Exploration: Korean Star Public Chain Klaytn and Industry Investment Trends

This article was first published in September 2020 on Cointelegraph Chinese.

On September 11, Cointelegraph Chinese hosted the sixth episode of its online interview series HUB LIVE, with the theme "Exploring the Korean Star Public Chain Klaytn and Industry Investment Trends." Klaytn, the Korean star public chain, is a service-oriented blockchain platform that provides an intuitive development environment and a friendly end-user experience.

Cointelegraph Chinese HUB is an online interview series initiated by Cointelegraph Chinese. It focuses on leaders in the blockchain and cryptocurrency industry, discussing the development opportunities and challenges in current industry segments, as well as how companies can break through the status quo and lead the future.

The host of this interview was TING, CCO of Cointelegraph Chinese and a reporter for CTGlobal. The guests included Joseph Hung, Market Strategy Director of Klaytn, Jay Hao, CEO of OKEx, and Charles Liu, COO of Coin Capital China. Joseph Hung shared insights on Klaytn's team status, token model, governance structure, vision, and goals. Following this, Joseph Hung, Jay Hao, and Charles Liu engaged in a roundtable discussion to explore the future development and investment directions of blockchain and DeFi.

Highlights of Guest Insights:

1. Joseph Hung, Market Strategy Director of Klaytn: Klaytn will become the most representative public chain and the most influential blockchain platform in Asia.

2. Joseph Hung: Klaytn has a world-class development and business team, with nearly 100 employees involved in the entire project, some of whom are renowned blockchain experts from both domestic and international backgrounds.

3. Joseph Hung: In October 2020, Klaytn will officially launch the Klaytn API Service (KAS) in Korea, which will enable the creation of smart contracts and digital wallets, as well as manage tokens. Klaytn (KLAY) has already been listed on the OKEx exchange.

4. Jay Hao, CEO of OKEx: The main advantages of DEX lie in the security of asset custody and data transparency, while CEX focuses more on the efficiency and speed of transactions. The two should complement and support each other.

5. Charles Liu, COO of Coin Capital China: Considering that Klaytn's partners have about 400 million users, combined with Kakao's instant messaging and gaming ecosystem users, it can be boldly predicted that Klaytn's main chain will reach at least 100 million users.

6. Charles Liu: In the long term, mining machines, mining farms, and BTC spot will be relatively stable investment directions.

Here are some highlights from the interview:

1. Ting: What is Klaytn's vision and goals?

Joseph: In early June this year, we officially launched the blockchain-based digital asset wallet service "KLIP," which is integrated into Korea's largest messaging app, KAKAOTALK; KAKAOTALK has 50 million global users, with over 200,000 already using the KLIP wallet service.

Currently, KLIP is only open to Korean users, but we are about to launch a local version of KLIP that overseas users can also use, which will greatly expand and enrich the Klaytn ecosystem.

At the same time, KLIP supports KLAY and other tokens compatible with the Klaytn ecosystem, but we plan to support other NFT digital assets and features in KLIP, such as airline miles, NFT games, coupons, etc.

In the long term, Klaytn's goal is to promote the large-scale implementation and application of blockchain technology, becoming an influential blockchain platform throughout Asia. Blockchain technology is not something that can be completed overnight. Moreover, what we see now in cryptocurrencies and blockchain is not everything. In the future, all assets will be digitized, and in the transition to the data era, public chains will become core infrastructure, with Klaytn becoming the most representative public chain in Asia.

2. Ting: Who are the team members?

Joseph: Klaytn has a world-class development and business team, with nearly 100 employees involved in the entire project, some of whom are renowned blockchain experts from both domestic and international backgrounds, and we are continuing to recruit talent to expand our domestic and overseas business.

Klaytn CEO Dr. Jason Han is a world-class blockchain expert. Jason is also a serial entrepreneur and blockchain enthusiast. He obtained his Ph.D. in EECS from KAIST, known as Korea's MIT, in 2005. His research topics include DHT and distributed systems, among other P2P algorithms. In 2007, he founded NexR, Korea's first big data and cloud computing technology startup, which was acquired by KT (Korea Telecom) four years later. After that, he co-founded FuturePlay and served as CTO. FuturePlay is a technology-focused accelerator and investment company that focuses on tech startups in the Asia-Pacific region. He has invested in dozens of startups and provided them with technical guidance. Since 2007, he has also taught courses on innovative business models and IT trends as an associate professor in the KAIST MBA program.

Klaytn Director Dr. Sam Seo is also an expert in blockchain. Before joining Ground X, he worked as an assistant computer scientist at Argonne National Laboratory and as a senior engineer at Samsung Research. He obtained his Ph.D. in Electrical Engineering and Computer Science from Seoul National University and has published numerous papers on parallel programming and high-performance computing.

3. Ting: What are some business development goals for this enterprise and service-oriented blockchain platform?

Joseph: We hope to create an environment that makes it easier for developers to develop on Klaytn. If KLIP, mentioned earlier, is the B2C node that general users encounter, the KAS (Klaytn API Service) that will be officially launched in Korea in October 2020 can create smart contracts and digital wallets, manage tokens, and save blockchain infrastructure resources for developers. With these, developers can invest most of their resources into the service itself.

Additionally, Kakao has dozens of subsidiaries, some of which can digitize resources and assets (gaming platforms, media, entertainment platforms, music platforms, etc.). Including these companies, Kakao is currently expanding its cooperation with companies based on NFT technology. Furthermore, while continuously introducing members to the governance committee (GC), Klaytn is working hard to increase cooperation cases between multinational companies and Klaytn.

4. Ting: How can enterprises benefit from the Klaytn blockchain platform, and vice versa?

Joseph: Through Klaytn, users can issue and circulate digital assets. Digital assets refer to all assets that can be represented in digital form. Cryptocurrencies are just one type of digital asset. In fact, this is a broader concept. Game items, points, coupons, merchandise vouchers, mobile funds, etc., are all digital assets. At the same time, physical assets such as real estate, stocks, and artworks are also gradually being digitized. Ultimately, data will play the role of digital assets, constructing a "data economy."

Korea's financial system already has a good infrastructure, and the vast majority of assets have been digitized. However, there are still elements like points and mileage that cannot be considered assets. Moreover, we also hope to include non-asset types like ID cards and qualifications into the blockchain for DID (Decentralized Identifier). By integrating various digital assets, we are preparing to develop a platform and services that are easy to issue and circulate.

5. Ting: Why should enterprises care about blockchain?

Joseph: Countries in Asia have been actively promoting some key industries in the Fourth Industrial Revolution, such as blockchain and AI, and we have seen many blockchain application cases in Korea.

However, blockchain technology is still in its early stages and far from completion. Nevertheless, the current cryptocurrency or blockchain market is not everything. In the future, when all assets are digitized and transition to the data era, public chains will become core infrastructure, which is why enterprises should care about blockchain.

6. Ting: Can consumers also benefit from this? If so, how?

Joseph: Through public chains, users can gain ownership of digital assets and conduct online transactions securely with anonymous parties. The NFT (Non-Fungible Token) technology of blockchain is a representative example that can guarantee asset ownership.

7. Ting: What is Klaytn's token model and governance structure? Why is it designed this way?

Joseph: Klaytn is known as an enterprise-grade blockchain public platform, and its parent company, GroundX, is a blockchain technology service company. In the design of the Klaytn public chain, a "hybrid" design is used, combining the features of public blockchains (distributed data and control, distributed governance) and private blockchains (low latency, high scalability). Therefore, Klaytn's goal is clearly engineering-oriented, aiming for large-scale applications of blockchain, focusing on the development environment and user experience, which is also one of the important characteristics of internet companies doing blockchain.

In addition, we have shortened the transaction confirmation time to one second, and we have increased the transaction speed to 4000 TPS, which allows us to meet the basic performance requirements of many large games and other applications.

From a project development perspective, Klaytn has its own characteristics and is more like a group-oriented blockchain company, promoting and developing in the blockchain field more comprehensively and broadly, similar to how companies like Consensys layout in the blockchain field, covering both public and private chains, focusing on technology services. The only difference is that Klaytn is based in Korea, promoting the public chain Klaytn rather than Ethereum.

The Klaytn Governance Council serves as the official governance body of the Klaytn network, responsible for the long-term governance of the Klaytn ecosystem. Currently, the Klaytn council has 30 members, all from internationally renowned companies deeply engaged in finance, IT, communications, content, gaming, etc., such as Vietnam's VNG Group, Korea's LG Electronics, SK, Korea's well-known cosmetics group Amorepacific, Korean mobile game company Netmarble, Pearl Abyss, and the Philippines' Union Bank, among others. In addition to these well-known large companies, other subsidiaries of Kakao, such as Kakao Games and Kakaopay, have also joined the council.

Klaytn is a project promoted by Kakao, but Klaytn gradually hands over authority to contributing partners. This distinguishes it from other enterprise public platforms. That is, Klaytn's policies and structure are not solely borne by Ground X, but are constructed together with the continuous introduction of governance council members and Klaytn partners to build a more advanced platform.

Here is the content of the roundtable discussion:

Cointelegraph Chinese was also fortunate to invite Jay Hao, CEO of the well-established exchange OKEx, and Charles Liu, COO of Coin Capital China, who has led investments in many industry unicorns, to discuss the future development and investment directions of blockchain.

8. Ting: What is OKEx's view on the future of decentralized exchanges and DeFi?

Jay Hao: Recently, the topic of DeFi has indeed been very hot, and discussing the views on DEX and CEX is quite meaningful at this moment.

In fact, I have previously discussed this issue with everyone on Weibo. The main advantages of DEX lie in the security of asset custody and data transparency, while CEX focuses more on the efficiency and speed of transactions.

So, you can see that whether centralized or decentralized, there is no absolute conflict between the two; they simply meet different user needs. On the contrary, the two should complement and support each other. Without the participation of CEX, when a DeFi project's token circulates only on DEX, it will only be limited to a small number of participants, while CEX plays a bridging role between DeFi and more "external investors," lowering the participation threshold for most novice users, and together they promote the development of the DeFi ecosystem in the trading market. As long as they meet market and user needs, their futures are worth looking forward to and optimistic about.

Some people may think that the surge in DEX trading volume means a significant impact on centralized exchanges. Of course not, as I mentioned earlier, CEX and DEX are interdependent and jointly promote the prosperity of the crypto market. I believe this can be seen in OKEx's layout in DeFi this year.

As early as the end of 2019, we connected with MakerDao's DSR, using OKEx as an entry point to provide DeFi services to users. The DeFi asset ecosystem of OKEx is continuously growing, and we have already opened up the DeFi entry in the earning and lending functions, allowing users to participate with one click without gas fees. In addition, we also provide users with various new rules for platform token locked mining.

However, OKEx has always placed great importance on the long-term application value brought by DeFi. In the future, we will also develop DeFi projects such as Dex, lending, and derivatives on OKChain, further exploring and practicing the hidden application value and significant innovations behind DeFi.

9. Ting: Have you considered listing decentralized exchanges?

Joseph: We are just a technology developer and do not participate in exchange operations; however, our partners and governance council members are developing decentralized exchanges, and there will be further announcements on this in the future. In fact, decentralized exchanges are also a part of DeFi; it's just that people have relatively underestimated the importance of decentralized exchanges. DeFi actually began to take shape when decentralized exchanges emerged. Currently, many centralized and decentralized exchanges are actively contacting us, and we are also exploring cooperation plans that can enhance user value and service quality.

10. Ting: How does the staking of tokens work?

Joseph: The staking of KLAY tokens is not provided by Klaytn or the developers of the Klaytn public chain, GroundX. Currently, the staking of KLAY tokens is provided by governance council member Hashed-ozys, with the service name called klaystation (www.klaystation.io). Another governance council member, Neoply, is also preparing staking services, which will be launched in the near future. In addition to these two governance council members, we are also developing DeFi-related projects with other governance council members, and there will be further announcements on this in the future.

11. Ting: What is the fixed transaction fee model? What is the importance of this model?

Joseph: In Ethereum, users set the gas fee for each transaction, and miners choose which transactions to include in their blocks to maximize their rewards. This is like bidding for limited resources. This method is effective because it is market-based. However, as we have seen in the recent DeFi boom, transaction costs fluctuate and often become excessively high.

To address this issue, Klaytn uses a fixed gas fee unit price, which can be adjusted by the governance council. This strategy ensures that each transaction is processed equally and guarantees execution. Therefore, users do not need to struggle to determine the appropriate unit price.

12. Ting: What are the standards for crypto exchanges like OKEx to decide on listed projects?

Jay Hao: When we talk about OKEx's DeFi asset ecosystem, regardless of the type of asset, our review standards are the same. Some users often give us feedback, saying that our listing speed is not fast enough, and they worry that our traffic will be taken away by other exchanges. For hype and traffic, we place more emphasis on security.

Project design, founding team, investment team, code auditing, etc., are all basic conditions. All listed projects undergo hundreds of evaluation factors. Good projects must have withstood various audits before listing.

More importantly, for projects that have already been listed, we also regularly review the performance of the projects, and those that do not meet the standards will be delisted, maximizing the extent to which each listed project can be tested by the market and investors.

Of course, there are also many important projects for which we will solicit user suggestions for evaluation, which is also a very positive interaction and progress between OKEx and the market and users. I think this is one of the reasons why OKEx can remain evergreen.

If anyone has any questions about OKEx's products and projects, feel free to leave a message on my Twitter and Weibo; the OKEx team values every user's valuable suggestions.

13. Ting: What is the main reason Coin Capital China invested in this project?

Charles Liu: 1) Compared to many projects in the industry, Klaytn can be said to be a project born with a "golden key." Its parent company, KakaoCorp, holds a position in Korea similar to that of Tencent in China, being a major giant in the mobile social communication field. It is worth mentioning that Tencent is currently also Kakao's second-largest shareholder. The strong group strength of the parent company, along with its main application Kakao having nearly 400 million users, provides significant support for its blockchain subsidiary Ground X's Klaytn project.

2) Considering that Klaytn's partners have about 400 million users, combined with Kakao's own instant messaging and gaming ecosystem users, we can boldly predict that as the project operates and develops, the Klaytn blockchain community ecosystem will gradually mature, and these potential users may become Klaytn's most loyal supporters. In the foreseeable future, Kakao's Klaytn main chain will reach at least 100 million users. Klaytn's efficient "hybrid" design combines the decentralized data and control of public blockchains, distributed governance, and the low latency and high scalability of private blockchains, creating the optimal solution for Klaytn, dedicated to achieving large-scale adoption of blockchain services and providing high-performance and flexible scalability solutions for high-traffic blockchain applications, thereby demonstrating the value and practicality of blockchain technology while creating a good development environment and user experience.

3) The Klaytn community governance body is the Klaytn Governance Council, responsible for the long-term development of the Klaytn ecosystem. Members are required to stake over 5 million KLAY tokens, covering internationally renowned companies in finance, IT, communications, content, gaming, etc., such as LG Electronics, PUBG ("PlayerUnknown's Battlegrounds"), and international exchanges like Binance, Huobi, and OKEx. We will also continuously leverage Coin Capital's advantageous resources to inject relevant resources from the blockchain and traditional circles into the Klaytn public chain. This can also be seen as a way for Coin Capital to realize the resources accumulated over many years.