1. Overview of Kaia's Background

1.1 Project Introduction

1.1.1 Establishment and Development History

On January 16, 2024, two of Asia's leading blockchain platforms, Klaytn and Finschia, announced a groundbreaking initiative: the launch of a unified mainnet. The merger of large-scale projects like Klaytn and Finschia is a highly unusual event in the Web3 ecosystem, especially considering that these two mainnets originate from two major internet giants in Korea and Japan—Kakao and LINE, respectively. On August 29, 2024, the merged Kaia mainnet was officially launched. By integrating their respective ecosystems and assets, Kakao and LINE aim to create a colossal Asian blockchain platform and gradually lead the global Web3 market.

The chairman of the Kaia Foundation is Sam Seo, who has been deeply involved in understanding Bitcoin and blockchain since 2017 and holds a Ph.D. in high-performance computing. Previously, Sam served as the Chief Knowledge Officer (CKO) at Krust Universe, where he led the development and operations of Klaytn. Additionally, he held the position of Chief Technology Officer (CTO) at GroundX, Kakao's blockchain subsidiary, and worked as an Assistant Computer Scientist at Argonne National Laboratory.

The joint backing of two major giants, Kakao and LINE, undoubtedly provides strong momentum for Kaia's development. Kakao boasts a usage rate of 96% in South Korea and has significant influence in Vietnam. Meanwhile, LINE is highly popular in regions such as Japan, Taiwan, and Thailand. Together, these platforms give Kaia a potential user base of over 250 million, significantly enhancing its global reach. With such an extensive user foundation, Kaia is poised to greatly advance the adoption and acceptance of blockchain technology in the East Asian market, laying a solid foundation for the large-scale application of blockchain technology. This positions Kaia to create the largest and most dynamic Web3 ecosystem in Asia. Other investors in Kaia include Hashed, IDG Capital, and others.

1.1.2 Key Milestones

Let us now take a closer look at Kakao and LINE in detail.

1.1.3 Kakao and Klaytn

Kakao Talk is one of South Korea's most popular instant messaging applications, with nearly 49 million monthly active users in Q3 2024, 90% of whom are based in South Korea. The company employs over 17,000 people and reported an operating profit of 130.5 billion KRW (approximately 93.48 million USD) in Q3 2024, marking a year-on-year increase of 5%. Notably, the platform division, which includes Kakao Talk, achieved revenue growth of 7%, reaching 943.5 billion KRW (approximately 707.63 million USD).

Kaia, formerly known as Klaytn (KLAY), is a public blockchain platform designed to provide a user-friendly blockchain experience. Developed by Ground X, the blockchain subsidiary of Kakao, it 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 user numbers in 2021. In 2023, its user base grew by an impressive 1,100%, reaching 873,000 users. Currently, Kaia ranks among the top 20 public blockchains on DAppRadar with 124 decentralized applications (DApps), while TON holds the 15th position.

From its inception, Klaytn was designed for DApp developers and enterprises, enabling them to innovate and enhance user experiences. This has provided Kaia with a robust technical foundation. To date, Klaytn has achieved a cumulative transaction volume of $376 billion, boasts over 29 million Web3 wallet users, and has a community of more than 240,000 members. Its all-time high on-chain total value locked (TVL) exceeded $1 billion. Additionally, it has established a strong presence in markets such as Singapore and Vietnam.

The South Korean market is inherently crypto-friendly, with its domestic exchange Upbit emerging as a leading platform in the crypto industry. For Web3 projects, being listed on Upbit is considered a significant achievement. Against the backdrop of widespread cryptocurrency adoption among Korean users, Kaia’s potential ceiling offers limitless possibilities for growth and innovation.

1.1.4 Line and Finschia

As Japan's most popular communication platform, LINE reaches 70% of the Japanese population and holds a dominant position in markets such as Thailand and Taiwan. In Japan, LINE boasts 92 million monthly active users, while in Thailand, the user base exceeds 51 million, making it the most popular social platform in the country. Taiwan has 21 million users, and the Indonesian market accounts for another 13 million users. This high level of user penetration provides a solid foundation for its advertising, payment, and content services. For example, Nielsen's 2024 LINE Usage Behavior Survey revealed that 92.1% of Taiwanese aged 15-65 used LINE in the past seven days, with nearly half being heavy users who check LINE an average of 14 times daily.

Compared to other social platforms, LINE’s unique ecosystem integration stands out. Users can access a wide range of content on LINE, including over 300,000 manga titles and nine games that combine social interaction. This diverse functionality gives LINE a significant edge in maintaining user engagement. Moreover, with an average weekly usage time exceeding four hours, LINE has become an indispensable part of users' daily lives.

This comprehensive ecosystem provides Kaia with a unique strategic advantage. LINE’s highly concentrated and active user base, combined with its integrated advertising and payment features, enables brands and services to reach target audiences with precision. Additionally, LINE’s localized content strategy ensures close alignment with user cultural preferences, creating an efficient pathway for Kaia’s localized marketing efforts.

LINE’s payment ecosystem also demonstrates its potential in the blockchain economy. With 40 million monthly active payment users and an annual transaction volume exceeding $12 billion, LINE Pay offers users a seamless digital payment experience. This robust payment infrastructure, paired with its highly targeted advertising capabilities (reaching over 200 million users monthly), provides a natural advantage for blockchain projects seeking to establish and expand in the Asia-Pacific market.

Particularly noteworthy is the LINE Miniapp initiative, which serves as a bridge between Web2 and Web3. This feature not only allows existing users to easily access decentralized applications but also creates a highly compatible development environment through deep integration with LINE’s payment, advertising, and communication ecosystems.

LINE’s blockchain platform, Finschia, was launched as early as 2018. Over five years of development, it has amassed more than 5.6 million Web3 wallet users and over 170,000 community members while establishing a significant presence in Japan, Taiwan, Thailand, and Abu Dhabi.

LINE’s strategic direction indicates that it aims to be more than just a participant in the future Web3 landscape—it seeks to be a driving force and accelerator. By bridging the gap between technology and mainstream adoption, LINE is poised to help propel the entire industry forward into the next phase of innovation.

Currently, Kaia has confirmed the launch of the SDK for Line mini-programs, with the first batch of Line mini-program applications set to debut in January 2025, while also meeting regulatory requirements. Among Kaia's six board members, three are from Kakao's blockchain Klaytn. Additionally, Kakao and its affiliates hold approximately 9.8% of Kaia's total supply and are actively involved in its governance. However, the current regulatory uncertainty in South Korea hinders Kakao from taking a more proactive role in blockchain initiatives, such as launching mini dApps like LINE. Once these regulatory uncertainties are resolved and LINE's mini dApp services succeed, Kakao is expected to fully embrace blockchain integration.

1.2 Tokenomics

1.2.1 Kaia Token

The native token of Kaia, KAIA, plays a central role in the blockchain economy, serving as a means to pay transaction fees when creating or executing smart contracts or transferring KAIA. It is not only a payment method for transactions but also powers the overall system's normal operation:

1. Incentive Mechanism: Customers on the platform incentivize consensus nodes (CNs) by paying with KAIA, as these nodes are responsible for verifying transactions and executing smart contracts. In simple terms, nodes provide computational power and resources, while users pay KAIA in return, establishing a mutually beneficial relationship.

2. Enhancing Development Quality: The fees paid using KAIA are proportional to the complexity and resource consumption of the smart contracts. If developers write inefficient or redundant code, executing it becomes more expensive. This mechanism encourages developers to optimize code quality and avoid wasting computational resources.

3. Maintaining Network Health: CN nodes receive KAIA rewards for consuming computational power and bandwidth to support network operations. This incentivizes more nodes to participate in the consensus process, ensuring decentralization and stability of the network.

New KAIA tokens are automatically issued with each new block, with an initial annual inflation rate of 5.2%. The distribution of block rewards is as follows:

● CCO and Community: 50% (20% to block creators as rewards, 80% as staking rewards)
● KEF (Kaia Ecosystem Fund): 25%
● KIF (Kaia Infrastructure Fund): 25%

This allocation model incentivizes network participation while supporting the growth and development of the Kaia ecosystem.

Kaia implements an on-chain governance system designed for fairness and inclusivity:

● Voting rights are proportional to the amount of KAIA tokens staked.
● A cap on voting rights prevents the opinions of a minority from being suppressed.
● Delegation of voting rights is permitted.
● All governance proposals are recorded on-chain to ensure transparency.

From a market perspective, Kaia has performed exceptionally well since rebranding from Klay to Kaia and listing on Binance.

1.2.2 Governance Council

With technological advancements driving the rapid growth of the metaverse, Decentralized Autonomous Organizations (DAOs) and developers are becoming significant forces in this new economic landscape. Kaia is keeping pace with this trend by launching the Kaia Governance Council (GC), composed of 31 trusted early members, primarily from top-tier institutions. These include Kakao, Binance, Google Cloud, GS HomeShopping (the leading multimedia retailer in South Korea), LG Uplus (a subsidiary of Korea's largest corporation, LG Corporation), Hanwha Systems (the second-largest non-bank financial group in South Korea), Everrich Group (a real estate developer focused on South Korea, Taiwan, and Southeast Asia), HashKey (a leading fintech group based in Hong Kong specializing in blockchain development), and NEOPLY (a prominent startup accelerator under NEOWIZ, a major South Korean online gaming company focused on blockchain investments).

Through this choice, the Kaia platform has successfully achieved stable operation of its mainnet, ensuring rapid and efficient advancement of technological stability and operational implementation during the early stages of the platform's development, thereby laying a solid foundation for subsequent innovations in governance models.

Moreover, Kaia has expanded the membership of its Governance Council (GC) from traditional enterprises to include DAOs and builders, adapting to the demands of the new era. Kaia's ultimate vision is to become a fully decentralized "DAO of DAOs," unifying the voices of all governance entities through on-chain mechanisms. This represents not only a technological innovation but also a genuine transformation of governance structures—empowering all stakeholders with greater voice and establishing a new benchmark for decentralized development in the metaverse.

Kaia's governance framework is not only a core pillar of its platform development but also a key highlight in attracting global developers, communities, and organizations to participate. Through a governance mechanism that combines foresight and flexibility, Kaia is laying a solid foundation for sustainable growth within the blockchain ecosystem.

In addition, Kaia collaborates closely with government entities; for instance, the Bank of Korea has chosen its parent company, Ground X, as the primary technology provider for simulating a blockchain-based digital won.

1.3 Technical Architecture Principles

Kaia is a highly optimized public blockchain based on Byzantine Fault Tolerance (BFT), designed to achieve consensus even in the presence of malicious nodes or failures, meeting enterprise-grade reliability and performance standards.

Key Features of Kaia Blockchain

1. Block Generation and Confirmation Time: 1 second.

2. Transaction Processing Capacity: 4,000 transactions per second.

3. Gas Fees: Approximately one-tenth of Ethereum's.

4. Compatibility: EVM-compatible, supporting Solidity contracts.

5. Governance: Managed by the Kaia Governance Council, composed of globally recognized enterprises.

Network Structure

Kaia's network is divided into three logical subnetworks:

1. Core Cell Network (CCN): Comprises Core Cells (CCs) responsible for transaction verification, execution, and block creation.

2. Endpoint Node Network (ENN): Consists of Endpoint Nodes (ENs) that handle RPC API requests and manage service chain data.

3. Service Chain Network (SCN): Auxiliary blockchains that operate independently for decentralized applications (DApps) and connect to the main chain via ENS

These mechanisms make the Kaia blockchain a platform that combines high performance, security, and compatibility, particularly suitable for applications requiring fast transaction processing, compatibility with the Ethereum ecosystem, and cross-chain interaction needs. Its design meets the convenience requirements of developers while supporting user experience in high-frequency trading scenarios, all while ensuring system reliability and attack resistance through multiple security measures. This is specifically reflected in the following five key areas.

1.3.1 Consensus Algorithm

The consensus algorithm is a mechanism used to achieve agreement among a group of participants who do not trust each other. Its core objective is to determine which blocks are "valid" within the blockchain network and to ensure the stability and reliability of the entire system. In blockchain technology, the performance of the consensus algorithm directly impacts network efficiency and plays a crucial role in user experience for blockchain applications. For example, a more efficient consensus algorithm results in faster transaction processing on the blockchain.

PBFT (Practical Byzantine Fault Tolerance) is a special consensus algorithm that directly confirms the validity of blocks by enabling communication among nodes, thereby avoiding fork issues. However, PBFT has limitations; as the number of participating nodes increases, the communication load between nodes grows exponentially, making PBFT suitable for networks with a limited number of nodes.

To address the communication bottleneck issue of PBFT while achieving high performance, Kaia employs an optimized version of Istanbul BFT. In Kaia, there are three types of nodes: CN (Consensus Node), PN (Proxy Node), and EN (Endpoint Node).

1. Consensus Node (CN): Responsible for block generation and managed by Core Node Operators (CCO).
2. Proxy Nodes (PN): Facilitate data transmission between consensus nodes and users, providing network interfaces, transmitting transaction requests, and propagating blocks.
3. Core Unit (CC): Composed of one consensus node (CN) and two proxy nodes (PN).
4. Endpoint Nodes (EN): Act as network endpoints that handle API requests and data processing, connecting users to the network and providing access services.
5. Bootnode: A special node operated by Kaia to assist new nodes in joining the network.

Due to the verification and consensus processes being conducted for each block, forks do not occur, and once consensus is reached, the finality of the block is immediately guaranteed.

Additionally, the issue of increased communication volume in BFT algorithms is addressed by utilizing a randomly selected committee. The CN collectively forms a committee, and during each block generation, a portion of its members is selected as committee members using a VRF (Verifiable Random Function). The main process involves:

1. Randomly selecting the committee: A mathematical method (called VRF) is used to fairly and randomly select a group of individuals responsible for generating and verifying blocks. This group is termed the "committee," which includes "proposers" (responsible for proposing new blocks) and "validators" (responsible for checking the compliance of blocks). The role of VRF is to ensure the fairness of the election while making the entire process verifiable but unpredictable, making it difficult for malicious nodes to attack.

2. Block generation: The selected proposer generates a new block that contains transaction data to be processed.

3. Verification and signing: Validators within the committee review whether the block submitted by the proposer is correct. If more than two-thirds of the validators recognize and sign it, the block will be added to the blockchain.

Since consensus information is exchanged only among committee members, communication volume does not exceed design levels even if the total number of CNs increases.

Currently, Kaia Mainnet can provide high throughput of 4,000 transactions per second with a block generation interval of one second. There are over 50 consensus nodes participating in the CNN (Consensus Node Network), and this number will continue to grow as Kaia optimizes its algorithms.

1.3.2 Block Generation and Propagation

Kaia's design for block generation and propagation is simple yet efficient, ensuring system stability and scalability. Key characteristics include:

1. Rapid block generation: The goal for each round of operations is to generate a block within one second, which is considered highly efficient in the blockchain field.

2. Random yet deterministic election process: Although the election of proposers and committee members is random, it is determined by an algorithm, and all nodes can verify this randomness. This design enhances security while ensuring fairness.

3. Two-thirds signing rule: A new block can only be added to the blockchain if more than two-thirds of committee members sign in agreement. This mechanism guarantees the credibility and immutability of blocks.

4. Multichannel propagation: To avoid network congestion, Kaia employs independent propagation methods for blocks and transactions, akin to transmitting different information on separate lanes. Blocks and transactions propagate through independent channels, significantly reducing delays and conflicts.

1.3.3 Kaia Virtual Machine (KVM)

The Kaia Virtual Machine (KVM) is a core component for running smart contracts, designed with compatibility and scalability in mind. Key features include:

1. Based on Ethereum Virtual Machine (EVM): Kaia directly inherits the architecture of Ethereum's virtual machine, allowing all Ethereum smart contracts to run seamlessly on Kaia.

2. Extended functionality: In addition to supporting Ethereum opcodes (smart contract execution instructions), Kaia introduces specialized precompiled contracts that optimize specific operations' efficiency.

3. Compatibility with Ethereum development tools: Developers can use popular Ethereum development tools like Remix, Hardhat, and Foundry with minimal need to learn new tools.

4. Easy migration: Developers who have already created smart contracts on Ethereum can deploy them on Kaia with minimal modifications, reducing development costs and migration risks. This positions Kaia as an extension of the Ethereum ecosystem, better capturing a wide range of EVM developers.

1.3.4 Security Measures

To enhance system security, Kaia implements several design measures:

1. Random selection of proposers: Using VRF to randomly select proposers for blocks makes it difficult for attackers to predict who will be proposer in the next round, thereby increasing security.

2. Key separation: Validators use two different keys:

● Verification key: Used for participating in block verification.
● Reward key: Used for receiving rewards.This design effectively prevents hackers from gaining both verification rights and rewards after attacking a single key.

3. Transparent verification process: Each member of the committee must verify new blocks; all signature records are public, allowing anyone to check verification results.

These measures ensure that the Kaia system remains secure and stable even when facing hackers or malicious nodes.

1.3.5 Interoperability

One of Kaia's design goals is to achieve seamless interaction with other blockchains, reflected in:

1. EVM compatibility: Kaia supports Ethereum's smart contract language (Solidity), enabling developers to easily migrate applications from Ethereum to Kaia.

2. Cross-chain capabilities: Kaia can interact with other EVM-SDK based blockchains for cross-platform transactions and smart contract execution. Currently, cross-chain bridges like Butter Network supported by Map Protocol have already integrated with Kaia.

3. Support for multi-chain ecosystems: Beyond Ethereum, Kaia has mechanisms designed for collaboration with other blockchain systems.

This makes Kaia a flexible blockchain platform capable of meeting various cross-chain scenario needs, such as asset transfers between decentralized exchanges (DEX) and cross-chain smart contract calls.

1.4 Competitors

Given that both projects start from social media, transitioning from Web2 to Web3, we will focus on comparing Kaia with Telegram-based TON.

Telegram, which has over 900 million users, offers games such as Catizen and Hamster Kombat through the Open Network (TON) blockchain, pioneering the integration of social media with Web3. The story of TON dates back to 2017, when it was proposed by Telegram founders Pavel Durov and Nikolai Durov. The initial goal was to deeply integrate blockchain technology with Telegram's social ecosystem to create an ideal platform for decentralized applications (DApps), while meeting the needs for fast and secure transactions. In 2018, Telegram raised $1.7 billion for the TON project through a private sale. However, in 2019, the U.S. Securities and Exchange Commission (SEC) sued Telegram, accusing it of issuing unregistered securities through its Gram token. This legal battle ultimately led Telegram to abandon the TON project in 2020.

Despite Telegram's withdrawal, the open-source community behind TON did not stop but continued to pursue the project's vision, renaming it The Open Network (TON). In 2021, the TON mainnet officially launched, marking the birth of a new decentralized ecosystem focused on efficient and scalable blockchain infrastructure.

TON is designed with high performance and strong scalability at its core, utilizing sharding technology and a Proof-of-Stake (PoS) consensus mechanism to support large-scale parallel transaction processing. Additionally, TON offers a range of innovative features, including:

● TON DNS: Provides an easy-to-remember address naming system for users and applications, reducing the complexity of blockchain interactions.
● TON Storage: A decentralized storage solution that meets file security and data storage needs.
● Instant Payment Channels: Offers a low-latency payment network for high-frequency trading users.

These technical characteristics not only facilitate developers and users on TON but also lay a foundation for the richness of its ecosystem.

As of 2024, TON has attracted over 800 applications, including stablecoin solutions, NFT platforms, and decentralized finance (DeFi) applications. Notably in the stablecoin sector, on-chain USDT supply has rapidly increased, injecting strong liquidity into its ecosystem. Some representative examples include:

● Tap to Earn Mini-Games: Notable casual games on the TON chain like Notcoin and Hamster Kombat have attracted a large user base, with daily active users exceeding 5 million at one point. These games are characterized by "low learning costs and high accessibility," making them well-suited for fragmented time play and highly appealing within the TON ecosystem.

● Decentralized Finance (DeFi): The Total Value Locked (TVL) on the TON chain has seen significant growth, currently surpassing $600 million, positioning it as one of the main competitors in the DeFi space.

● NFT and SocialFi Applications: Leveraging Telegram's traffic entrance, TON has deepened Web3 concepts into social domains through applications like NFTs and SocialFi, forming an ecosystem that combines entertainment and interactivity.

Moreover, with its global community base and robust technical performance, TON has successfully attracted numerous developers and decentralization enthusiasts.

However, TON has also faced challenges; for instance, there were brief infrastructure interruptions during periods of high network activity. This reflects the need for further optimization in terms of development potential and technical stability. The main comparisons are as follows:

1.5 Preliminary Valuation Assessment

Despite TON maintaining a global influence in decentralization and technological innovation, KAIA's localization strategy and robust user base have established it as an irreplaceable player in the Asian market. KAIA is not only a significant participant in the East Asian blockchain ecosystem but also has the potential to become a key force in driving the adoption of Web3 applications in the future.

We compared several indicators. From the MC/TVL metric, KAIA's current valuation appears significantly lower than that of TON, suggesting that its market positioning and localization strategy have not been fully quantified, and its capital market potential remains largely untapped. This is particularly evident as the social and payment dividends derived from its vast user ecosystem, supported by LINE and Kakao Talk, have yet to be fully converted into capital market value. In contrast, TON's MC/TVL ratio reflects a high recognition of its technological capabilities and vision for global expansion, although such high valuation may indicate a narrowing growth space.

Furthermore, KAIA's current valuation may not adequately reflect its strategic significance in the implementation of Web3 applications. For instance, through deep integration with existing social payment systems, KAIA has achieved a seamless connection between innovative scenarios like DeFi and NFTs with users' daily behaviors. This endogenous growth model provides natural stickiness and vitality to its ecosystem.

However, whether this potential can truly be realized remains contingent on the actual deployment of specific application scenarios. Notably, the LINE mini app set to launch in Q1 2025 will be a crucial step for KAIA in expanding its Web3 influence and will serve as an important opportunity to assess its ecological value. This milestone is pivotal not only for KAIA's ability to fully unleash its ecological potential but also for validating whether it can surpass other competitors in the East Asian market to become an indispensable blockchain solution provider.

2. Kaia’s ecosystem

According to the official website, Kaia currently hosts 364 projects. From top-tier DeFi protocols to AAA games, real-world assets (RWA), fandoms, and communities, Kaia's vibrant ecosystem is enjoyed by millions across Asia every day. The data from DeFiLlama clearly shows that the top three projects by Total Value Locked (TVL) in the Kaia ecosystem are Neopin, Lair Finance, and Capybara, all of which operate within the DeFi space.

2.1 DeFi

In the real world, economic activities often rely first on social infrastructure (such as national infrastructure) and natural infrastructure (such as the natural environment). On this foundation, financial infrastructure maximizes the efficiency and impact of economic activities by providing services like capital lending, becoming a catalyst for economic development.

However, the development path of the blockchain world is entirely different from that of the real world. Leading blockchain networks such as Ethereum, Arbitrum, Optimism, BNB, and Solana have first built a DeFi ecosystem around financial infrastructure before gradually promoting the implementation of other industry DApps (decentralized applications). Through functions like capital lending, token swapping, and reward mechanism design, DeFi provides essential liquidity support for various DApps, enabling them to establish a foundation on-chain. In other words, in the blockchain world, the financial infrastructure of the network has become a prerequisite and an indispensable foundation for the accumulation of digital products and ecological development.

This vision driven by DeFi is helping Kaia become an important infrastructure for the next generation of blockchain networks. To this end, Kaia has launched the D2I (DeFi to Infrastructure) program.

During the DeFi summer of 2021, Kaia secured significant funding through liquidity mining. However, the collapse of the on-chain economic bubble in 2022 caused a significant contraction in the ecosystem, affecting Kaia's competitiveness. The D2I program aims to quickly revitalize this underutilized ecosystem through incentives and provide financial infrastructure support for new DApps after the chain merger. In the long term, the core goal of this program is to comprehensively reshape Kaia's DeFi ecosystem and assist in its resurgence.

In the first half of 2024, Kaia selected three DEX partners as part of the D2I program: two v3 AMM (spot) DEXs—Dragonswap and Kaiaswap—and one coverage AMM (spot) DEX—CapyBara. Although Kaiaswap recently exited the ecosystem, Dragonswap and CapyBara continue to develop actively. As of now, these teams have achieved the following results:

● Cumulative Trading Volume: Over $710 million;
● Total Locked Value (TVL): Over $39 million;
● Number of Transactions: More than 3.1 million;
● User Growth: Cumulative users exceeding 260,000;
● Ecosystem Contribution: Burned 245,000 KAIA tokens.

Notably, the trading volume of on-chain DEX for $KAIA has become comparable to that of Binance, indicating that Kaia's DeFi ecosystem is gradually recovering.

With two spot DEX teams selected through the D2I program in early 2024, Kaia plans to introduce Avalon Finance and potentially bring in another main DEX team capable of handling institutional liquidity if necessary. The DeFi ecosystem is continuously evolving; it is transitioning from complex "funding blocks" (such as yield aggregators and leveraged liquidity mining) to derivatives based on ecosystem native tokens and stablecoins. This transformation aligns with growing institutional demand. As core financial infrastructures (spot DEXs and money markets) stabilize gradually, Kaia will focus on developing derivatives based on native coins and stablecoins (such as LSDfi, LRTfi, and yield stripping derivatives). Its primary goal is to enhance market share for LSD and LRT so that Kaia's native coin plays a more active role in the DeFi ecosystem.

The D2I program demonstrates Kaia's strategic foresight in revitalizing the DeFi market. Through precise incentive mechanisms and strong collaboration with ecosystem partners, Kaia not only addresses current core issues but also lays a solid foundation for future development. With ongoing improvements in core financial infrastructure and derivative markets, Kaia is expected to stand out amidst increasing competition in blockchain and become a trusted provider of DeFi solutions for enterprises and users.

In the future, builders within D2I will evolve from basic DEX platforms to comprehensive ecosystems. They are also continuously adding new features such as Launchpads, Meme platforms, liquidity management providers, lotteries, and perpetual futures. These robust infrastructures now allow all DApps within the Kaia ecosystem—including the upcoming Mini DApp on Line—to easily establish an on-chain ecology through these functionalities.

2.1.1 Neopin

Project Overview:
NEOPIN, established in 2021, is a "licensed DeFi protocol" under the South Korean gaming giant Neowiz, combining the advantages of both centralized finance (CeFi) and decentralized finance (DeFi). It serves as the first DeFi within the Kaia ecosystem, aiming to bridge traditional finance and DeFi protocols within a compliant framework. NEOPIN has been selected for the Abu Dhabi Investment Office's innovation program and is collaborating with local government agencies to develop a DeFi regulatory framework, making it a rare regulated DeFi service provider that actively embraces regulation for long-term development. The current Total Value Locked (TVL) has reached $240 million, supporting 59 tokens and operating with 22 nodes.
X: @NeopinOfficial

2.1.2 Lair Finance

Project Overview:
Lair Finance is a liquidity staking protocol within the Kaia ecosystem, designed to provide users with decentralized finance (DeFi) yield opportunities. Through its unique tokenomics and staking mechanisms, users can engage in liquidity provision and asset appreciation plans on the platform, earning additional KAIA token rewards for sustainable financial returns.
X: @LairFinance

2.1.3 Capybara Exchange

Project Overview:
Capybara Exchange is the first and largest decentralized exchange (DEX) on the Kaia chain. It features ultra-high capital efficiency, transparency, and a community-first approach. Its TVL has significantly increased over the past two months, surpassing $40 million.
X: @CapybaraDEX

2.1.4 Avalon Labs

Project Overview:
Avalon Labs (formerly Avalon Finance) is a leading lending ecosystem centered around Bitcoin, uniquely positioned at the intersection of DeFi (Decentralized Finance), CeDeFi (Centralized Decentralized Finance), and RWA (Real-World Asset) lending. By connecting these three critical areas, Avalon Labs has established itself as a cornerstone in the rapidly evolving decentralized finance landscape. The decision to build its products on the Kaia chain stems from a strong alignment in core values. Kaia emphasizes community-driven initiatives, sustainability, and streamlined user experiences, which resonate with Avalon’s vision in the DeFi sector. Avalon Labs aims to leverage its existing active user base of 80,000 to 90,000 and significant Total Value Locked (TVL) to enhance Kaia's influence beyond the Asia-Pacific region and into various global niches, thereby expanding its impact within the international blockchain ecosystem.
X: @avalonfinance_

2.1.5 DragonSwap

Project Overview:
DragonSwap serves as a central hub for DeFi on Sei, supporting Automated Market Makers (AMM), prediction markets, and Liquid Staking Tokens (LST). Designed with user-friendliness and community orientation in mind, DragonSwap has evolved into the highest-performing parallel liquidity center operating on Sei V2. Currently, it boasts a TVL exceeding $55 million and nearly 120,000 users, with an all-time high reaching $700 million. On March 8, 2024, DragonSwap was selected as a partner for the Kaia Foundation's (formerly Klaytn Foundation) D2I program, committed to leveraging D2I liquidity incentive mechanisms to foster the growth of the DeFi ecosystem on Klaytn.
X: @dragonswap_dex

2.2 Payment

2.2.1 Alchemy Pay

Project Overview:
Alchemy Pay was established in Singapore in 2018 as a payment gateway that seamlessly connects cryptocurrencies and global fiat currencies for businesses, developers, and users. The Alchemy Pay Ramp solution can be integrated with platforms and DApps via plugins or APIs, facilitating an easy transition from fiat to cryptocurrency. Alchemy Pay supports payments in 173 countries, utilizing methods such as Visa, Mastercard, Discover, Diner's Club, Google Pay, Apple Pay, popular regional mobile wallets, and domestic transfers, with a particular focus on emerging markets. It also enables remittances in over 50 local fiat currencies. Recently, Kaia partnered with Alchemy Pay to offer a zero-fee $KAIA bridging service, allowing users to seamlessly purchase $KAIA using local fiat currencies through bank cards or mobile wallets for ultimate convenience.
X: @AlchemyPay

2.3 AI Track

2.3.1 FlareAI

Project Overview:
FlareAI is the first AI-driven DApp launched on the Kaia blockchain. This marks the integration of cutting-edge AI technology with Kaia's robust blockchain infrastructure, setting new standards for innovation within decentralized ecosystems. FlareAI aims to revolutionize the integration of AI and blockchain technology by addressing key challenges in AI development such as data quality, efficiency, and privacy. By leveraging Kaia's ultra-low latency and high-speed infrastructure, FlareAI provides developers and users with an unprecedented experience in creating and interacting with AI-driven solutions.
X: @flareai_io

2.3.2 FDN

Project Overview:
FDN is an AI facial recognition network that utilizes Web3's incentive characteristics to better capture facial data, thereby adding value in scenarios such as AIGC-generated 3D avatars and advertising marketing. Additionally, it employs blockchain technology to protect user data privacy. FDN has entered the first phase of the Kaia Wave project and is part of the acceleration programs at Web3Labs and Kucoin.
X: @project_fdn

2.4 Mini Dapps on Line

In the Web3 gaming universe of 2024, Ton, in collaboration with Telegram, has introduced a groundbreaking business model through a series of Mini Apps. Leveraging Telegram's impressive user base of 900 million, Web3 games have attracted an unprecedented number of users and interactions. Recently, LINE also announced its first batch of Mini Dapps, which are detailed as follows:

1. Bombie: A meme-based mini-game developed by Pluto Studio where players shoot zombies to earn airdrop rewards. In just three months since its release, it has garnered 7 million users and generated $10 million in revenue. Bombie is the first mini-game to span both Telegram and LINE platforms, set to launch on the LINE Dapp Portal in January 2025, allowing users to access and play directly through LINE Messenger while accumulating rewards. X: @Bombie_xyz

2. Bullet Storm: An innovative arcade shooting game that combines social engagement with reward-driven gameplay, attracting millions of players globally. X: @_KultGames

3. Captain Tsubasa (Minttown): A mini-game developed by MintTown based on the iconic Japanese soccer anime IP "Captain Tsubasa." X: @TsubasaRVonTG

4. Contentverse (Wizzwood): A team that pioneers the integration of Web2 social platforms with Web3 gaming. Wizzwoods is a pixel-style farming idle game that incorporates cross-chain technology and SocialFi elements. X: @Wizzwoods_game

5. Elderglade: An AI-driven fantasy world game developed by blockchain game developer W3Forge, officially launched on Telegram on September 23. W3Forge is known for its success with zkRace (165x ATH) and ranked among the top 20 in CoinMarketCap's global IDO in 2021. X: @Elderglade

6. Frog Defense: A mini-game featuring frog defense battles, debuting on the Kaia blockchain and LINE, introducing the popular TikTok game Frog Pikeman to the Web3 gaming arena. As LINE's first tower defense game, Frog Defense combines engaging gameplay with viral meme appeal, offering millions an exciting entry point into blockchain gaming. X: @FrogDefense

7. Futr: A prediction market platform where real-world outcomes meet social connections. Designed for collaboration, Futr allows users to predict events, earn insights through Futr tokens, and engage via an active social media hub. It fosters friendships and tribes within a creator-driven ecosystem that makes predictions fun, social, and rewarding. X: @thefutr_

8. Gee: Developed by a community startup studio, this platform nurtures unique digital companions on the Kaia blockchain. X: @dokyoworld

9. Goblin Master: This platform enables brands to create immersive digital realms that captivate audiences through engaging gameplay and unique reward experiences in a magical task-filled world. X: @GoblinMasterTon

10. Goblin Tycoon: Exclusively developed by Digital Fire Studios for LINE Messenger, this idle casual game allows players to build a goblin empire, acquire powerful weapons, upgrade resources, and battle epic bosses in a fun and addictive adventure. X: @GoblinTycoonZoH

11. Heroic Arena: This game reinterprets ACG culture from a fresh perspective as LINE's first anime-style click battle game loved by millions globally. Players can unlock exquisite anime character NFT collections for future trading within Heroic IP derivatives. It will offer a series of ACG games centered around NFT assets + $HAT for LINE fans. X: @heroicarenagame

12. KeitoKun: A one-stop entertainment application platform on Kaia and LINE that emphasizes community-driven growth and decentralized innovation, transforming entertainment into an immersive and rewarding journey for users. Launching in January 2025 on Kaia and LINE. X: @KeitoKunyarn

13. Midnight Survivors: The first gacha roguelike game on LINE supported by KaiaChain that merges intense survival gameplay with beneficial gacha systems and exclusive in-app rewards while providing players opportunities to earn through its innovative gaming experience. X: @Survivors_gg

14. Shin Chan's Match Daily: Dive into a quirky world blending match-three puzzles with "spot the difference" challenges featuring the iconic Crayon Shin-chan universe developed by GGI's subsidiary—a leading blockchain game publishing platform and content community globally. X: @MIXMARVELGAME

15. SuperWalk: A healthcare and wellness portal Dapp aimed at non-crypto users that seamlessly integrates fitness habits with tangible rewards, boasting over 300,000 users. X: @SuperWalk_

16. Web3 Plants vs Zombies: This version innovatively merges merging upgrade mechanisms with classic tower defense gameplay where players collect powerful cards to build strategic defenses against waves of enemies culminating in epic boss battles, offering dynamic progression with challenging levels and vibrant visuals for modern gamers redefining tower defense experiences. X: @TelgatherGames

17. TCOM (Astroboy): TcomArena is a premier action-adventure game combining classic action RPG elements with innovative gameplay where players embody legendary characters like Iron Wall Astroboy on thrilling adventures while defeating hordes of enemies to unlock powerful skills and upgrade attributes—all part of building the world's largest Web3 IP open platform. X: @ACG_WORLDS_

18. Twelve Goblins: A merging puzzle game from the Web3 project "Wizardry BC Project," utilizing Drecom's IP "Wizardry." X: @TwelveGoblins

19. X-Hero: Developed by Digital Fire Studios, this variant of tower defense gameplay allows players to summon heroes, strategize defenses, and battle relentless waves of monsters within dynamic and addictive gameplay experiences. X: @DigitalfireStu

20. Yuliverse: A gamified social metadata platform transforming users' lifestyles into crypto assets using location-based service technology. X: @TheYuliverse

2.5 Other Ecological Activities

2.5.1 Kaia Wave

In September of this year, Kaia Wave was officially launched. This initiative, developed jointly by the Kaia Foundation and LINE NEXT, is a Web3 creator program that provides Web3 builders with the opportunity to connect with over 200 million LINE users. Kaia Wave will offer up to $10 million worth of KAIA tokens, marketing support, venture capital connections, and user experience enhancement tools to assist DApps in promoting themselves across Asia.

Since the launch of the Kaia Wave program, 400 project teams have participated. The Kaia Foundation and LINE NEXT teams will prioritize projects that can effectively utilize the LINE Mini DApp UX infrastructure.

The following image showcases the vibrant atmosphere of the Wave event held in Thailand in November.

2.5.2 Line Next

Kaia frequently co-hosts various offline events with LINE NEXT, such as the recently held Kaia Demo Day project showcase and the Creator Alliance Assemble last month. LINE NEXT is a dedicated Web3 enterprise under LINE, focusing on NFT business, which secured up to $140 million in investment in 2023 from private equity fund operator Crescendo Equity Partners and its consortium.

2.5.3 Kaia Grants

Kaia has launched multiple initiatives to provide generous support and professional assistance to DApps. Below are some of the projects that have received Kaia Grants, including notable ones such as LayerZero, OpenSea, and ELYSIA.

• Kaia Ecosystem Fund

The Kaia Ecosystem Fund (KEF) focuses on ecological development, encompassing service rewards, developer community cultivation, infrastructure support, indirect investments, and the operation of the governance committee. It is funded by 25% of the total KAIA issued during block creation. Its operations are transparent, requiring all budget and usage details to be approved by the governance committee and made public.

• Kaia Infrastructure Fund

The Kaia Infrastructure Fund (KIF) primarily supports mainnet and infrastructure research and development, ecosystem acceleration (providing financial support to small Kaia blockchain ecosystem partners, attracting new governance committee members, and offering market liquidity), as well as foundation operations. This fund is also supported by 25% of newly issued KAIA and ensures efficient and transparent execution of funds through strict internal control mechanisms.

• Ignite on Kaia

This program aims to facilitate seamless onboarding for DApp developers by providing practical market support in both technical and business aspects. The Ignite on Kaia (IOK) program allows DApp developers to concentrate on product development while industry experts handle other critical areas such as wallets, marketing, security tools, API nodes, NFT markets, oracles, and development outsourcing. Particularly for "Go-To-Market" strategies, the IOK fund can assist projects in covering part of their marketing expenses.

3. Highlights

In the global landscape of the Web3 ecosystem, KAIA emerged as a rising star, starting from the East Asian market and gradually building a regionally advantageous blockchain solution through precise positioning, technological innovation, and ecological integration. The main points summarized are as follows:

**1. Unique Positioning: **
Giants Collaborate to Build the East Asian Blockchain EcosystemKaia Chain is born from the collaboration of two tech giants—Kakao and LINE—making it one of the most ambitious blockchain projects in the East Asian market. This partnership not only provides technological resources and capital backing but also brings an unparalleled user base with a combined user base exceeding 250 million. This robust foundation allows KAIA to seamlessly integrate blockchain services into familiar social payment scenarios, creating a localized Web3 ecosystem experience. For users accustomed to Asian social culture, KAIA is not a foreign technology platform but an organic extension of their daily lives.

2. Asset Scale and Ecological Breadth:
Asia's Largest Web3 NetworkKaia Chain unifies the Klaytn and Finschia networks, boasting an asset scale exceeding $75 billion, making it an unmatched giant in the Asian blockchain sector. More importantly, Kaia has established a rich ecosystem covering over 360 DApps across various fields including decentralized finance (DeFi), NFTs, gaming, and social applications. This not only positions Kaia as one of the largest Web3 ecosystems in East Asia but also showcases its capability to build applications across multiple industries.

3. Significant Introduction of Existing Web2 Users:
A Gateway Connecting Web2 and Web3Beyond constructing a technologically advanced blockchain network, Kaia has launched innovative products like LINE MiniApp to create low-barrier entry points for users into Web3. The introduction of the “Kaia Wave” initiative significantly lowers user entry barriers by investing $10 million to support developers in attracting large numbers of ordinary users into the Web3 ecosystem through seamless Web2 touchpoints (such as Line Mini DApps). Kaia's mission is to transform “complex blockchain technology” into “one-click user experiences,” making Web3 truly part of mainstream society.

4. Global Vision and Ecological Collaboration:
From East Asia to the WorldKaia leverages Kakao and LINE's strong positions in the Asian market while extending its influence globally, particularly in the Middle East, with its headquarters strategically located in Abu Dhabi. This positioning indicates a focus on connecting markets across Asia, the Middle East, and Europe/America. Simultaneously, Kaia actively collaborates with leading international DeFi projects and attracts top-tier global protocols (like Avalon Labs) into its ecosystem. This strategy combining global outreach with local engagement ensures solid and rapid expansion for Kaia.

5. Undervalued MC/TVLCompared to TON's higher ratios, KAIA's valuation is significantly lower.
This undervaluation reflects not only a conservative market judgment regarding its value positioning but also hints at KAIA's immense growth potential. The market capitalization of Kaia has yet to fully reflect its strong social and payment dividends, especially given its strategic significance in deeply integrating into East Asian user ecosystems.

6. Future Layout:
Reshaping Financial and Cultural Digital InfrastructureKaia's ambitions extend beyond technology itself; it aims to change how the entire digital landscape operates. Its ecosystem encompasses more than just financial applications; it embodies Kaia's grand vision of building a future digital society through culture, community, and innovative technology. Moving forward, Kaia will continue to focus on decentralized finance while integrating asset liquidity, on-chain governance, and cross-chain interoperability to provide a stable core infrastructure for the global proliferation of blockchain technology.

In conclusion, the story of Kaia Chain represents not just a narrative about blockchain technology but an attempt at societal transformation. By deeply engaging with East Asia, integrating resources from tech giants, and pursuing an audacious globalization strategy, it demonstrates exceptional capability in driving large-scale blockchain adoption. Whether Kaia can fulfill its mission of reshaping the global blockchain landscape will serve as an important barometer for the development of the blockchain industry.

4. References

1.https://www.kakaocorp.com/ir/referenceRoom/earningsAnnouncement?lang=en
2. https://www.techinasia.com/news/kakao-grows-profit-declining-sales
3. https://medium.com/kaiachain/kaia-d2i-program-report-7193c296db5a 4.https://medium.com/kaiachain/crafting-the-core-of-project-dragons-defi-ecosystem-caa72ec45211
5.https://www.digitalmarketingforasia.com/why-line-is-the-most-popular-social-media-app-in-japan/
6. https://docs.kaia.io/learn/governance/
7. https://usesignhouse.com/blog/line-stats/
8. https://www.aicoin.com/en/article/429056 9.https://www.coindesk.com/web3/2024/11/27/line-with-an-eye-on-telegrams-in-app-games-success-to-launch-mini-DApps-next-year
10.https://cointelegraph.com/press-releases/flareai-the-first-ai-powered-DApp-launching-on-kaia-blockchain
11. https://www.kaia.io/grants
12.https://govforum.kaia.io/t/kgp-26-dragon-defi-initiative-d2i-crafting-the-core-of-project-dragon-s-defi-ecosystem/730/15