Kaia: Partnering with two major Asian social giants, Line and Kakao, with a potential of 250 million users ready to unleash.

1. Background Overview of Kaia

1.1 Project Introduction

1.1.1 Establishment and Development History

On January 16, 2024, the two leading blockchain platforms Klaytn and Finschia announced the launch of a unified mainnet plan. These two mainnets originate from the internet giants Kakao and LINE in South Korea and Japan, respectively. On August 29, 2024, the merged Kaia mainnet will officially go live. Kakao and LINE plan to create a giant blockchain in Asia and gradually lead the global Web3 market.

Sam Seo, the chairman of the Kaia Foundation, holds a PhD in high-performance computing and previously served as CKO at KrustUniverse, leading the development and operation of Klaytn. He also served as the Chief Technology Officer at GroundX(, the blockchain subsidiary of Kakao), and was an assistant computer scientist at Argonne National Laboratory.

The joint support from Kakao and LINE has injected strong momentum into Kaia. Kakao has a usage rate of up to 96% in South Korea and also has a significant impact in Vietnam. LINE is loved by users in Japan, Taiwan, and Thailand, and when combined, the potential user base of Kaia exceeds 250 million, significantly enhancing global coverage. Kaia is expected to greatly improve the popularity and acceptance of blockchain technology in the East Asian market, laying the foundation for large-scale applications and creating a vast and vibrant Web3 ecosystem, the largest in Asia.

1.1.2 Important Time Nodes

• January 16, 2024: Klaytn and Finschia announce merger plans.
• August 29, 2024: Kaia mainnet officially launched
• January 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 which are from South Korea. The company employs over 17k people, and the operating profit for Q3 2024 was 130.5 billion KRW (9348 million USD ), a year-on-year growth of 5%.

Klaytn has been built for DApp developers and enterprises from the very beginning. This ecosystem allows developers to unleash their creativity and enhance user experiences. Klaytn's cumulative transaction volume is $376 billion, with over 29 million Web3 wallet users, more than 240k community members, and an all-time high on-chain TVL exceeding $1 billion. Additionally, it has a strong influence in Singapore and Vietnam.

1.1.4 Line and Finschia

LINE covers 70% of the Japanese population and also holds a dominant position in markets such as Thailand and Taiwan. The number of monthly active users in Japan reaches 92 million, with over 51 million users in Thailand, 21 million users in Taiwan, and 13 million users in the Indonesian market.

LINE's ecological integration capabilities are outstanding. Users can consume its rich content products, including over 300,000 comic books and 9 games that integrate social interactions. An average usage time of over 4 hours per week highlights its irreplaceability in users' daily lives.

LINE's payment ecosystem demonstrates its potential in the blockchain economy. With 40 million monthly active payment users and an annual transaction volume exceeding 12 billion USD, LINE Pay has provided users with a seamless digital payment experience.

Finschia was launched in 2018 and has developed over approximately 5 years, with over 5.6 million Web3 wallet users and more than 170k community members, holding a significant position in Japan, Taiwan, Thailand, and Abu Dhabi.

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 necessary power for the normal operation of the entire system:

1. Incentive Mechanism: Customers incentivize consensus nodes (CNs) by paying KAIA.
2. Promote development quality: The fees paid using KAIA are proportional to the complexity of the smart contract and resource consumption.
3. Maintain network health: CN nodes receiving KAIA rewards can incentivize more nodes to participate in the consensus process.

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

• CCO and Community: 50% ( 20% Block Creator Rewards, 80% Staking Rewards )
• KEF( Kaia Ecosystem Fund ): 25%
• KIF(Kaia Infrastructure Fund ): 25%

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

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

1.2.2 Governance Council

Kaia has launched a Governance Council, GC(, composed of 31 trusted early members ), most of whom are top institutions. This includes: Kakao, Binance, Google Cloud, GS HomeShopping, LG Uplus, Hanwha Systems, Everrich Group, HashKey, NEOPLY, and others.

Kaia 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.

1.3 Technical Architecture Principles

Kaia is a highly optimized, BFT-based public blockchain designed to meet enterprise-level reliability and performance standards.

Kaia Blockchain offers:

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

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

1. Core Unit Network ( CCN ): Composed of Core Unit ( CC ), responsible for transaction validation, execution, and block creation.
2. Endpoint Node Network ( ENN ): Composed of endpoint nodes ( EN ), responsible for processing RPC API requests and serving chain data.
3. Service Chain Network ( SCN ): An auxiliary blockchain that operates independently through DApp, connected to the main chain via EN.

1.3.1 Consensus Algorithm

Kaia adopts an optimized version of Istanbul BFT. In Kaia, there are three types of nodes: CN( consensus nodes ), PN( proxy nodes ), and EN( endpoint nodes ).

1. Consensus Node (CN): Responsible for generating blocks, managed by Core Node Operator (CCO).
2. Proxy Node (PN): Transmitting data between consensus nodes and users
3. Core Unit ( CC ): composed of one CN and two PNs.
4. Terminal Node (EN): Acts as a network endpoint, handling API requests and data processing.
5. Guide Node: A special node operated by Kaia, used to help new nodes join the network.

Verification and consensus are conducted for each block, so there will be no forks, and once consensus is reached, the finality of the block can be instantly guaranteed.

1.3.2 Block Generation and Propagation

Kaia's block generation and dissemination design is simple and efficient:

1. Quickly generate a block: The goal of each round of operation is to generate a block within 1 second.
2. Random yet Deterministic Election Process: The election of proposers and committee members is random, but the process is verifiable.
3. Two-thirds signature rule: A new block can only be added to the blockchain after more than two-thirds of the committee members have signed their agreement.
4. Multi-channel propagation: Blocks and transactions propagate independently, reducing latency and conflicts.

1.3.3 Kaia Virtual Machine ( KVM )

Kaia's virtual machine ( KVM ) is a core component for running smart contracts, with main features including:

1. Based on the Ethereum Virtual Machine (EVM)
2. Extended Features: Added some specialized pre-compiled contracts
3. Compatible with Ethereum Development Tools
4. Easy Migration: Smart contracts developed on Ethereum can be deployed on the Kaia platform with minimal modifications.

1.3.4 Security Measures

Kaia has taken a series of designs to improve system security:

1. Randomly select proposer: Use VRF to randomly select the proposer of the block.
2. Key Separation: Validators use two different keys: the validation key and the reward key.
3. Transparent verification process: Each member of the committee must verify the new block, and all signature records are public.

1.3.5 Interoperability

One of Kaia's design goals is to achieve seamless interaction with other blockchains.

1. EVM Compatibility: Supports Ethereum's smart contract language ( Solidity )
2. Cross-chain capability: Can interact with other blockchains based on EVM-SDK.
3. Support for multi-chain ecosystem: Designed a mechanism that can collaborate with other blockchain systems.

1.4 Competitors

Compare Kaia with the Telegram-based TON:

The story of TON dates back to 2017, proposed by Telegram founders Pavel Durov and Nikolai Durov. In 2018, $1.7 billion was raised through a private placement. In 2019, it encountered a lawsuit from the SEC, and in 2020, Telegram announced it would abandon the TON project. In 2021, the TON mainnet was officially launched by the community.

TON uses sharding technology and a PoS consensus mechanism, supporting large-scale parallel transaction processing. It offers features such as TON DNS, TON Storage, and instant payment channels.

As of 2024, TON has attracted over 800 applications, including stablecoin solutions, NFT platforms, and DeFi applications.

Main comparison:

• User Base: Kaia potential users 250 million, TON potential users 900 million+
• On-chain ecosystem: Kaia has 360+ DApps, TON has 800+ DApps
• TPS: Kaia 4000 TPS, TON 100,000 TPS
• Block confirmation: Kaia 1 second, TON 5 seconds
• On-chain TVL: Kaia $39 million, TON $600 million
• Market Cap: Kaia $845 million, TON $3.5 billion
• MC/TVL: Kaia 21.67, TON 5.83

Preliminary Value Assessment 1.5

Although TON has a global influence in terms of decentralization and technological innovation, KAIA's localization strategy and strong user base give it an irreplaceable position in the Asian market.

From the perspective of the MC/TVL metric, compared to TON, KAIA's current valuation is significantly low, suggesting that its market positioning and localization strategy have not been fully quantified, and the potential in the capital market has not been completely tapped. As for TO