🤔 What is Klaytn ?
Klaytn is a smart contract blockchain developed by Kakao, a South Korea based tech company.
💡 What role does KLAY token play ?
KLAY is the native token for Klaytn ecosystem. It is used for:
- Transaction fee: Users have to pay transaction fees in KLAY tokens to include their transactions on Klaytn blockchain.
- Staking: Klaytn runs on proof fo stake consensus mechanism. Nodes have to stake KLAY tokens to participate in the block creation and validation process.
📝 Origin of Klaytn
- Kakao is a leading South Korean tech company with several products and services.
- 2017 Crypto bull run inspired the company to launch their own crypto project.
- However, they faced stiff resistance from their financial authorities, similar to Facebook’s Libra.
- They launched GroundX, a subsidiary in Japan to overcome regulatory hurdles in their country in 2018.
- GroundX raised capital by selling KLAY tokens during ICO in 2019. Klaytn mainnet also went online in the same year.
🤖How does it work ?
Klaytn network consists of three subnetworks based on distinct roles:
- Core cell network(CCN): Comprises of core cells to verify and execute the transactions submitted via the endpoint nodes. The CCN is responsible for creation and propagation of blocks throughout the entire network.
- End point node network(ENN): Comprises of endpoint nodes that are responsible for creating transactions, processing data requests from service chains, and handling all the RPC API requests.
- Service chain network(SCN): Service chain networks in Klaytn are similar to sidechains composed of auxiliary blockchains attached to the main chain via endpoint nodes. These service chain networks exist to allow for the operation of blockchain applications or BApps (otherwise known elsewhere as dApps).
The Core cell network and Endpoint node network together form the Klaytn main chain. It is possible for blockchain applications to run on the main chain. Alternatively, any bApp can be created on its own Service Chain. The benefit of Service Chains for bApps is that they provide a dedicated execution environment for applications that guarantee high TPS and configurable network policies.
Klaytn depends on three-tiered networks to function:
- Consensus Node Network (CNN): The Consensus Nodes combine to form a full-mesh network called the Consensus Node Network. This network uses modified Istanbul BFT consensus mechanism to reach consensus.
- Proxy Node Network (PNN): Proxy Node Network comprises of Proxy Nodes. These nodes maintain a connection with one other Proxy Node in neighboring core cell. Depending on how the network is configured number of these peer connections is liable to change.
- Endpoint Node Network (ENN): The Endpoint Node Network is the outermost sub-network comprising End Nodes which are connected to each other and to some of the Proxy Nodes.
🏛️ Governance model
Klaytn Governance Council operates Consensus Node Network and governs Klaytn ecosystem. The council consists of 30 members.
😨 Risks and challenges
- Centralization: Klaytn network is run by a handful of nodes selected by Klaytn team. These nodes are in it for personal monetary gains rather than long-term growth of Klaytn project.
- Government crackdown: Most governments are working on developing their own CBDCs(Central bank digital currency). They will not allow projects to directly compete with their CBDCs. Similar projects like Facebook’s Libra/Diem were shut down by governments in the past.
- Competition: There are other smart contract blockchains that are much faster, secure, decentralized and have a larger ecosystem. Why will any developer launch their app on a centralized blockchain like Klaytn where they lose power over their app to some large corporations.
Klay token had initial supply of 10 billion which were distributed as follows:
These tokens will be released as follows:
In addition new Klay tokens are mined with every block(inflation rate of 3%.). The block reward is distributed as follows:
- Core Cell Operator Reward: 34%
- Proof of Contribution: 54%
- Klaytn Improvement Reserve: 12%
Blockchain is the new trending term and we will see many corporations and even governments selling centralized shit in name of a blockchain.
There is a reason why projects like Etherium 2 that increase throughput without compromising decentralization are taking so long to develop.
Crypto industry is not regulated and most projects are open source making it very easy for anyone to copy and launch their own crypto projects.
Stay away from projects that use too much corporate jargon and compromise decentralization for scalability.