Backed by social giant Kakao, the strength and potential of Klaytn, the “Korean Ether”

What are the advantages of Klaytn compared with the old public chains such as Ether, and what kind of value can the ecology bring out?

Backed by social giant Kakao, the strength and potential of Klaytn, the "Korean Ether"

We are currently in the post-blockchain era, where the entry of traditional institutions, compliance and technological iterations in the blockchain world continue to drive the overall development of the industry.

Geographically, South Korea is the country with the most inclusive and robust regulatory system for blockchain, and Klaytn, a public chain built on Korean social giant Kakao, has received extensive support from the government and banking sector for its development in South Korea. In addition, the project has also laid out the global ecology through more than 30 node strategic partners such as Coinan, Firecoin, LG Electronics, SK Korea Telecom and MakerDao.

Backed by social giant Kakao, the strength and potential of Klaytn, the "Korean Ether"

What are the advantages of Klaytn compared to the old public chains like Ether, and what kind of value can the ecology burst out?

The post-blockchain era and the Korean battlefield

The theme of the post-blockchain era: the entry of traditional institutions, compliance and the rise of the decentralized world.

Bitcointreasuries data shows that as of May 10, 2021, there are 56 institutions holding 1,421,999 bitcoins, accounting for 6.77% of the total bitcoin supply.

This includes the Grayscale Fund, which has been attracting other institutional and wealthy investors by issuing Bitcoin Trusts (GBTC) in a compliant manner, MicroStrategy, a publicly traded company that continues to buy Bitcoin, and Tesla, which has been added by Elon Musk.

Of course, in addition to Wall Street financial institutions and public companies, there are also compliant ETFs, such as Canada’s first compliant ETF, the TSX’s Purpose Bitcoin ETF.

The entry of these institutions has brought huge amounts of over-the-counter funds to the cryptocurrency industry and has also backed them with influence. Traditional financial institutions, as well as the financial market, will also look at the cryptocurrency market in a new light, which will undoubtedly have a positive effect on the overall development of the industry.

In addition to the entry of traditional institutions to buy coins, the use of regional compliance as well as traditional resources to promote the platform and ecological development is also an important feature of the post-blockchain era.

As early as Nov. 21, 2019, Jia Nan Cai Zhi landed on NASDAQ as the “first blockchain stock”, after which Yibang International, which is also a mining machine manufacturer, was also successfully listed; in 2021, the cryptocurrency exchange Coinbase was successfully listed, which made more people start to pay attention to cryptocurrencies; the blockchain platform Klaytn within the ecology of Kakao, a social giant with a share of over 94% in South Korea, also attracted a large amount of traditional funds to enter through the compliance channel.

Also, more noteworthy is the meteoric rise of DeFi. This has made the decentralized world of assets flow, and a large amount of “dormant” capital gradually joined the DeFi “perpetual motion machine” to gain revenue. On the surface, DeFi funds are expanding because of the FOMO sentiment and siphoning effect generated by its high returns. In reality, it is the maturing technology and improving infrastructure of the blockchain world that is the root cause.

Although the blockchain and cryptocurrency industry as a whole has reached a new height, different countries have different attitudes towards the blockchain industry and industry regulations are lacking. Currently, South Korea is at the forefront of the world in terms of the integrity of the blockchain industry system.

From the perspective of cryptocurrency investment, Korean investors are very enthusiastic about cryptocurrencies, and the country’s regulation and standardization are relatively sound.

Among the investor base, the percentage of cryptocurrency investors in Korea has now exceeded 30% of the national population, with the younger group being the main force in investing in cryptocurrencies.

South Korea has been focusing on KYC/AML regulation since the early days, and there are many compliant exchanges in South Korea including Upbit, CoinOne, Bithumb, etc. The introduction of the Special Gold Law in South Korea in April this year has made the cryptocurrency space more regulated in South Korea.

Blockchain is a multi-layered field, and Korea is not only relatively regulated in the field of cryptocurrency, but also relatively self-contained and mature in the layout of technology and industry.

Behind the Korean blockchain ecosystem, there are mature investment institutions with investment and research capabilities, a complete information dissemination ecosystem, an independent and compliant judicial system, and the backing of listed companies and consortia. At the same time, Korea has a wide range of application scenarios such as games, fan economy, travel, payment and other sectors.

On the whole, the Korean blockchain market is a full “value depression”. From a global perspective, the Korean market has been undervalued. In the current bull market, many Korean projects and ecosystems have exploded, such as Luna and Klaytn, which have performed very well.

Especially the Klaytn public chain, which is the infrastructure, is called the “Korean Ether”, and its status is evident.

Klaytn, the “Korean Ether”

Every DeFi investor knows the importance of Ether to the current DeFi ecosystem. The overall leading DeFi protocols in the industry such as Uniswap, Compound and AAVE are all based on Ether.

However, Ether is also facing problems such as congestion and high Gas fees, making the user experience of DeFi extremely poor. Of course, this also gives an important window for the development of exchange public chains and other competing ethereum chains.

Klaytn is essentially a public chain system. Compared with Ether, Klaytn can bring more efficient experience to users and low transaction cost, which provides a basis for many business scenarios to be built on Klaytn.

For the Korean market, Klaytn is based on the social giant Kakao, which is able to obtain massive user traffic and migrate many application scenarios.

For Chinese users, WeChat is the most important social tool today, with a share of over 87% in China. In Korea, Kakao has the same influence as WeChat, and almost all Koreans are its users. Of course, Kakao is not only limited to social networking, but also enables Korean users to use Kakao for “food, clothing, housing, transportation, trading” and other applications.

Klaytn was born from Kakao platform, we can consider Klaytn as an extension of Kakao in the field of blockchain, and Klaytn is linked with Kakao ecosystem in the form of public chain. As a traditional Internet platform, Kakao is known for its compliance and security, and Korea as a whole has strict regulation on blockchain segment, the launch of Klaytn is still based on compliance as the main principle.

From this perspective, for many finance-related scenarios such as payment, storage, exchange, transaction, credit, etc., Klaytn can serve as a blockchain financial infrastructure for Kakao, making Kakao’s overall financial ecological scenario more credible and efficient. Also based on the characteristics of blockchain, Klaytn can meet the free exchange of domestic currency with other mainstream currencies. At present, the cooperation between Klaytn and CBDC of the Bank of Korea is in the process of preliminary preparation, and is currently in the preliminary stage of formal cooperation.

At present, the number of Klaytn on-chain account addresses is about 2 million, accounting for less than 4% of Kakao users. klaytn as a blockchain financial infrastructure on Kakao, the ecology as a whole is still in an extended state, with the continuous improvement of various financial scenarios klaytn will also usher in the overall explosion of user growth.

On the one hand, the number of Korean cryptocurrency users is still rising, and on the other hand, Kakao users will gradually become financial users on Klaytn. From the dimension of growth space, Klaytn’s user growth will probably reach more than 10 times in the future.

From the perspective of Klaytn itself, as a public chain, its token KLAY is also a part of the ecology, just like ETH is to the ethereum system. In South Korea, which is known for its compliance, KLAY is currently only on CoinOne, which is currently the third largest compliance trading platform in South Korea, behind Upbit and Bithumb in terms of ranking, but CoinOne only accounts for about 10% of the market share of Korean digital asset exchanges. The overall market capitalization of KLAY is not high.

As a small-cap cryptocurrency backed by Kakao with huge application potential, KLAY’s low trading volume is more due to the fact that KLAY is not yet on a large trading platform. According to the survey, the KLAY holdings of CoinOne users are currently in the range of 1,000-5,000.

Just looking at the comparison of demand buy and sell orders on CoinOne, KLAY is currently only released by about 25%-40%. After March 2021, all chips held by early private investors will be unlocked and released and flow to the market, after which there will be no more selling pressure, only more demand.

In addition, in Korea, Korean Won trading pairs have always been popular among Korean users, and the trading volume of Korean Won trading pairs is currently the highest in the overall Korean cryptocurrency sector. Therefore, when KLAY goes online with Upbit and Bithumb and goes online with Korean Won trading pairs, the overall market capitalization and trading volume may show an exponential increase.

In addition, Huobi and Binance have become nodes of Klaytn, and Upbit is also an early strategic partner of Klaytn. It may not be difficult for KLAY to land on the above-mentioned major exchanges one by one in the future.

The Klaytn Ecology in Need of Explosion

As a whole, based on the current situation of the Korean market and the current industry trendsetter, Klaytn’s application system can be roughly divided into three segments, NFT, DeFi and Kakao’s application ecology.

NFT is one of the hottest topics in 2021. From the characteristics of the Korean market, on the one hand, Korea’s fan economy is ranked first in the world with the UK, the US and Japan, and has a wide user base and cultural depth. The influx of fan economy can give a great boost to the NFT segment, such as fan’s medals, star NFT works and so on. At the same time, Korean game industry is currently ranked top in the world, Klaytn game ecology is a top priority of the overall layout, NFT can also form economic linkage in the game.

Klip, Kakao’s built-in digital asset wallet, provides the best entry point for Kakao users to the Klaytn ecosystem. There are already about 1 million Kakao users who have created Klip wallets. Currently Klip can be used to store NFTs based on Klaytn, which, as a blockchain infrastructure backed by Kakao, is expected to be the main hub for carrying and circulating these NFT assets.

Backed by social giant Kakao, the strength and potential of Klaytn, the "Korean Ether"

DeFi’s popularity and potential is obvious to all of us. Based on smart contracts, DeFi now covers DEX, lending, insurance, prophecy machines, derivatives and more, with record TVLs. klaytn also launched its own DEX Klayswap, which currently has a TVL of nearly $2 billion, making it one of the largest DeFi portals in Korea.

One of the best features of Klayswap is that it can be used directly in the Kakaotalk chat application, simplifying the process of participating in DeFi by putting in a liquidity pool to gain revenue.

In addition, it is understood that around the Klaytn ecosystem, a number of lending platforms, machine gun pools, aggregated trading platforms and other games will be launched subsequently to improve the utilization of investors’ funds and achieve the growth of its overall volume.

As mentioned above, Klaytn can serve as an extension of the current Kakao ecology in the blockchain field. In addition to building DAPPs to assist Kakao’s various scenarios, the financial ecology built by Klaytn has a wide range of prospects, and Klaytn has already participated in the layout of the CDBC of the central bank of Korea. As the blockchain infrastructure of the main payment segment, KLAY is also expected to play an important role in the Klaytn ecology as well as the Kakao ecology.

KLAY is currently included in the digital asset custody business launched by Kookmin Bank of Korea along with BTC and ETH, and is also illustrated by the fact that KLAY is also used as points for distribution in Korea Daily.

Klaytn, as the infrastructure that carries the development of blockchain ecology in Korea, is currently supported by the government and banking sector in the country. And backing Kakao is expected to convert all Korean users into ecological users and extend the ecology in various fields to realize the explosion of ecological value. Similarly, as Korea with sound cryptocurrency laws and regulations, KLAY’s future burst of value is also worth looking forward to.

Some analysts even believe that relying on Kakao, a traditional social giant, with the support of the government, banks and partners in the cryptocurrency field, together with the innovation of technology, expansion of applications and perfection of the ecology, Klaytn has the potential to become a project and ecology with a market share close to 100% in Korea.

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