Kinto is an Ethereum L2 rollup designed to accelerate the transition to an on-chain financial system. It features permissionless KYC/AML and native account abstraction to solve the two biggest blockers to mainstream adoption: compliance and user experience.
Today, we want to announce our plans to improve Kinto’s user experience further by integrating Celestia, the industry’s leading modular data availability layer. Celestia will significantly scale Kinto’s throughput and provide low transaction fees for end users while ensuring our ability to interoperate and onboard assets from Ethereum Mainnet. It also preserves credible neutrality towards developers deploying on top of Kinto in comparison to a consortium or committee-based model.
Celestia’s full integration with the Arbitrum Nitro tech stack is already live today for testnet deployment, featuring Nitro fraud proofs and Ethereum fallback, minimizing any of the tradeoffs of using modular DA.
🧱Built for on-chain finance
Kinto is an Ethereum L2 that bridges the gap between traditional and decentralized finance by reducing regulatory risk and featuring permissionless KYC/AML. Kinto allows users and developers to transact and build on the first decentralized network that supports traditional financial institutions and DeFi protocols.
Our goal has remained the same since we started Kinto: accelerate the transition to an on-chain financial system by providing a secure, easy-to-use, and KYC-enabled blockchain without sacrificing decentralization or neutrality as a developer platform.
The modular architecture enabled by Celestia finally makes this vision fully viable.
Interoperability
- Unlike private & permissioned blockchains, Kinto is implemented as an open Ethereum L2 rollup, maintaining direct access and interoperability to onboard assets and users from Ethereum Mainnet while still ensuring compliance via on-chain KYC/AML
Scalability
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Instead of using expensive Ethereum block space for DA, Kinto taps into Celestia to provide low fees for end users and abundant block space to developers.
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Abundant blockspace increases developers’ ability to tap into account abstraction and build expressive applications without resorting to a private blockchain architecture or over-reliance on off-chain infrastructure.
Neutrality
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Tapping into Celestia for modular DA also provides credible neutrality towards developers and institutions integrating with Kinto.
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This minimizes the pitfalls of the consortium model of many private enterprise blockchains or Data Availability Committees with few members, which require developers and users to trust a small set of actors.
Kinto needed to embrace the modular thesis to customize its stack to build a viable on-chain financial system. The modular thesis emphasizes that different layers of blockchain architecture are separated and specialized, thereby allowing each critical component to function more efficiently. By becoming the first Arbitrum-based L2, Kinto preserves dedicated blockspace for its users, eliminates the risk of OFAC-sanctioned activity, and ensures high security through Arbitrum’s interactive fraud proofs if needed.
⚙️ Why Celestia?
In monolithic blockchain designs, the blockchain processes transactions, handles consensus, and stores data on one chain, creating scalability and customizability bottlenecks. Celestia’s architecture is optimized to provide high-throughput data availability and consensus that easily integrates with leading rollup frameworks.
Plugging in Celestia as a modular DA layer frees up our time to focus on building out Kinto’s unique features and getting to market quickly without sacrificing end-user experience. Because of Celestia’s sole focus and years of research on DA, they have shipped the most advanced data availability technology available on Mainnet.
Celestia offers minimal social overhead for deploying a high-throughput blockchain, ensuring that Kinto remains neutral to end users and developers compared to consortium blockchains or Data Availability Committees with few parties.
💰The Savings
Calldata in Ethereum is quite expensive, with November 2023 totaling nearly $18 million in fees across major Ethereum L2s. Today, on Ethereum, rollups compete for data availability alongside everything else on Ethereum Mainnet, including all its popular applications like Uniswap.
By using Celestia as a dedicated DA layer, we can reduce these calldata costs by more than ~100x. Basic calculations suggest Celestia can help reduce the cost of an ERC-20 transfer from 60 cents today to significantly less than 1 cent.
Cost reduction helps in terms of user fees and fosters broader adoption by developers who can build applications that take advantage of high throughput, like microtransactions. With Kinto, users and developers alike can execute transactions and access unique network features, including account abstraction and KYC/AML, at a fraction of the cost of previous L2s.
Finally, Celestia’s approach enhances Kinto’s decentralization and credible neutrality. Providing a robust consensus mechanism ensures that the integrity of Kinto is maintained without a central authority. This decentralized approach is vital for building trust with a wide range of end users, and it is essential for financial applications where security and trust are paramount.
🥫How it works
Celestia uses an innovative Data Availability Sampling (DAS) technique optimized to enable high throughput L2s while minimally sacrificing security. We’ve been excited since Celestia announced its support for the Arbitrum stack and became the first data availability network available.
To do so, Kinto will tap into Celestia via Blobstream on Ethereum Mainnet, which provides L2s secure on-chain access to Celestia’s data root for integration with the bridge and Nitro.
For a broader overview of how the integration with Nitro works, check out Celestia’s Arbitrum Orbit documentation.
The modular thesis, where different layers of the blockchain architecture are separated and optimized, allows each layer to function more efficiently.
From day one, Kinto used Ethereum as the settlement layer. Ethereum is the network with the most mature infrastructure for on-chain financial applications and the most censorship-resistant, neutral block space.
On the execution layer, we announced our partnership with Arbitrum a few weeks ago, becoming the first Arbitrum-based L2. Arbitrum is the undisputed L2 leader in TVL, maturity, and size of its DeFi ecosystem.
🌊 Launch Program
Kinto’s launch program is now live.
Our Arbitrum and Celestia stack aspires to provide guarantees similar to those of the traditional finance system but with increased uptime, open access, and lower costs than legacy asset issuance. With Celestia underneath, we hope to tap into the scalability needed to accelerate this transition.
Kinto’s launch program, Engen, is now live. You can join and become one of the founding members ahead of our mainnet launch by the end of Q1.
If you share our vision for a secure, open, decentralized financial system, join our Engen Launch here.