In part 1 of our interview with Zachary Keats of Klaytn, Kakao’s blockchain development arm, we explored Klaytn and Kakao’s dominance in the online and digital community in South Korea. Although Kakao gives Klaytn a large audience and participant pool in South Korea, what other attributes does Klaytn have that makes it an exceptional blockchain?
Klaytn: The hybrid blockchain with PBFT
While elaborating on the Klaytn blockchain, Keats first mentioned the ‘hybrid design’ of Klaytn, “Klaytn is a hybrid of a public and private blockchain, so we have made some compromises to our decentralization in order to improve scalability and performance.”
Keats also explained the performance improvement brought by Klaytn’s hybrid design, “The transactions and consensus are using the PBFT algorithm which is done privately within when the blocks are confirmed, and then they are sent to the public. The hybrid structure works with private blockchain for achieving consensus propagating blocks, but then relaying it to the public blockchain network.”
Klaytn adopts the trust model of private consensus with public disclosure. A smaller group of consensus nodes (CN) executes BFT consensus in a private network that is surrounded by a larger network of permissionless endpoint nodes (EN) to access block generation results. He added, “With this current hybrid method, I mentioned, achieving one second block time with finality, because we have the node operators that are doing that privately, then reaching transactions per second of about 4000.”
Klaytn’s governance council
Klaytn’s governance is similar to Libra’s consortium governance style. Klaytn is putting together groups of trusted, large enterprises with users and applications to move to the blockchain, where reputation is put on the line.
“We have achieved a very successful result of about 26 different enterprise partners governing our platform,” said Keats. Starting with governance, these large enterprises are running nodes on our platform. “Our 26 enterprise nodes are made up of Kakao companies and other large players such as LG and major gaming companies, including Netmarble.”
Originally, Klaytn did not invite any blockchain or crypto companies to be a part of the governance council. The original idea was that the governance council should have real users that are very trusted have a strong reputation, and are interested in blockchain. Binance is a large brand with many users, fits all the criteria, and is “very ambitious.”
As Binance is also very familiar with blockchain, Klaytn has invited the company to their governance council and is looking to inviting more players to join the council in the future. Keats stated, “With Binance, I believe there are a lot of ways we can collaborate in, including co-investments, perhaps DeFi, and we will be looking into how we can apply these new initiatives to the new markets. We haven’t announced specific projects with Binance yet, but we will be exploring these potentials together.”
“We’re very excited about the governance council that we have put together — having gained validation from other players who are trying to do the same thing, including Libra and Hedera Hashgraph. I believe the future is bridging traditional enterprise to this new technology, and we shouldn’t shy away from the centralized enterprises, because we need them and their users to be taking on blockchain to use on a regular basis. This kind of cooperation model of bringing groups of enterprises and other institutions together is the next way we move forward.”
Klaytn’s transparent evaluation and incentive mechanisms
Keats introduced the Proof of Contribution and Klaytn Improvement Reserve (KIR), Klaytn’s transparent evaluation, and incentive mechanisms and described them as that they are similar to government program models. “If you think about Klaytn as an economy, as the government of that economy, in order to stimulate certain good behaviors, growth, infrastructure improvements, we have to make some programs to encourage people to do those kinds of initiatives.”
Proof of contribution is a growth stimulus package for small businesses or startups and DApps to get certain rewards for showing that they are contributing to the volume of transactions, activities, and new users to the Klaytn chain. This is to ensure that there will be the right amount of services and users to the chain. With this program, Klaytn can provide extra token incentives to those who are contributing to the Klaytn economy.
The KIR is intended to generate positive economic externalities. “As a token-based incentive program, we are focusing on encouraging participants to build services that benefit the ecosystem, with infrastructure layers or wallet layers – this type of improvements to the Klaytn platform, which does come at a cost for a participant’s time and resources,” said Keats. “We strongly encourage the development of these services to improve the experience for all of Klaytn’s users.”
President Xi’s statement on blockchain – what does it mean for the industry?
Keats commented on President Xi’s statement on blockchain and said, “The announcement was virtuous and positive for blockchain technology overall. As there a lot of players and investors in China, any push to bring more awareness to this technology is beneficial. President Xi’s commitment to blockchain for China is nothing but positive as it increases overall awareness.”
“Looking at Libra, it has come out and stumbled a bit, and lost some of their major node operators. Although that is a setback, it still brings greater awareness for blockchain overall.”