Exclusive Interview with Kaia Public Chain: Introducing the New EVM-Compatible Public Chain from Kakao and Line

This week, Kaia mainnet held an offline event in Taiwan, during which the editor had the opportunity to interview Uno Lee, the Chief Commercial Officer of Kaia Foundation. This article will introduce the architecture of the Kaia mainnet and how Kaia strives to achieve its vision.

Breaking Through the Public Chain Solution? Kaia: Emphasizing Node Quality to Improve Efficiency

Kaia is an EVM-compatible Layer 1, a merger of KakaoTalk's Klaytn and Line's Finschia. It is a PoS public chain, with a focus on the officially claimed high-performance features.

Although the official response to the technical questions was not received by the time of submission, we can generally deduce from the technical documentation that Kaia attributes the inefficiency of the network to varying node quality. Therefore, their technical architecture will address node-related issues through the following five methods:

1. Unpredictable Block Proposer Selection Algorithm

Kaia ensures that each block proposer cannot be predicted, preventing proposers from becoming targets of Distributed Denial of Service (DoS) attacks and enhancing the overall network security. This algorithm also aids in fairly distributing the opportunity to propose blocks, maintaining the balance and efficiency of the consensus process.

2. Validator Reputation Evaluation Framework VRank

VRank provides a mechanism to evaluate validators based on their behavior, reliability, and past performance, ensuring that only excellent nodes can continue to participate in the block generation process. This not only reduces the risk of inefficient nodes participating in consensus but also prevents unstable nodes from affecting overall network performance.

3. Automated Validator Penalty System

Kaia introduces an Autonomous Validator Slashing System, which automatically penalizes malicious or erroneous behavior by validators. This automated punishment mechanism swiftly detects and handles abnormal node behavior, ensuring the efficient progress of the consensus process and avoiding the impact of invalid or incorrect nodes on overall performance.

4. System Transaction and Consensus Information Feedback

In each block, Kaia utilizes System Transactions to automatically generate consensus information and update it in the blockchain contract. This means that the latest state during the consensus process is immediately reflected on the chain. This mechanism facilitates efficient synchronization of consensus information, allowing all network participants to quickly access the latest consensus status, reducing delays, and maintaining high network performance.

5. Validator Qualification Verification and Governance

Kaia introduces an automated qualification verification process to ensure that nodes participating in block generation have the ability to stably operate the network. Only nodes meeting the criteria can become block proposers or validators, reducing the risk of unstable nodes in the network and further enhancing performance.

However, upon reviewing the relevant data, besides the node-related mechanisms, there is not much explanation as to why this public chain can achieve high performance. Also, mechanisms like VRank, while eliminating underperforming nodes, may also contradict the permissionless principle, which could be further explored.

Due to its shorter block time and high TPS, new validator nodes in Kaia need to verify a significant amount of block data. Therefore, Kaia compresses verifiable block data and generates zero-knowledge proofs, allowing new validators to quickly verify archived data without verifying every block. Additionally, when users and dApps need to check historical data, Kaia provides a DA layer to offer fault-tolerant trusted data.

Half of Block Rewards Go to the Foundation, High Node Threshold Raises Centralization Concerns

Kaia adopts a dynamic gas fee model, where the gas fee for each block automatically adjusts based on the usage of the previous block. The maximum fluctuation is set at 5%, making gas fee changes predictable. A portion of the transaction fees in each block is set to be automatically burned. The various parameters of the dynamic gas fee model can be changed through governance functions.

On the Kaia chain, a certain amount of KAIA is issued with each new block creation. The target initial annual inflation rate of Kaia is set at the amount of newly issued KAIA per year divided by the total market supply of KAIA, which is 5.2%. However, the amount of new KAIA issued per block is not permanently set and can be changed through governance voting.

One point worth discussing is that half of the block rewards in Kaia go to validators, while the other half goes to the foundation. Looking at Kaia's node requirements, as long as Kaia blockchain validators meet the minimum staking requirement of 5 million KAIA, they can freely stake or unstake their KAIA. At today's price of 0.13 USD per coin, approximately $650,000 is needed to become a Kaia validator, which may not be a small amount. For comparison, Ethereum's threshold is 32 ETH, around $80,000.

Currently, there seems to be an issue with Klaytn Scope, and we have no information on the specific holdings of Klay tokens. In today's pursuit of lowering node validation thresholds in Ethereum for more decentralization, Kaia's validator threshold and block reward mechanism appear to lean towards centralization.

Emulating Ethereum, Introducing a Three-Tier Burn Model for Dynamic Inflation Balance

We mentioned that Kaia, with its PoS mechanism, maintains a certain level of inflation annually. Following this, Kaia uses a three-tier burn model to effectively adjust circulation and provide stable value incentives for network participants as the Kaia blockchain ecosystem matures. These three tiers consist of transaction, MEV, and business burns.

Transaction-based burning is the default burn method in Kaia, where a portion of transaction fees is automatically burned. Additionally, Kaia redistributes MEV profits within the network ecosystem or burns them to prevent any unfair practices by validators, thereby enhancing network reliability.

Business-based burning is not an inherent feature of the Kaia blockchain. Kaia encourages protocols to incorporate KAIA burning designs into their services. This allows protocols to receive support from the Kaia ecosystem fund.

Relationship Between KLAY and FNSA Tokens and KAIA

According to public information, there will be an exchange ratio of KLAY:KAIA = 1:1 and FNSA:KAIA = 148.079656:1. Binance announced the halt of trading and delisting of existing KLAY spot trading pairs KLAY/BTC and KLAY/USDT on October 28, 2024, at 11:00 UTC+8. They will automatically remove all orders and open KAIA/USDT spot trading on October 31, 2024, at 16:00 UTC+8.

Interview with Kaia Vice President: What Lessons Have Been Learned from Klaytn's Experience?

Q1: We previously reported on the security issue with Klayn's Klip wallet in 2022. Could you briefly explain the incident and how the team will handle subsequent product security issues?

Uno Lee: The case mainly involved the leakage of personal information of the victim, not a vulnerability in the protocol itself. The victim's data may have leaked elsewhere, and hackers used this information to steal funds. Subsequently, methods like 2FA two-factor authentication will be employed to prevent similar problems.

Kakao Exposes Security Vulnerability in South Korea's Communication Giant! Kakao Executives Clash Over Their Own Cryptocurrency Wallet

Q2: Kakao had previously launched the Klaytn public chain, but from my observation, the development did not go as expected. Kakao has gradually downsized its blockchain division, separating Klip from KakaoTalk last July and gradually selling its NFT Klaybay and NFT trading market Klip Drops. What has the team learned from the experience with Klaytn?

Uno Lee: Klaytn's development was mainly limited to users concentrated domestically in South Korea. The collaboration with Line will help open up the international market.

Q3: In the future, will LINE's built-in wallet be non-custodial, or will it be custodial? Because, as far as I know, there are security concerns and lack of transparency with Telegram's built-in wallet, so users are reluctant to deposit large sums of money.

This question was left unanswered.

Q4: Is it possible to integrate Web3 wallets into Line Pay? What is the underlying payment settlement structure? E.g., Line Point is a virtual currency but not a cryptocurrency, or to launch activities to offer more discounts for Web3 payments to attract users.

Uno Lee: The issue with payments is still tied to regulations. In the short term, payment applications will be made in forms like Line Point to comply with various countries' regulations.

Q5: Line's games are very popular in Taiwan, and Korean games are also very famous. Is it possible in the future to move GameFi onto Line and KakaoTalk like Telegram did?

Uno Lee: Currently, we maintain an open attitude and will not require existing LINE games to change their game modes.

In conclusion, while the public may have high expectations for the public chains launched by Kakao and Line, seeing them as gateways to Web 2 users, it was also understood during the interview that, like other blockchain projects under Web 2 companies, they are more inclined towards independent operation and experimental nature. In such cases, it is still important to monitor how many resources the parent company is willing to allocate. However, being a reality of Web 2 companies, unlike protocols solely in Web 3 that can dream big, the features Kaia will introduce in the future are largely restricted by regulations.

When it comes to network design, including node thresholds, etc., it may only spark discussions once it is widely adopted. Nonetheless, it is appreciated that the Kaia Foundation was willing to address some of the author's questions after the public Q&A.