Author: Weilin, PANews

On August 29th, Layer1 blockchain Kaia announced the launch of its mainnet, which is a result of the merger between Klaytn developed by the South Korean social media giant Kakao and Finschia from the popular Japanese instant messaging app LINE.

In a recent interview, the core developer of Kaia stated that the merger of Klaytn and Finschia was inspired by the success of the TON ecosystem. In the future, developers will be able to create mini dApps on messaging apps through the software development kit (SDK) to achieve Web3 native app integration similar to Telegram.

In South Korea, 96% of Korean users use Kakao's communication app, while LINE is the main instant messaging app in Japan. According to official data, the two instant messaging apps, Kakao and LINE, have a combined user base of 250 million. However, whether they can truly reach these users and achieve widespread adoption of Web3 remains to be seen.

Merger of Klaytn and Finschia, following TON's approach

In January of this year, Kakao, the developer of Klaytn, and LINE, the developer of Finschia, proposed to merge their respective networks to create the "largest Web3 network in Asia." The proposal was approved on February 15th, receiving 95% support from the Finschia community and 90% from the Klaytn community.

After several months of intense preparation, Kaia's mainnet was officially launched on August 29th. Kaia supports EVM smart contracts and, according to the official website, "Kaia has the lowest transaction latency in the leading EVM L1, with a block time of 1 second and instant finality, providing a smooth user experience and opening up possibilities for use cases requiring near real-time response." It is reported that Kaia adopts practical Byzantine Fault Tolerance (pBFT), which is a highly optimized version of the Byzantine Fault Tolerance algorithm, enabling it to achieve a processing capacity of 4,000 transactions per second in real-world environments.

A month ago, Aidan Kwon, the head of the Klaytn Foundation and core developer of Kaia, publicly stated that the merger of two operational chains is very rare, especially for large-scale chains like Finschia and Klaytn. However, the team made many efforts to overcome the challenges brought about by technical and cultural differences.

"We carefully planned to minimize the impact on each ecosystem service. Klaytn has been in operation for over 5 years and has independently onboarded numerous partners. In contrast, Finschia has fewer anonymous projects but has closer ties with its partners, enabling direct communication. To streamline the process, we decided to migrate some applicable projects to the Ethereum Virtual Machine (EVM), as this is the least disruptive and fastest way to impact the ecosystem."

According to Aidan Kwon, the new blockchain Kaia is inspired by the success of TON and plans to prioritize integration with messaging apps, leveraging the super app role of messaging apps. Unlike platforms focused on anonymity, Kaia's messaging app provides more opportunities for wide-ranging service integration. "We are targeting large messaging platforms like LINE and KakaoTalk, which represent the business direction and potential of Kaia. This aligns with our background and the advantages of Kaia."

Technically, Kaia plans to integrate with channels from Discord and Telegram, aiming to achieve widespread blockchain integration through messaging apps. Despite regulatory and social challenges, Kaia intends to gradually overcome these issues and demonstrate its advantages and differentiation to Web2 companies. Ultimately, Kaia's goal is to expand into a super app, connecting blockchain with various Web2 services.

During the development process, the Kaia team also encountered some challenges. Aidan Kwon stated, "Time is the main constraint for the development team. After the merger proposal was approved in February, the development team had about 3 months to complete the development. We faced differences in understanding and background between Finschia and Klaytn developers." Nevertheless, the team ultimately succeeded in smooth communication and coordination, leading to the successful launch of the mainnet.

Aidan Kwon, core developer of Kaia

This time, Kaia also launched the Kaia Wave Web3 Developer Support Program, allowing developers to create mini dApps on LINE through the NEXT WEB software development kit (SDK) to achieve Web3 native app integration similar to Telegram.

With the launch of the Kaia mainnet, Kaia Foundation also introduced Kaia Portal, providing users with token exchange, airdrops, staking, and other functions. For holders of Klaytn, there is no need for separate token exchange, but holders of Finschia's FNSA tokens will need to convert them to the new KAIA tokens.

Backed by 250 million users, will it lead to widespread adoption?

Aidan Kwon stated, "After the merger, Klaytn's DeFi and gaming services will be combined with Finschia's NFT, payment, and artificial intelligence services, forming a vast ecosystem with over 420 dApps and services."

The announcement from Kaia Foundation also mentioned, "Kaia is the largest Web3 ecosystem in Asia, integrating the two messaging apps, Kakao and LINE, with a combined user base of over 250 million."

According to public information, Klaytn was launched in June 2019 and quickly became one of the leading blockchain networks among South Korean users. According to DappRadar's 2023 report, Klaytn ranked among the top 10 blockchains in terms of user numbers in 2021, with a user base growth of 1100% to 873,000 in 2023. In the past 30 days, the most popular dApp on Klaytn was Kgken, a Move-to-Earn app with 743,000 users, followed by Superwalk with 50,700 users, and Iskra with 45,000 users.

Similarly, LINE has also garnered significant market attention. In 2022, LINE's NFT company, LINE NEXT, secured a strategic investment of $10 million, with investors including SoftBank, Naver, CJ ENM, Shinsegae, LINE Games, YG Plus, Hashed, and K Auction. The following year, the company announced a $140 million investment from the private equity fund operator Crescendo Equity Partners and its consortium, marking the largest investment in the Asian blockchain and Web3 field in 2023.

Finschia, under LINE, was launched in 2018 and has since attracted a large number of users. The most popular dApp on Finschia, the NFT platform DOSI, reached a cumulative user base of 5.6 million after its launch in January of this year and facilitated over 530,000 NFT transactions.

However, these two major social apps venturing into Web3 also face significant market challenges, as many instant messaging apps are also entering the Web3 space. For example, in 2018, Beechat not only focused on encrypted communication but also provided digital asset wallet functionality, and some software even aimed to issue digital currencies to provide payment support for their chat apps and related scenarios. In May 2017, the Canadian instant messaging social platform Kik announced the launch of its own digital currency Kin, allowing users to purchase a range of digital services with it.

However, at present, Telegram and the TON ecosystem are the ones that receive more market attention and participation. In January 2018, according to reports from various media outlets including TechCrunch, Telegram Message, known as the "blockchain version of WeChat," planned to establish TON, positioning itself as the third-generation blockchain system after Bitcoin and Ethereum. The "TON Payments" proposed in the TON whitepaper aims to provide a tool for encrypted digital currency payments, even integrating into more application scenarios. As of now, the TON network has developed rapidly, with the total value locked (TVL) soaring from $9.56 million last year to $750 million, continuously setting new records. Despite the recent negative impact of the news of Telegram founder Durov's arrest, its influence is still significant. This poses significant competitive pressure for Kaia.

The introduction of mini dApp functionality may bring more growth opportunities for Kaia. For example, TON introduced mini apps such as TON Wallet, which provide a convenient entry point for Web2 users to easily enter the Web3 world. Similarly, mini apps like Notcoin and Hamster Quick Strike also show tremendous potential, attracting a large number of users and promoting the adoption of blockchain due to their convenience, user-friendliness, interactivity, and low cost.

Overall, emulating the TON ecosystem's mini app approach and leveraging the advantages of a large user base and strong funding from Web2 companies have increased the possibilities for Kaia's ambitions. For similar Web3 native companies, the entry of Kakao and LINE, two mature Web2 giants, will bring even greater competitive pressure. After all, these established social media giants have a huge user base, ample funding, and mature product experience, and a new competitive stage is emerging.

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