State of Kaia Q3 2024

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Key Insights

  • The introduction of Mini Dapps within popular messaging app LINE represents a strategic move to onboard Web2 consumers.
  • Kaia’s market cap increased 31.5% QoQ to $781.0 million. Kaia rallied in Q3 after experiencing a down trend in market cap from Q2.
  • Kaia users spike 538.4% from quarter lows. In Q3, Kaia jumped from a low of 81,500 users to 520,800, showing a resurgence in onchain activity.
  • Kaia mainnet launched. The Klaytn and Finschia blockchains merged on Aug. 28, 2024 to form Kaia, a new blockchain focused on expanding its reach across Asia.
  • The Kaia Wave Initiative has allocated $10.0 million in grants to support ecosystem growth, attracting nearly 700 applicants.

Primer

Kaia is a newly launched EVM-equivalent chain that emerged from the Klaytn and Finschia chain merge proposal known as Project Dragon. The KLAY token ticker has changed to the KAIA ticker as of Oct. 31, 2024.

On August 28, 2024, the Klaytn and Finschia blockchains merged to create the new Kaia blockchain. Klaytn and Finschia combined through a hard fork of the Klaytn chain, making Kaia an upgrade based on Klaytn’s existing mainnet while integrating Finschia’s technologies.

Kaia retained much of Klaytn’s infrastructure and features. It remained an EVM-equivalent chain with a 1-second block time but also with the addition of the Finschia blockchain, Kaia now stands to inherit the benefits of connecting with LINE, one of the largest messaging apps globally.

Klaytn’s mainnet infrastructure (such as nodes, RPC endpoints, and governance mechanisms) continued to operate without interruption but was rebranded under the Kaia name. This continuity minimized disruptions for existing users, while the rebranding reflected the broader functionalities and markets that Kaia now serves.

Governance structures from both chains were merged, creating a more robust, decentralized governance model involving over 45 major institutions and projects across Asia.

Kaia is now Asia’s largest Web3 governance system with over 45 members and integrated with Kakaotalk and LINE’s 250 million users. The Kaia blockchain is composed of three networks: the Core Cell Network (CCN), the Endpoint Node Network (ENN), and the Service Chain Network (SCN). The CCN and ENN work together to comprise Kaia’s Mainnet, while the SCN consists of auxiliary blockchains (i.e., sidechains) that are independently operated but connected to the mainnet through Endpoint Nodes (EN). Bootnodes are special nodes operated by Kaia to help new nodes join the network.

Kaia integrates with messaging platforms like LINE and KakaoTalk, the dominant messaging super apps used by Japan, Thailand, Indonesia, Taiwan, and South Korea. By way of its mobile-friendly SDK, Kaia aims to create a seamless UX that Web2 users can interact with while also solving Web3 applications distribution challenges.

For a complete primer on Kaia, refer to our Initiation of Coverage report.

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Key Metrics

Research Contents

Financial Analysis

Kaia’s market cap increased by 31.5% QoQ, rising from $594.0 million in Q2 to $781.0 million in Q3. Despite this growth in market cap, Kaia’s token price declined by 16.2% QoQ, dropping from $0.16 to $0.13. The late uptick in market cap toward the end of Q3 likely reflects positive market sentiment surrounding the new Kaia chain being fully operational and incentive programs such as Kaia Portal.

Network Analysis

Usage

In Q3, Kaia’s daily active user count increased by 538.4% from its quarter low of 81,500 to 520,800. This sharp rise in users is largely attributed to the Kaia merger, with the highest daily user count recorded on August 28, the day prior to the merger’s completion. Despite these gains, the peak daily user count decreased by 41.3% QoQ, from 887,600 in Q2 to 520,800 in Q3. Additionally, Kaia experienced a peak of 8.5 million daily transactions in Q3, a 96.51% increase QoQ from 4.3 million previously.

Although Kaia experienced a decline in certain metrics QoQ, positive engagement trends emerged within Q3. Kaia started the quarter with 100,500 users on July 3, before climbing to 520,800 by August 28—a 418% increase in daily users over nearly two months, demonstrating a strong mid-quarter recovery.

Overall, Q3 highlights notable engagement trends on Kaia, with significant mid-quarter increases in daily users and transaction volumes, and sustained stability towards the end of the quarter. The data suggests heightened interest in the impending launch of Mini Dapps on Kaia as well as initiatives that launched with the recent merger such as the Kaia Portal.

Kaia — The Merged Chain

On August 28, 2024, Klaytn and Finschia blockchains merged to create Kaia. Kaia is now Asia’s largest Web3 ecosystem by governance with over 45 delegates. The Kaia blockchain is composed of three networks: the Core Cell Network (CCN), the Endpoint Node Network (ENN), and the Service Chain Network (SCN). The CCN and ENN work together to comprise Kaia’s Mainnet, while the SCN consists of auxiliary blockchains (i.e., sidechains) that are independently operated but connected to the mainnet through Endpoint Nodes (EN). Bootnodes are special nodes operated by Kaia to help new nodes join the network.

Kaia also inherits the optimized version of the Istanbul Byzantine Fault Tolerance (IBFT) consensus mechanism. IBFT builds on top of Practical BFT, as a result, Kaia Mainnet could theoretically handle 28,922 TPS, introduce immediate transaction finality, one-second block generation time, and include over 50 CNs to participate in the consensus process.

The Klaytn Virtual Machine (KLVM), now the Kaia Virtual Machine (KVM), was EVM-compatible upon launch, but has now become EVM equivalent. EVM equivalence is a much stronger version of compatibility. It allows protocols from other EVM environments to launch on Kaia with virtually no changes in the code.

Kaia supports a unique account model that separates the address from the public key. It allows registering a different public key or multiple public keys to an account. Users can assign each public key’s role for finer access control. Also, the account model facilitates native gas fee delegation, enabling services to pay for the gas fee on behalf of users.

On September 23, 2024, the Kaia Foundation announced a new feature of the network tentatively named Consensus Liquidity. Set to launch in Q1 of 2025, Consensus Liquidity allows users to pair their staked KAIA with another approved token through governance. Consensus liquidity effectively allows for users to earn on their staked KAIA as well as earn liquidity provider fees from creating a liquidity pool with the staked KAIA and a token that has been previously approved by the foundation.

Consensus Liquidity pools staked KAIA along with a project’s token that has been previously approved through governance, which will allow users to earn block rewards and swap fees, thereby supporting chain security and allowing for more KAIA to flow through the DeFi ecosystem.

Key Features of Consensus Liquidity:

  • Dual Rewards: Earn both staking rewards and DEX swap fees simultaneously.
  • Increased Liquidity: Expands Kaia ecosystem’s TVL and reinforces economic stability.
  • Fee Burning: A portion of transaction fees are burned, contributing to token value growth and sustainability.
  • Strategic Partnerships: Projects involved in Consensus Liquidity gain priority access to new Kaia features and collaboration opportunities.

Consensus Liquidity is designed to attract high-quality projects, increase liquidity, enhance TVL, and foster partnerships across the Kaia ecosystem.

Mini Dapps

Mini Dapps represent a major upcoming feature of the Kaia blockchain. These applications will operate within the LINE messenger app, unlocking access to its 230M+ users. Kaia empowers LINE users by enabling the creation of keyless MPC (Multi-Party Computation) wallets through Web3Auth. This eliminates the need for traditional private key management, enhancing security and providing a seamless experience for Web2 users.

Kaia further simplifies user onboarding by introducing fee delegation within Mini Dapps. This allows developers to cover transaction fees on behalf of users, removing a significant barrier to entry.

By integrating advanced technology and user-focused features, Kaia aims to deliver a user experience comparable to Web2 applications, encouraging broader adoption and engagement within the blockchain ecosystem.

Kaia Wave

The launch of the Kaia mainnet also marks the introduction of the Kaia Wave initiative, developed in partnership with LINE NEXT. This program accelerates Web3 Mini Dapps on LINE by offering tools such as the NEXT WEB SDK and over $10.0 million in funding. Below is a breakdown of the services available to accepted projects:

Marketing Support:

Kaia Wave will provide a comprehensive marketing solution, connecting applications to LINE’s 230M+ users while leveraging global Web3 creator channels. Key components include:

  • Dapp Portal: Mini Dapps are listed on LINE’s Dapp Portal, where users can explore, earn rewards, and engage with the applications.
  • LINE Official Accounts (OA): Featured Mini Dapps are promoted through LINE’s official accounts in regions such as Japan, Taiwan, Thailand, the US, and LATAM.
  • LINE Ads: Marketing campaigns through LINE’s advertising platform include custom content, card-style posts, and reward marketing with points and stamps.
  • Web3 Creator Alliance and Owned Channels: Mini Dapps benefit from promotion by global Web3 creators and LINE’s social media platforms (Discord, X, Medium, etc.).

UX Improvement Tools

Tokenomics, Liquidity Boost and More

Technical Tools and Infrastructure:

  • Access to native price feeds will be available through Pyth and Orakl.
  • Treasury management support through Gnosis Safe.

Multichain Expansion:

Aidrop campaign support:

  • Galxe Quests to onboard users.
  • Participation in the Flipside Crypto earn quest platform.
  • Tap-to-Earn (T2E) games on LINE, where users earn points convertible into airdropped rewards.

Token Launch Support

  • Launchpad and token minting solutions through DeFi partners.
  • Liquidity pool creation on DEXs like Dragonswap and Capybara, offering features such as single-sided staking and custom range order deposits.
  • Incentive campaigns with KAIA rewards to scale liquidity pools. Provided by the Kaia foundation and DEXs, a project will receive token emissions to use as a booster for its liquidity pool.

Gasless Transactions

  • Gas fee support for Mini Dapp builders via bundler partnerships.

VC Partnering

Projects seeking funding or equity investment can pitch to Kaia’s VC partners, gaining access to investor relations (IR) reporting and networking opportunities.

Ecosystem Innovations introduced with the merger

Building on the success of the Kaia merger, the Foundation has also expanded its ecosystem and partnerships. Below are notable ecosystem projects from Q3, which align with Kaia’s broader mission to enhance Web3 engagement and infrastructure.

  • Kaiascan: Jointly developed with Bisonai, Kaiascan lets you search blockchain data like tokens, blocks, and transactions, as well as verify smart contracts.
  • Kaia Portal: Kaia Portal is a platform where users complete tasks on the Kaia blockchain to earn points. These points can be redeemed for Kaia tokens, with more points increasing the amount of tokens you can earn.
  • Flipside: Flipside provides free onchain data and analytics to users. Flipside now supports Kaia and users now have the opportunity to earn through Flipside quests. Complete various tasks such as bridging to the Kaia network and providing liquidity. In anticipation of the Kaia chain launch, Flipside partnered with Kaia to have immediate data available for the chain on their platform.
  • Kaia Square: The hub for all Kaia governance. Kaia Square offers a dashboard for users to interact with Kaia governance. Users can view public delegation, governance voting, and treasury transparency to participate in Kaia governance.

Ecosystem Overview

In Q3, Kaia’s total value locked (TVL) reached a quarterly low of $28.4 million but closed the quarter at $41.8 million, marking a 46.9% increase from its low. Despite this recovery, Kaia’s TVL declined by 14.3% QoQ, decreasing from $48.8 million to $41.8 million.

A major highlight of Q3 has been the rapid growth of Capybara DEX. Launched in the previous quarter, Capybara has gained significant traction on Kaia, with its total value increasing by 1,286% QoQ from $461,730 to $6.4 million.

Capybara DEX is a decentralized exchange built on the Kaia chain, designed to offer efficient and scalable trading solutions. Utilizing an asset-to-liability model to minimize slippage, Capybara is also optimized for hyper-efficient gas usage, reducing transaction costs for users.

Key features of Capybara DEX include:

  • Single-Sided Liquidity Pools: Users can choose to supply a single asset of a liquidity pool. Allows for more efficient capital usage and supports borrowing and lending protocols.
  • WomPets’ Gamified Bribe Market 2.0: Users earn rewards (WPP) for participation, which can be used in mini-games, unlocking incentives across multiple projects.
  • Initial Airdrop Offerings (IAO): Enables users to earn free airdrops by contributing content, enhancing community engagement.

Kaia’s stablecoin market cap grew by 0.2% QoQ, reaching $47.8 million in Q3. USDT led with a market cap of $31.2 million on Kaia, capturing a 65.4% share of the stablecoin market. DAI ranked as the second-largest stablecoin with a market cap of $10.7 million, holding a 22.5% share.

Overall, the stablecoin market on Kaia has remained consistent throughout 2024, with only minor fluctuations in total market cap, reflecting steady demand for stablecoin assets on the network.

Gaming remains a key driver of user growth on the Kaia blockchain. Notably, KGeN, a gaming-focused ecosystem on Kaia, empowers gamers to control their data and reputation within a Web3 environment. Following KGeN, Another World ranks as the second-largest project by cumulative users. This metaverse initiative is built on Kaia and aims to deliver a healthy, immersive experience by leveraging blockchain technology.

Partnerships

Kaia expanded its ecosystem significantly in Q3, securing over ten new partnerships. While diverse in nature, these partnerships primarily focus on decentralized exchanges (DEXs) and gaming projects, reinforcing Kaia’s commitment to growth and user engagement following the chain merge.

  • Rubic: A cross-chain aggregator that simplifies DeFi by connecting 80+ blockchains and supporting 15,500+ crypto assets for efficient swaps. It provides users with the best rates, liquidity, and transaction speeds, enabling seamless movement of assets across different networks.
  • Particle Network: In Q3, Kaia joined Particle network in an effort to bring further chain abstraction to their network. Particle network is an L1, unifying all chains through Universal Accounts. They aim to provide true chain abstraction for their users.
  • Hashkey: A digital assets service provider and exchange in Asia, Hashkey partnered with Kaia with the aim to accelerate adoption of web3 in the Asian and global markets. Coinciding with the Klaytn and Finschia merger, Hashkey and Kaia will focus on digital finance, content creation and security.
  • Portal Pay: A Web3 distribution platform. Kaia integrates with Portal Pay— a cross-chain liquidity layer. Make cross-chain transactions with Portal Pay on Kaia’s gaming projects.
  • Aura Network and PunkgaMe: Aura network is an abstraction layer for intellectual property with dual smart contract engines. PunkgaMe leverages blockchain to help manga artists monetize their work. This partnership focused on empowering artists to create and build on the Kaia chain. Together, they pave the way for the future of Programmable IP and empowering artists globally, starting with the ongoing Kaia Island art manga contest.
  • DMission: An engagement platform where users can team up and play games via an array of applications through campaigns. DMission will focus its efforts in the Vietnam market to help bring more users from Vietnam to the Kaia blockchain.
  • Fearless Wallet: A Self-custodial, multi-chain wallet. Fearless supports over 80 different networks.
  • Abu Dhabi Global Markets: Abu Dhabi Global Markets(ADGM) incorporates Kaia DLT foundation into its group. With ADGM’s advanced regulatory framework, Kaia will look to support Web3 projects by bridging global investors to Asia’s growing Web3 market. The foundation’s new base in Abu Dhabi will accelerate the adoption of the Kaia ecosystem.
  • K300 Ventures: A venture capitalist firm focusing on early blockchain projects. K300 partners with Kaia to help with ecosystem growth.
  • TradeCoinVN: A community built in Vietnam. TradeCoinVN will provide additional support to Kaia in community growth in Southeast Asian markets.
  • Micro3: Micro3 is a decentralized social aggregator to tokenize worldwide user engagement and empower the Web3 industry through extensive NFT- Infrastructure As-A-Services.
  • Blockio: Blockchain Node APIs for Web3. Providing thousands of developers with RPC endpoints to 50+ blockchains. With Blockio, developers can now connect to Kaia nodes. Leverage GetBlock’s reliable infrastructure to build next-gen applications on the Kaia chain.
  • Wallacy Wallet: Wallacy has launched the first Swap DEX aggregator on Kaia chain, processing 4.1K transactions and $470K in volume within ten days. By integrating the top four swap protocols on Kaia chain, the platform ensures the best prices, low slippage, optimized gas fees, and access to a diverse range of tokens. Users can now execute large trades efficiently while enjoying a seamless, decentralized trading experience on the Kaia chain.
  • KaiaFun: A memecoin launchpad platform. Users can trade and launch their own memecoins.
  • Galxe: A leading platform for building Web3 communities through reward-based loyalty programs. Galxe offers a no-code solution for creating engaging campaigns and distributing rewards.

NFT and Gaming

On August 14, 2022, the 3KDS NFT project sold out its mint, with over 300,000 NFT character draw packs minted. The project amassed over 15,000 in total trading volume across 14,000 trades, and reached 10,000 unique holders. 3KDS is an integrated content platform offering diverse media experiences, including games and webtoons.

Mobile game Cascade Kings hosted a leaderboard event, allowing users to compete for up to 20,000 KAIA by ranking in the top 100 on its leaderboard.

On September 19, 2024, Kaia announced a strategic partnership with Elfin Metaverse, an all-in-one GameFi and eSports platform built on Elfin Lands. With over 1.2 million active users and 2 million game battles, Elfin Metaverse brings daily eSports competitions, game token launches, and revenue-sharing opportunities for landholders to the Kaia ecosystem.

Fusionist, a sci-fi gaming trilogy, hosted a planet mint event with 10,000 planets available, including 2,000 exclusively for Kaia blockchain users. This event further strengthens Kaia’s growing presence in the gaming and metaverse sectors, attracting new users and enhancing engagement within its ecosystem.

Closing Summary

The most significant announcement in Q3 was the launch of the Kaia mainnet, which officially merged Klaytn and Finschia. This merger introduced key initiatives such as the Kaia Portal, which aimed at boosting activity onchain by offering incentives to users when interacting with DeFi. As well as the Kaia Wave Initiative: Designed to support developers in building Mini Dapps on Kaia, fostering growth and innovation across the ecosystem.

Kaia’s TVL declined by 14.3% QoQ, dropping from $48.8 million in Q2 to $41.4 million. However, as Kaia advances its Mini Dapp development, this figure could increase, particularly as the ecosystem begins tapping into the combined 250 million user base of LINE and Kakaotalk.

Looking forward, Kaia’s strategic focus lies in establishing itself as the leading blockchain in Asia. The Kaia Wave Initiative will play a key role, empowering developers to build and launch Mini Dapps, thereby expanding Kaia’s ecosystem and engaging its substantial user base.

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