Kaia Coin Overview and Future Outlook
3 min read · · Korean original
Contents 5
Kaia (KAIA) is a Layer 1 blockchain created by merging Kakao's Klaytn and Naver LINE's Finschia. Kaia aims to be the largest blockchain platform in Asia and is currently listed on major exchanges such as Upbit and Binance.
What Is the Kaia Coin?
The Kaia coin offers instant transaction finality and is sometimes called "Korea's Solana." The Kaia chain produces and processes a block about every second and boasts speeds of roughly 4,000 TPS.
In addition, the Kaia blockchain is fully compatible with the Ethereum Virtual Machine (EVM), so existing Ethereum-based dApps can be launched easily on the Kaia chain.
On top of that, Kaia's transaction fees are more than about 100 times cheaper than Ethereum's, and it offers a variety of features such as account abstraction, gas fee delegation, and LINE Messenger integration.
Kaia's ultimate goal is to become a Layer 1 chain that supports large-scale business applications and is used across a wide range of industries.
Kaia Coin Issuance and Distribution Structure
$KAIA, Kaia's native token, plays a key role in running the network and growing the ecosystem. 9.6 new Kaia coins are issued every time a new block is created, which adds up to about 300 million $KAIA issued per year.
Newly issued coins are distributed to validators, the community, and funds according to the ratios below. The annual inflation rate of the total token supply is 5.2%.
| Validators and community | 50% | Block production, network maintenance, and staking rewards. |
|---|---|---|
| Kaia Ecosystem Fund (KEF) | 25% | Invested in dApp development, project support, and ecosystem expansion. |
| Kaia Infrastructure Fund (KIF) | 25% | Used to improve network infrastructure and strengthen scalability and security. |
$KAIA holders can delegate their tokens on the Kaia Portal to support governance and earn staking rewards. Alternatively, they can deposit them in popular DeFi services such as Capybara and DragonSwap to earn additional rewards.
Pros, Cons, and Future Outlook of the Kaia Coin
Back in the days of Klaytn (KLAY), Kaia's predecessor, price drops caused by excessive selling were one of the major issues that seriously worried the community and investors. In response, Kaia launched a new token economy along with the merger, but there are still problems worth considering.
During the Klaytn era, early investors and partner companies sold off large amounts of their holdings before the Klaytn ecosystem had stabilized. This selling pressure caused the price of KLAY to fall sharply and eroded market confidence.
In addition, it had fewer applications such as dApps and DeFi compared with other chains, and as investors chasing short-term gains rather than long-term investment became the majority, its speculative tendencies grew stronger.
The New Kaia Token Economy
Kaia redesigned its token economy to fix Klaytn's existing problems. The main improvements are lowering annual inflation to around 5.2% and encouraging long-term holding through staking rewards. In fact, staking participants receive 40% of block rewards as incentives.
Kaia also invests in dApp development and infrastructure expansion through the Kaia Ecosystem Fund and the Infrastructure Fund. Kaia users can also deposit assets through the Kaia Portal and earn additional Kaia rewards. Check out the Kaia Portal right now.
Wrapping Up
Kaia aims to become the best blockchain in Asia. The price decline during the Klaytn era was mainly caused by poorly designed tokenomics and a failure to manage the initial circulating supply, which drew a lot of criticism from investors.
Learning from these mistakes, Kaia has made improvements over Klaytn in its distribution structure, reward system, and ecosystem investment. However, the major challenge of expanding its ecosystem still remains, and solving it with a long-term perspective looks set to play an important role in Kaia's future outlook.
