outreach on KakaoTalk. This can be done by rewarding KakaoTalk users with fungible or non-fungible tokens when they make in-app purchases or interact with sponsored content.
KakaoTalk users can also stake their KLAY coins in the Klip Wallet, though this does not seem to contribute to the security of the KLAY blockchain.
Besides the Klip Wallet, the Klaytn blockchain hosts over 60 DApps and DeFi protocols such as the KlaySwap AMM DEX, which currently boasts over 300 million dollars in daily trading volume.
The volatility of the KLAY coin means it’s unlikely to be a form of payment. The future of Klaytn is actually not up to Kakao but the Klaytn Governance Council. Now the Klaytn Governance Council consists of over 30 crypto and non-crypto companies including LG Electronics, Binance, Huobi, etc.
The Klaytn Governance Council is tasked with approving or rejecting any proposed changes to the Klaytn blockchain which can technically be tabled by anyone. An approved proposal gets implemented solely at the discretion of the governing council chairman. Klaytn’s documentation also suggests that this sole chairman has unlimited emergency powers such as freezing user accounts or even stopping the entire Klaytn blockchain under certain circumstances. This should give you some idea of what the Klaytn blockchain looks like under the hood.
Like many enterprise blockchains, Klaytn is basically a carbon copy of Ethereum with a few minor differences.
For starters, it uses a permission proof of stake consensus mechanism which supports a limited number of validators. As a result of this relative centralization, Klaytn has a 1 second block time and can process around 4,000 transactions per second. However, because Klaytn apparently uses an unaltered clone of the Ethereum Virtual Machine (EVM) for its smart contracts. This 4,000 TPS speed is likely limited to regular transactions.
Moreover, fees on the Klaytn blockchain are quoted almost 1/10 of Ethereum, which is still quite a bit when you consider the cost of gas on Ethereum as of late.
Luckily, Klaytn transaction fees can actually be delegated to other participants on the blockchain. This makes it possible for businesses to bundle any transaction fees into the cost of the product or service being purchased using the Klaytn blockchain.
To further facilitate enterprise adoption, the Klaytn blockchain has an elaborate architecture that supports the addition of customizable blockchains. Klaytn’s validator nodes, called core cell operators,form the Core Cell Network or CCN, which processes transactions on the Klaytn blockchain.
These validator nodes are run by the members of the Klaytn governance council, and each council member must stake a minimum of 5 million KLAY coins to become a Core Cell Operator. In return, they earn 34% of each block reward. While validator's stakes cannot be slashed. Klaytn’s documentation repeatedly states that there are penalties for misbehaviour.
The transactions that the CCN processes come from Endpoint Network Nodes or ENN which do not need to stake any KLAY coins.
Klaytn’s funding structure runs continuously with Klaytn network’s block generation. With every new block, newly issued KLAY and the sum of transaction fees used in the block (collectively called “block reward”) are aggregated and distributed to the following three destination accounts in accordance with the predetermined ratio:
Klaytn Governance Council Reward: 34%
Klaytn Growth Fund (KGF): 54%
Klaytn Improvement Reserve (KIR): 12%
At the time of Klaytn mainnet launch, 9.6 KLAY will be minted per block. This implies that approximately 300 million KLAY will be minted annually, which is equivalent to 3% annual inflation against the 10 billion KLAY issued at genesis (the annual inflation rate is subject to change through the Klaytn Governance Process). A transaction fee is charged per OPCODE and is metered according to the transaction fee table. For detailed information on the transaction fee table, please refer to Transaction Fees.
KLAY is the main internal transferable cryptocurrency of Klaytn and is used to pay transaction fees when creating or executing smart contracts or when transferring KLAY.
KLAY is a necessary element--a fuel--for operating the Klaytn distributed application platform. It is a form of payment made by the clients of the platform to the consensus nodes (CNs) executing the requested operations. To put it another way, KLAY is an incentive; it ensures that developers write high-quality applications (wasteful code costs more) and that the network remains healthy (CNs and RNs are compensated for the resources they contribute).
KLAY can be purchased at:
1. Binance Exchange - you can purchase KLAY on Binance using your mobile phone or desktop. You only need to follow the step as instructed. You can also receive a 25% discount on trading fees using Binance Coin (BNB) instead of cash. Use the link above for a bonus 10% discount.
2. Crypto.com MCO/CRO - this is a favorite for many reasons, as you can earn interest on a wide variety of coins, as well as apply for a crypto debit card. This operates similar to a pre-paid Visa card, where you top up before use, however, you can choose to top up with cash or crypto. For example, you can transfer Bitcoin (BTC) to the card and spend it like cash, or let it sit in the account and earn interest. Rates of interest on deposits vary from 2% up to 10% or more. New investors may receive up to $50 when using the above link to create a new account.
3. KLAYswap is the Klaytn blockchain that provides the exchange and wallet for depositing, swaps, staking, and withdrawing the coins.
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