Author: Weilin, PANews

On August 29, Layer1 blockchain Kaia announced the launch of its mainnet. It was formed by the merger of Klaytn, previously developed by South Korean social giant Kakao, and Finschia, a popular Japanese instant messaging app LINE.

In a recent interview, Kaia’s core developers said 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 a software development kit (SDK) to achieve Web3 native application integration similar to Telegram.

In South Korea, 96% of South Korean users use Kakao's messaging app, while LINE is the main instant messaging software in Japan. According to official data, Kakao and LINE have 250 million users, but can they really reach these users and achieve large-scale adoption of Web3?

Klaytn and Finschia merged to imitate TON's strategy

In January this year, Kakao's blockchain Klaytn and LINE's blockchain Finschia proposed to merge their networks to create "Asia's largest Web3 network." The proposal was passed on February 15 with support from 95% of the Finschia community and 90% of the Klaytn community.

After several months of intense preparation, the Kaia mainnet was officially launched on August 29. Kaia supports EVM smart contracts. 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 that require near real-time response." It is reported that Kaia uses Practical Byzantine Fault Tolerance (pBFT), a highly optimized version of the Byzantine Fault Tolerance algorithm, which enables it to reach a processing capacity of 4,000 transactions per second in a real environment.

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

“We carefully planned to minimize the impact on each ecosystem service. Klaytn has been operating publicly for more than 5 years and has independently onboarded many partners. In contrast, Finschia has fewer anonymous projects but has closer ties with its partners and is able to communicate directly. To simplify the process, we decided to migrate some applicable projects to the Ethereum Virtual Machine (EVM) as this is the fastest and least impactful approach to 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 that focus on anonymity, Kaia's messaging apps offer more opportunities for extensive service integration. "We are targeting large messaging platforms like LINE and KakaoTalk, which represent the commercial direction and potential for Kaia. This is consistent with our background and Kaia's strengths."

Technically, Kaia plans to integrate into Discord and Telegram channels, aiming to achieve broad blockchain integration with messaging applications as intermediaries. Despite regulatory and social challenges, Kaia intends to overcome these issues step by step and show Web2 companies Kaia's advantages and differentiation. Ultimately, Kaia aims to expand into a super application that connects blockchain with various Web2 services.

During the development process, the Kaia team also encountered some challenges. Aidan Kwon said, "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." Despite this, the team finally facilitated the smooth launch of the mainnet through successful communication and coordination.

Aidan Kwon, core developer of Kaia

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

With the launch of Kaia mainnet, Kaia Foundation also launched Kaia Portal, which provides users with token exchange, airdrop, staking and other functions. For Klaytn holders, there is no need for a separate token exchange, but Finschia's FNSA holders need to convert their tokens into new KAIA tokens.

With 250 million users, will it lead to mass adoption?

Aidan Kwon said: “After the merger, Klaytn’s DeFi and gaming services will be combined with Finschia’s NFT, payment and AI services to form a massive ecosystem with more than 420 dApps and services.”

The Kaia Foundation announcement also mentioned that “Kaia is the largest Web3 ecosystem in Asia, integrating two messaging apps, Kakao and LINE, which have a total of more than 250 million users.”

According to public information, Klaytn was launched in June 2019 and quickly became one of the leading blockchain networks among Korean users. According to DappRadar's 2023 report, Klaytn ranked among the top 10 blockchains by number of users in 2021, and its number of users increased by 1,100% to 873,000 in 2023. This year, in the past 30 days, the most popular dApp on Klaytn is Kgken, the Move-to-Earn app with 743,000 users, followed by Superwalk with 50,700 users, and Iskra with 45,000 users.

LINE has also attracted much attention from the market. In 2022, LINE's NFT company LINE NEXT received US$10 million in strategic financing, with investors including SoftBank, Naver, CJ ENM, Shinsegae, LINE Games, YG Plus, Hashed, K Auction, etc. The following year, the company also announced that it had received US$140 million in investment from private equity fund operator Crescendo Equity Partners and its consortium, which was the largest investment in the blockchain and Web3 field in Asia in 2023.

LINE's Finschia was launched in 2018. Since then, Finschia has also attracted a large number of users. After its launch in January this year, Finschia's most popular dApp NFT platform DOSI has accumulated 5.6 million users and facilitated more than 530,000 NFT transactions.

However, these two social applications also face great market challenges in deploying Web3. In fact, many instant messaging software are also entering Web3. For example, in 2018, Beechat not only focuses on encrypted communication, but also provides digital asset wallet functions, and some software is intended to issue digital currency to provide payment support for its chat applications and related scenarios. In May 2017, Canadian instant messaging social platform Kik also announced the launch of its own digital currency Kin coin, which will allow users to purchase a series of digital services through it.

However, at present, Telegram and TON ecosystem are more concerned and participated by the market. In January 2018, according to TechCrunch and other media, Telegram Message, known as the "blockchain version of WeChat", plans to establish TON, positioning itself as the third-generation blockchain system after Bitcoin and Ethereum; and the "TON Payments" proposed in the TON white paper is intended to realize the payment tool of encrypted digital currency and even access more application scenarios. So far, the TON chain has developed rapidly, and the total locked value (TVL) has soared from US$9.56 million last year to US$750 million, continuously setting new highs. Although it has been negatively affected by the news of the arrest of Telegram founder Durov recently, its influence cannot be underestimated. For Kaia, this is a lot of competitive pressure.

The introduction of mini DApp functions may bring more room for Kaia to grow. For example, TON introduced mini apps such as TON Wallet. These types of applications provide a convenient entry point, allowing Web2 users to easily step into the Web3 world. Mini apps such as Notcoin and Hamster Fight also show great potential. With the advantages of convenience, ease of use, interaction, and low cost, these applications have attracted a large number of users to participate, while also promoting the adoption of blockchain.

Overall, imitating the mini app TON ecosystem and relying on the advantages of Web2 companies with a large user base and strong financial resources has added more possibilities to Kaia's ambitions. For similar Web3 native companies, the participation of two mature Web2 giants, Kakao and LINE, will bring greater competitive pressure. After all, these old social media giants have a huge user base, abundant funds and mature product experience, and a new competition stage is emerging.