Can Decentralised Finance (DeFi) Revolution Give This Cryptocurrency A Boost?

Klaytn, launched in 2017, is a public blockchain developed by Ground X, the blockchain arm of Kakao, a leading South Korean company that provides gaming, communication, entertainment, fashion, finance, investment, and transportation services. It is valued at more than $53 billion. Kakao developed a proprietary blockchain platform to avoid any bottlenecks that the online and mobile-first services could face due to performance limitations of existing blockchain technology. Klaytn has an efficient 'hybrid' design that seeks to combine the best of two worlds- decentralized data & control, distributed governance (offered by public blockchains) and low latency, high scalability of private blockchains. The main objectives of this proprietary blockchain are to provide a platform for developers to build decentralized applications for Non-Fungible Tokens (NFTs), Decentralized Finance (DeFi). As a part of this, Klaytn now has an integration with OpenSea, one of the biggest NFT platforms in the crypto space at present. Klaytn is also working with global leading institutions to develop a base software platform for Central Bank Digital Currencies (CBDC). Additionally, Klaytn offers BApps (Blockchain Applications) with responsiveness, robustness, and usability on par with those based on legacy technologies to remove all adoption hurdles.

How Klaytn Is a Comprehensive Dencentraslised Ecosystem

KLAY is the native token for the ecosystem. The coin saw a bullish run subsequent to Klaytn Foundation launched its growth fund to ensure an efficient and sustainable growth of its ecosystem. The fund will provide financial resources to developers building on the ecosystem. The previous version of the fund has already allocated funds to about 20 teams. Klaytn's DeFi ecosystem comprises 3 main players- Klayswap, Klaystation, and Orbit Bridge and these may be accessed via a browser extension (Kaikas) or a standalone wallet (Klip).

Interactions Between Klaytn Ecosystem's Different Components (taken from: https://miro.medium.com/max/1400/1*UZn4gQHNnerSQR0VbCXgpA.jpeg)

Klayswap is a decentralized exchange (DEX) and the largest DEX on Klaytn by volume, and also an automated market maker, meaning that it algorithmically enables crypto exchanges at an automatically set price. Additionally, Klayswap allows users to gain KLAY staking rewards (KSP rewards). Currently, the KLAY staking function rewards its contributors with a 14.5% yield.

Klaystation allows the users to navigate this esoteric ecosystem. Klaystation facilitates KLAY staking by the users. The system facilitates token swapping with a wrapped version called sKlay. The amount of sKLAY that each user will receive should be equal to the amount of Klay that has been put through the system. For example, if a user stakes 100KLAY, then he will receive 100sKLAY in return and vice-versa. Each sKLAY token represents the proof of your staked coins and they shall be used to redeem KLAY tokens back from the KLAY liquidity pool. The staking rewards for those users who choose to stake their KLAY through Klaystation are situated at around 5% annually.

Orbit Bridge facilitates this ecosystem's communication with the wider crypto world as at present Klatyn DeFi applications cannot at the moment directly interact with external blockchains. It is a cross-chain function to connect and communicate with the Klaytn network and other public blockchains. It is an application that runs on the Orbit chain and can transfer tokens from other Layer 1 blockchains such as Ethereum and Terra to the Klaytn network. Additionally, users can imports crypto assets from other blockchains.

What Is So Special About Klaytn?

For one, Klaytn has attracted a lot of investor interest from Singapore, Hong Kong, the USA, Indonesia along with its native South Korea and has acquired $90 million in seed funding. In July 2021, Kakao entered a partnership with South Korea’s central bank (The Bank of Korea or BOK) in the country’s central bank digital currency project for digitised wons. Hashed, Korea's most powerful blockchain accelerator and community builder is supporting Klaytn in mapping out its token economy and community building with its network of global top venture capitals and crypto-focused partners. However, it was its 2021 integration with OpenSea that has garnered interest from crypto-enthusiasts and pushed up the prices of KLAY after March 2021

KLAY's Performance From Aug 2020- Aug 2021 (taken from Coin Gecko)

While the prices (and trading volume) did increase in the face of this news, they reverted back to the $1 level in June 2021. However, what cannot be denied is that the Klayn ecosystem offers some tangible benefits, including a much lower gas price than Ethereum. Given that Klaytn specifically seeks to make NFT creation easy and cheap arguably (via KrafterSpace, its NFT-minting platform) could make Klayn an important player in the NFT sector (provided the NFT sector continues to grow). Some of the other advantages that make Klaytn a formidable player in the blockchain sector include its ability to support up to 4000 transactions/second, along with 1-second block generation and confirmation time. Additionally, Klaytn has the EVM (Ethereum Virtual Machine) and supports the execution of Solidity contracts. These are all positive indicators of Klaytn's technical soundness. Its collaboration with BOK is a sound sign of this ecosystem making a mainstream entry and possibly reassuring for people who look for projects with mainstream applications. While these are early days, Klaytn's future success will depend on a lot of factors- including how popular its NFT minting platform becomes and whether central bank-led projects take off or not. However, things are certainly looking sound for Klaytn as things stand