作者： Yinliang (Former Researcher at BlockBooster, Lead Author) and Caiya (From BlockBooster, Supporting Author)

The information related to the development of Kaspa ecology in this study was supported by the Kaspa Ecological Foundation

Grayscale has released a list of crypto assets that it is considering including in future Grayscale investment products and a list of crypto assets for released products, which are divided into several categories: currency, smart contract platform, finance, consumer and culture, utilities and services. Among them, the crypto assets that Grayscale is considering including in future Grayscale investment products include: Kaspa (KAS).

(Source: grayscale)

With a total supply of 28.7 billion KAS and a current market cap of approximately $3.4 billion since the mainnet launch in 2021, Kaspa continues to rise in the blockchain industry with a strong and supportive community.

As part of its continued efforts to strengthen its ecosystem and community, Kaspa has hosted a series of developer-focused events, including Advances in Financial Technologies in September 2024, the upcoming Kaspa Innovation Summit in Hong Kong on October 27, and the Australian Crypto Convention in November.

In addition, the Kaspa Ecosystem Foundation also plays a key role in nurturing and expanding the Kaspa ecosystem, providing financial support and strategic guidance, and recently announced a series of programs to promote the development of the ecosystem: Kasplex and KEF Katalyst Program Season1.

Kasplex is a comprehensive solution designed to improve the efficiency and sustainability of the Kaspa network. It integrates data insertion protocols, open source indexers, and powerful APIs. It currently supports seamless creation and management of KRC-20 tokens, and will release standards for NFTs in the future. By leveraging Kaspa's high block rate and decentralized proof-of-work (PoW) Layer-1, Kasplex lays the foundation for the development of a diverse ecosystem of decentralized applications.

KEF Katalyst Program Season1 is a series of initiatives designed to accelerate the growth of the Kaspa ecosystem. The first phase of the program received $10 million in funding, covering grants, infrastructure construction, and educational activities, aiming to promote Kaspa, encourage developer collaboration, and provide a platform for innovative projects.

These recent initiatives by Kaspa are all in preparation for the expansion and application of the ecosystem. Next, let’s take a deeper look at the current status of Kaspa’s projects and technical progress.

Overview

Kaspa is a Layer-1 blockchain based on the blockDAG structure, using the GHOSTDAG consensus protocol, a consensus protocol that evolved from the PHANTOM mechanism. Compared to Bitcoin, the main difference of Kaspa is its structure. Bitcoin uses a single chain structure, while GHOSTDAG uses a directed acyclic graph (DAG), where one block can point to multiple other blocks.

This design improves transaction finality and speeds up block generation through parallel processing. Unlike traditional PoW chains, Kaspa uses the KHeavyHash proof-of-work consensus algorithm, which optimizes energy efficiency while increasing hash power to ensure blockchain security and decentralization. Through innovative pruning technology, Kaspa can minimize storage requirements and only retain about three days of transaction history. However, in order to support future transaction outputs, certain key blocks may still need to be pruned under certain conditions. Kaspa currently runs at a block generation rate of one per second and plans to expand to 10 or even 100 blocks per second. It is worth noting that in 2024, Kaspa's smart contracts transitioned from the original GoLang to the Rust language, and mining nodes also began to migrate to Rust earlier that year, marking a major advancement in its technology ecosystem.

Migrating from GoLang to Rust  

Rust is known for its high performance and security, in line with Kaspa's goals of increasing transaction speed and network capacity. This migration involves rewriting Kaspa’s full node and related libraries into Rust to take advantage of modern computing potential and benefit from Rust’s active developer community.

Kaspa's reasons for switching from GoLang to Rust include:

- Performance optimization: Rust is known for its excellent performance, with advanced parallel processing capabilities, and can process multiple blocks concurrently between CPU threads. This feature is crucial for Kaspa's blockchain network, especially its goal is to process a large number of transactions and blocks per second.

- Modern computing potential: By adopting Rust, Kaspa aims to maximize the capabilities of modern computing hardware and optimize energy efficiency.

- Security and reliability: Rust prioritizes security and reduces security vulnerabilities caused by common programming errors. Security is critical in blockchain networks, and Rust's compile-time security checks provide additional protection against potential threats.

- Community and Ecosystem: The Rust developer community is expanding rapidly. Kaspa's migration to Rust enables it to integrate into this ecosystem and gain access to the rich knowledge, tools, and libraries contributed by Rust developers.

The impact of this migration on the Kaspa network is profound:

- Increased transaction throughput: By increasing transaction processing speed, Kaspa aims to significantly increase its transaction throughput, which is critical for the widespread adoption of its technology. This migration is the foundation for Kaspa to achieve its future goal of processing 100 blocks per second.

- Energy efficiency: Rust's energy-efficient execution model is consistent with Kaspa's commitment to sustainable development in blockchain technology. This shift supports a more environmentally friendly approach compared to traditional proof-of-work systems.

- Scalability: Rust’s efficiency and performance improvements are expected to enhance Kaspa’s scalability, enabling the network to handle growing transaction volumes without sacrificing speed or security.

- Attract developers: Rust adoption could attract more developers to the Kaspa project. Rust is highly regarded among developers for its performance and safety features, which could expand the talent pool contributing to the Kaspa ecosystem and innovation.

As of press time, over 96.49% of nodes have completed the migration from GoLang to Rust.

Hash rate

Hash rate is an indicator used to measure computing power in blockchain networks. It refers to the number of hash calculations that a miner or network can perform per second. A higher hash rate means more calculations are completed per second, thereby increasing the chances of successful mining and receiving rewards. Mining machine performance is measured in h/s (hashes per second).

- 1 Kh/s = 1,000 h/s  

- 1 Mh/s = 1,000 Kh/s = 1,000,000 h/s  

- 1 Gh/s = 1,000 Mh/s = 1,000,000 Kh/s = 1,000,000,000 h/s  

- 1 Th/s = 1,000 Gh/s = 1,000,000 Mh/s = 1,000,000 000 Kh/s = 1,000,000,000,000 h/s

The hash rate of the Kaspa network reflects the overall performance of all miners. The current hash rate of the Kaspa network is 763.92 PH/s, with a peak of 843.44 PH/s on August 13, 2024.

Architecture

Bitcoin operates on the "longest chain" principle, which ensures the integrity of the blockchain by linking honest blocks together, thereby ensuring the security of the network. However, this approach limits network throughput and scalability due to its sequential processing nature.

Structural model: directed acyclic graph  

Kaspa introduced the PHANTOM protocol based on directed acyclic graphs (DAGs), a permissionless ledger protocol. Unlike Bitcoin's single-chain structure, PHANTOM allows references to multiple previous blocks, thereby achieving a total ordering of all blocks and transactions and ensuring a consistent set of accepted transactions. The core of PHANTOM lies in the parameter K, which adjusts the protocol's tolerance for simultaneous block creation to accommodate higher throughput scenarios. When K=0, the protocol is similar to Bitcoin's non-fork structure.

Linear sorting

To solve the double-spending problem, Kaspa uses the GhostDAG protocol. GhostDAG evaluates each block based on its connectivity in the past set of blocks, and selects the block with the highest score to form the main chain. This main chain constitutes the initial subset, and subsequent blocks vote in sequence according to this main chain. The entire network votes based on the connectivity trend from high to low.

When the traditional blockchain system encounters blocks generated at the same time, competing blocks will often be generated, resulting in the waste of orphan blocks. GhostDAG solves this problem by adopting a DAG structure where blocks can reference multiple parent blocks, forming a BlockDAG rather than a linear chain. This design supports parallel block creation, significantly improving the system's throughput without sacrificing security.

In addition, the GHOSTDAG protocol also includes sub-protocols such as block data pruning, SPV proofs, and proof of work enhancements, which together improve performance. Block data pruning reduces the size of the blockchain by discarding unnecessary data, while SPV proofs allow lightweight clients to verify the validity of transactions without downloading the entire blockchain. These innovations improve Kaspa's scalability and efficiency in blockchain operations.

Token Economy

Kaspa was launched through a fair launch in November 2021, without a pre-mine, pre-sale or token distribution. Kaspa is fully decentralized, open source and community-governed. The protocol's total token supply is capped at 28.7 billion, with 24.9 billion currently in circulation. Kaspa's current total market cap and fully diluted valuation is $4 billion.

Kaspa's token issuance is designed to decrease year by year, with each year halving through smooth monthly reductions. Initially mineable via CPU, the network gradually incorporates GPU and ASIC mining power. Kaspa follows a carefully designed issuance schedule to manage the growth of the token supply.

Mining cooperation

On June 26, 2024, Marathon Digital announced that its Kaspa mining operation has mined 93 million KAS, worth approximately US$15 million, since its launch in September last year.

In May 2023, Marathon began evaluating Kaspa as a potential way to diversify its revenue streams while continuing to leverage its existing infrastructure and digital asset computing expertise. After successfully deploying its first batch of Kaspa ASIC miners in September 2023, the company began to scale up its operations. Marathon has purchased approximately 60 PH of KS3, KS5 and KS5 Pro ASIC miners, each with a profit margin of up to 95% in some cases, depending on the current network difficulty and KAS price. Of these, 30 PH of Kaspa ASIC miners are currently operating in the company's own facilities in Texas, and the rest are expected to be fully operational in the third quarter of 2024.

“By mining Kaspa, we are able to create a revenue stream that is distinct from Bitcoin and directly tied to our core competency in digital asset computing,” said Adam Swick, Chief Growth Officer at Marathon. “With our existing infrastructure, unique relationships with hardware manufacturers, strong balance sheet, and team expertise, Marathon is uniquely positioned to mine Kaspa and capitalize on the current high margins on Kaspa ASICs. We look forward to continuing to support innovation in the proof-of-work ecosystem while expanding our position as the leader in digital asset computing.”

Once fully deployed, Kaspa will account for 1% of Marathon's 1,100-megawatt data center portfolio.

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