Klaytn (KLAY): How It Works

Blockchain technology has never been bigger. Every cryptocurrency has an infrastructure that’s based on its blockchain protocol. Currently, there are four types of protocols: public, private, hybrid and consortium. Typically, the use cases of a cryptocurrency are determined by the type of blockchain upon which it’s built.

In this article, we’ll discuss Klaytn (KLAY), a hybrid emerging blockchain project that combines the strengths of public and private protocols. Here’s everything you need to know.

What Is the Klaytn Blockchain?

Klaytn was developed by Ground X, the blockchain subsidiary of South Korean tech giant Kakao Corporation. With a market cap of over $40 billion, Kakao is one of the largest publicly traded tech companies in Korea. Over 93% of South Korea’s population uses Kakao’s instant messaging app, KakaoTalk (usually shortened to “KaTalk” in South Korea). Having recently launched South Korea’s first-ever internet-only bank, KakaoBank, the company is also a pioneer in the fintech industry. Currently, Kakao manages around 30 services in various sectors: Kakao Music, Kakao Games, Kakao T Bike and Taxi, and more.

Fueled by 2017’s crypto bull run, Kakao made its venture into the crypto space in 2018. After launching the KLAY token in a successful ICO, Kakao went on to build blockchain network Klaytn, which they hope will become the technological backbone for all South Korean businesses. 

Klaytn’s hybrid infrastructure helps it to deliver a seamless blockchain experience for businesses both within and outside South Korea. Using Klaytn’s modular network, enterprises can create and operate their own customized blockchains.

The blockchains built on Klaytn’s architecture are service-oriented and typically referred to as “service chains,” running independently and autonomously as sub-networks contributing to Klaytn’s enterprise-friendly ecosystem. Klaytn’s USP is that these service chains are customizable, flexible, and can accommodate any web service. 

So far, Klaytn has managed to attract the attention of several global enterprises, with 40 initial service partners (ISPs) on board with the project less than a year after its launch. Like Kakao, these companies offer a diverse range of products and services.

What Is KLAY?

As the native utility token of the Klaytn blockchain, KLAY has various use cases across the Klaytn ecosystem. All transactions occurring on the platform can be paid in KLAY, which also has great utility among the other blockchain applications that run within the Klaytn network. One such use case is discussed below.

As mentioned, the Klaytn blockchain is now available on KakaoTalk. Klip, a crypto wallet, is integrated into the app. With it, users can store over a dozen Klaytn-based cryptocurrencies, including KLAY. This wallet also supports the storage of many fungible and non-fungible tokens (NFTs). Apart from enhancing customer experience, the Klip wallet also provides a staking facility for KakaoTalk users to earn rewards via KLAY staking.

Other than the Klip wallet, the Klaytn blockchain also hosts over 60 successful DApps (decentralized applications) — or rather, BApps (blockchain applications) — and DeFi protocols. A few examples are KLAYswap DEX, Kaikas browser extension, and KLAYstation dashboard. The functionality of KLAY is spread across these applications, making the token very valuable.

How Does the Klaytn Blockchain Work? (Klaytn Architecture)

As the Klaytn blockchain caters primarily to enterprises with large data transaction volumes, a typical consensus mechanism such as proof of work (PoW) or proof of stake (PoS) would likely not suffice. Klaytn is deployed instead via an advanced consensus mechanism known as IBFT (Istanbul Byzantine fault tolerance).

Although Klaytn’s current infrastructure can’t be achieved through PoS or PoW consensus, it allows the PoS consensus to support a limited number of beginning validators while keeping IBFT as its primary consensus mechanism. It’s evident that the Klaytn blockchain is inspired by the Ethereum network. In fact, this project has deployed a virtual machine that is not only similar to Ethereum’s, but also functions in a comparable manner.

However, everything on this blockchain network is about speed and convenience. To put things into perspective, Ethereum can process about 10 transactions per second (TPS), whereas Klaytn can process up to 4,000 TPS. Also, transaction fees on Klaytn are over 10 times cheaper than those on Ethereum. This has allowed Klaytn to initiate the mainstream adoption of blockchain among institutions as scalability ceases to become a problem.

Klaytn’s digital and enterprise experience foster interoperability among existing services, while providing a unified environment for blockchain developers to build their protocols. Klaytn also focuses on fixed transactions and ensures that transaction fees are transparent and predictable.

What Makes Klaytn/KLAY Unique?

Ease of Deployment

With Klaytn’s UX (user experience), EX (enterprise experience) and DX (digital experience), enterprises are able to deploy their blockchains easily or to join other chains without having any experience in the field. To launch their tokens on the Klaytn blockchain, companies don’t need to hire external professional help — e.g., blockchain specialists and technical experts.

Backing

Apart from what we’ve discussed regarding Klaytn’s parent company, this project also has the backing of conglomerates such as LG Electronics, Union Bank and FSN. This support encourages enterprise blockchains to trust Klaytn’s ecosystem and to invest in the project. On the institutional front, current investors of the Klaytn Network include Wemade Tree, Humanspace and Netmarble. 

KLAY Usability

Typically, the use cases of any utility token are constrained within its native blockchain. KLAY, however, is different. As we said, this token has utility both within Klaytn’s ecosystem, and even among applications built on Klaytn’s blockchain.

Key Features of the Klaytn Blockchain

Of all the features discussed, there are two key aspects which differentiate Klaytn from other enterprise-centric blockchains. 

Innovative Consensus

By deploying the IBFT consensus, Klaytn solves the problems of latency and scalability. Also, its low transaction fees makes it ideal for enterprise use.

Interoperability

As mentioned, Klaytn’s ecosystem currently consists of more than 60 DApps. Therefore, enterprises have plenty of options when it comes to identifying and developing the type of app they want. Thanks to the versatile nature of Klaytn’s blockchain, developers can create DApps for different industries, such as game development, DEXs and asset management.

KLAY Tokenomics

The total supply of KLAY is capped at 10.7 billion tokens. With a circulating supply of 2.5 billion KLAY, the token recorded an impressive $39 million in trading volume in the past 24 hours from time or writing, and the total market capitalization of KLAY stands at $3.2 billion is (valued at $1.30 per KLAY). Currently, KLAY is ranked 32nd with the reputable CoinMarketCap.

Pros and Cons of Klaytn 

Pros

• Klaytn Network combines the advantages of public and private blockchain models, creating a blockchain that has low latency and which is decentralized, governed publicly and highly scalable.
• Klaytn’s blockchain infrastructure can process up to 4,000 TPS.

Cons

The Klaytn Governance Council comprises companies such as LG and SK Networks. This council is responsible for approving or rejecting any proposed changes made to the Klaytn blockchain. After the council has given its approval, the council’s chairperson needs to approve the proposal as well before any changes can be made. This aspect of Klaytn seems a bit centralized.

Is Klaytn (KLAY) a Good Investment? 

From an investment perspective, KLAY is a token with high potential, having recorded an ATH above $4. After an ensuing correction, its price action was fairly stable with no extreme lows. According to WalletInvestor, the KLAY token is poised for exponential growth, with the token’s value predicted to reach $5.40 by 2026. This is an increase of approximately 300% on its current price of $1.30.

Buying KLAY

The KLAY token can be bought on reliable crypto exchanges such as Bybit. To purchase KLAY on Bybit, follow the steps outlined below. 

Step 1:  Register

To buy any crypto on Bybit, you need to first have a verified trading account. Creating a Bybit account is a straightforward process that should take only a few minutes. Visit the official Bybit website and click Sign Up in the top right corner. Fill in the details requested, create a strong password, confirm it, and then click Continue. To start making transactions on the exchange, make sure you’ve first completed the KYC verification process.

Step 2: Buy USDT

The KLAY token is paired only with USDT on the Bybit exchange. Therefore, you need to have USDT in your wallet to purchase KLAY. If you already have USDT, you can transfer it to your Bybit wallet. Otherwise, first purchase your USDT, which will only take a couple of minutes. 

To buy your USDT, click the Buy Crypto button on the exchange’s main page and change the drop-down menu option from BTC to USDT. Enter the volume of USDT you want to purchase, pick your preferred fiat currency, and choose a payment channel. Bybit supports bank wire transfers, debit/credit cards, and even Apple Pay for selected fiat currencies. Once the transaction is successful, the USDT will be reflected in your wallet.

Step 3:  Identify The KLAY/USDT Pair

Visit the Spot Market section and search for the KLAY token by clicking the drop-down menu above the price chart. In the screenshot below, you can see the Buy area on the right. Here you can enter the quantity of KLAY you want to purchase. Click Buy KLAY after confirming the USDT amount. Once your order is filled, the KLAY tokens will be reflected in your wallet. 

Step 4: Secure Storage

We recommend storing KLAY in a secure crypto wallet. You can transfer your KLAY tokens to a wallet by clicking Withdraw and pasting the corresponding withdrawal destination wallet address. Cold storage options are ideal, as they can better safeguard your crypto tokens from online con artists. 

Closing Thoughts

The Klaytn project was designed to revolutionize the enterprise blockchain space, and it seems on track to do so. Blockchain solutions like Klaytn are essential to driving adoption at the institutional level. 

Looking at Klaytn’s complex yet robust architecture, Kakao has clearly put a lot of effort into it. With powerful backing from Kakao and its subsidiaries, KLAY could eventually become the most prominent cryptocurrency in South Korea. That being said, KLAY could potentially struggle to find its footing globally as the crypto market is dominated by heavyweights such as Bitcoin and Ethereum. In particular, Ethereum 2.0 has been partially rolled out — and their reign isn’t looking to end anytime soon.