Deep Tide: Sunny, David & Zolo
Klaytn Foundation: Sam Seo
"We have a huge influence in China and face fierce competition globally. Our advantage lies in user experience."
--Sam Seo, Representative Director of Klaytn Foundation
Preface
After Token2049, the audience once again focused their attention on Asia. Although the consensus among the public is that compared with the European and American markets, the Asian crypto industry lacks infrastructure innovation capabilities, but Asia's Internet application engineering capabilities, government policy tolerance and community close connections are not inferior to those of Europe and the United States, and to some extent are even better.
South Korea, the crypto country that was at the center of the industry controversy last year due to Luna Crash, has become more and more courageous.
In terms of encryption policy, the local government, which has always maintained an open encryption, strives to promote policies to protect encryption investors; at the level of technology giants, South Korea's Web2 oligarchs are also actively promoting the construction of regional public blockchains, and using the advantages of centralized engineering to greatly improve the user experience; in terms of international market expansion strategy, they also use the development strategy of "expanding territory is not a one-day job": keeping a low profile in the country's encryption industry, stationing in Singapore, using the advantages of user experience to leverage the Asia-Pacific and Southeast Asian markets, while keeping an eye on the European and American markets.
To give a simple example, KakaoTalk is a mobile social software with a market share of more than 95% in South Korea, which is equivalent to WeChat in China. In KakaoTalk, users can use encrypted wallets to transfer money, and the gas fees in all processes are abstracted away by the background. Technologies such as user abstraction protocols on the market are all applied in this wallet. Judging from the tolerance of national conditions and the strength of the leadership of technology giants, the user experience built by the Korean encryption market is relatively good.
In the real world asset (RWA) track, the Korean crypto industry is also working closely with the Korea Gold Exchange to promote the listing of gold assets on the chain and increase the market sales and liquidity of gold transactions.
Who is the leading project behind all these strategies?
Klaytn is a public blockchain project invested by the South Korean Internet giant Kakao Group. Behind every move made by Klaytn is its deep understanding of the users of the Korean Internet market and its spirit of daring to challenge. Kakao Group is similar to Tencent in China. It is an important technology company in South Korea and has something in common in operating diversified services such as messaging, games, e-commerce and financial technology.
The following is a conversation between Shenchao and Sam Seo, representative director of the Klaytn Foundation. We hope that it will inspire or resonate with readers on the topic of the crypto market and project development in neighboring countries.
Background story and thoughts about Web3
DeepChao: Could you please introduce yourself and how you first joined Klaytn?
Himself:
I completed my PhD in Computer Science with a major in High Performance Computing, focusing on optimizing software performance. Prior to joining Web3, I worked at a research institute, focusing on code optimization and improving developer convenience. In 2017, while working as a research engineer at Samsung Research, a friend introduced me to Bitcoin, which prompted me to delve into Bitcoin papers and related materials. This marked the beginning of my in-depth understanding of Bitcoin and its underlying blockchain technology.
I found the philosophy of Bitcoin very inspiring, especially its emphasis on decentralization and transparent systems that can revolutionize decision-making and financial systems. However, I also began to understand Ethereum and its unique features and ideas, which made me believe that it can shape the future of the Internet and software systems. Inspired by this vision, I joined Kakao's blockchain subsidiary Ground X as a software engineer and protocol engineer. In the core development team, my role is to design and implement Klaytn as a public blockchain.
Deep Tide:
You got your PhD in high performance computing and then learned about the Bitcoin whitepaper early in your career. In your intuition, given your strong software background, what is the intersection between traditional web and blockchain?
In addition, many people believe that the biggest application of blockchain is finance. Even Elon Musk mentioned in a podcast with Lex Fridman that he believes blockchain can eventually solve financial problems. However, he did not emphasize other potential applications. From your perspective, how should blockchain empower the next generation of the Internet, not just serve fintech?
Himself:
First, I agree with others that the most common application of blockchain is currently in the financial sector. However, I think the application of blockchain and smart contracts is broader than the financial system. In Web3, the Internet was originally designed and developed as a decentralized system. However, due to operational and technical issues, Web1 and Web2, the current Internet, became centralized systems for large companies. However, the Internet was originally designed to be decentralized. That is, we have browsers and interfaces, we have front ends, and we have back ends, which are where the data is stored and who owns the data. Currently, centralized entities such as Google or Meta own and manage all user data for system efficiency and security reasons.
With Web3 and the implementation of blockchain and smart contracts, everything becomes transparent and accessible. The system itself is highly secure, and blockchain technology based on cryptography ensures data security. Data is securely stored and ownership can be re-granted to creators and users. By owning the data ourselves, we can make money or exploit it without relying on third-party intermediaries or central entities. However, large companies may still be necessary to provide a better user experience. But when it comes to data ownership and transmission, blockchain and Web3 technology can achieve a decentralized approach. This is the difference and what sets Web3 apart from traditional technology or legal systems.
Improving Web3 user experience is the mission of Klaytn public chain
Deep Tide:
I know Klaytn is building a foundational trust layer for Web3, the Metaverse, or the future of the Internet. Currently, there are many Layer 1 blockchain platforms. As far as I know, Klaytn has achieved large-scale adoption in the Korean market. In addition to regional differences, what is the difference between Klaytn and other blockchain platforms?
Himself:
Klaytn prioritizes a better user experience, which requires providing a low-latency platform and high throughput. While blockchain platforms are generally secure unless they have security vulnerabilities, many still have issues with speed and responsiveness compared to existing Web2 systems and software. People have become accustomed to highly responsive and high-performance systems, such as those on mobile phones. However, when using blockchain, people often feel that speeds are slow and users must be aware of their private keys and potential hacking risks.
Solving these user experience issues is critical, and what sets Klaytn apart is its ability to provide block times in seconds and eventual consistency. When using Klaytn, users won't even notice the difference between Web2 and Web3 applications. In addition, while Klaytn does not claim to be the best, it aims to provide high throughput and transactions per second (TPS), enabling service developers to build applications in a high-performance environment. Finally, Klaytn provides native fee delegation functionality from the beginning, allowing users and services to abstract complex gas fee payments. This feature is what makes Klaytn different from other public chains, and I believe this technology can enhance the user experience of Web3 technology.
Deep Tide:
In the blockchain space, people have been struggling to solve the trilemma of scalability, decentralization, and security. So, if Klaytn can achieve low latency and high throughput, indistinguishable in speed from Web2, which factor of the trilemma needs to be sacrificed to achieve this goal?
Himself:
Initially, we tend to sacrifice the decentralized nature of blockchain to solve scalability issues. Security is always a key factor that needs to be guaranteed. However, when we prioritize scalability, we may need to sacrifice a certain degree of decentralization. Despite this, our technical team is committed to finding ways to increase decentralization while maintaining high performance. They are actively conducting research and have made significant progress in this regard.
Preferences of 6 million South Korean crypto users
Deep Tide:
South Korea has become a major player in the blockchain and Web3 industry, thanks to its significant developments and contributions in the field. Now, how would you describe the current state of the Web3 industry in Korea? As far as I know, you are currently headquartered in Singapore, but Klaytn is expanding into international markets, which shows that you have confidence in the domestic Korean market. Are there any unique characteristics or advantages of the current state of the Web3 industry in Korea compared to other countries?
Himself:
As you mentioned, Klaytn started in Korea, and although we are currently headquartered in Singapore, our main market is still the Korean market. Understanding the Korean market is crucial.
The Korean market is very different from the Western market, especially the preferences of Korean users, both cryptocurrency users and regular website users. They value trustworthiness and usability over decentralization. Therefore, it is worth noting that they tend to use centralized exchanges more frequently.
In South Korea, there are more than 6 million cryptocurrency users, and while not all of them use blockchain wallets, many of them have accounts on centralized exchanges. This feature is unique to the Korean industry and market. The reason for this preference lies in the availability of centralized exchanges. They are faster, cheaper, and more convenient than decentralized exchanges. Users do not have to worry about managing their own private keys and tend to trust the operators of these exchanges.
In light of this, the Web3 industry and blockchain industry in Korea revolve around the activities and user experience of centralized exchanges. Klaytn’s goal in Korea is to attract these centralized exchange users to the world of Web3. While many of them are currently only interested in trading, if we can provide them with a better decentralized finance (DeFi) experience and enhance their user experience on Klaytn, they may be willing to explore and use Web3 services.
One of the ways we achieve this is by developing a crypto wallet in KakaoTalk. KakaoTalk is a popular mobile social app in South Korea, used by more than 95% of people. We integrated the Klaytn wallet into the platform, hiding the complexity of the user interface such as private keys and addresses. Users can seamlessly send tokens and use DeFi services in KakaoTalk. This integration encourages developers to bring Web2 users into the world of Web3 and Klaytn services.
Shenchao: That’s really impressive. Have you observed other Korean projects solving user experience issues? Have these applications promoted mass adoption of the Klaytn ecosystem?
Himself:
One area that has gained popularity on Klaytn is gaming. While it is not an emerging area, gaming has been seeing high adoption on Klaytn. To address the user adoption challenge, they implemented Klaytn’s fee delegation feature.
A game called “SuperWalk” offers two modes: Free Mode and Pro Mode. In Pro Mode, users need to acquire NFTs to participate. This is a challenge for users because they have to acquire tokens and purchase NFTs to start the game. However, in Free Mode, users do not have to face this complexity. The team behind Superwalk uses Klaytn’s Fee Delegation feature to pay for Gas Fees. This way, users can simply play the game without having to worry about acquiring tokens or dealing with other complexities. The SuperWalk team hides this complex interface from users and lets them start playing the game in a friendly way similar to traditional web applications. They gradually introduce users to other features and modes that require purchasing tokens.
Additionally, they have integrated the aforementioned Klip wallet. KakaoTalk users can easily get started with this DeFi app simply by using their wallets. They can use the app even if they don’t have any tokens initially. Over time, they’ll learn about purchasing NFTs and other aspects of the game. This approach has helped SuperWalk gain more users in the Korean market, and they are currently expanding to Japan and other countries. The focus is on providing a seamless user experience without having to worry about the token system. Users can start the game first and switch to pro mode when they feel comfortable. This approach solves the user experience problem in the emerging gaming sector.
Regarding upcoming developments, the team is working on digital world asset organization. While this is still a work in progress, one of the expected services is the tokenization of gold. The Korea Gold Exchange hopes to bring transparency and liquidity to physical gold by allowing users and investors to buy, sell, and trade gold tokens on-chain. While the service has not yet been released, it is expected to be launched later this month or early next month. Once this feature is launched on Klaytn, it will build a bridge between the on-chain world and physical assets such as gold. People will be able to buy gold on Klaytn without actually storing it as the gold will be safely kept by the Gold Exchange. This development is expected to pave the way for the creation of various applications and services based on these gold tokens.
International expansion or Asia-Pacific market first?
Deep Tide:
I know Kakao is an important partner and endorser of Klaytn. What role do you think this partnership plays in the development of the project? Without the partnership, what challenges will Klaytn face in its development?
Himself:
We know it’s challenging to compete with other public chains outside of Korea. We have a big presence within Korea, but internationally, we have to compete with other companies. One advantage we can leverage, though, is our UX expertise. We have successfully developed and deployed various use cases and applications on Klaytn in Korea. We can use these as references and work with local teams in other countries to easily apply our previous experience to new markets and different applications. This is our strategy, and I believe it’s what differentiates us from other teams. We have first-hand knowledge of how to get users using Web3 and DeFi and make them feel comfortable. This is how we enter other markets relying on existing experience and partnerships.
Deep Tide:
Klaytn’s international team has been based in Singapore for a while now. What kind of relationship have you observed between the Korean and Asian market team members? Also, what does Klaytn need to do to leverage its local UX expertise in the Asian market in order to be more competitive?
Himself:
This may be a common approach, but our strategy is to work with team members in Singapore and other countries to localize Klaytn's services in each specific country. For example, this year our focus is to increase awareness in the Vietnamese market. To do this, we hired local team members in Vietnam and worked with the local marketing team in Vietnam. Instead of relying solely on existing members, we empowered local team members to introduce our history, partners, and ecosystem to the local market. As a result, we have established numerous partnerships with local entities.
When engaging with local markets, we don’t just emphasize our success in Korea. We emphasize that our goal is to promote the development of the Web3 industry in the target countries. In this way, people are more receptive to Klaytn and more willing to listen to our message. Our strategy is to localize our content and DeFi products to suit the specific needs of each country.
Deep Tide:
For example, let's consider the differences between the Builder market in Vietnam and the Korean market. The Korean market places great emphasis on user experience. However, in the local Vietnamese market, Builders have different priorities. So, from the perspective of both Builders and users, what are their main concerns?
Himself:
Based on my experience and understanding of the Vietnamese market, Vietnamese builders tend to prioritize practical aspects. Although Vietnam has a large number of developers, their experience and maturity in website technology are still at an early stage. That's why they focus on building small-scale projects or applications that can be quickly deployed to users. On the other hand, Koreans pay more attention to improving user experience. Many users and developers in Korea have experience in developing Web3 applications.
In Vietnam, the market and developers are still in the early stages and lack rich experience. As an ecosystem and Layer 1, we strive to help them reduce trial and error. Without the cooperation and support we provide, Vietnamese developers would have to go through countless trials and errors independently. Again, the key difference is that Vietnamese builders have limited experience, which leads them to focus on building smaller projects and prioritize the rapid launch of services.
Deep Tide:
Yes, I think that's the beauty of Web3. Even in the face of competition, people can collaborate because local teams, markets, and builders in different countries have their own unique strengths and weaknesses. Web3 is about combining these different elements to create a truly global recipe.
In addition to the Asian market, has Klaytn considered entering broader markets such as Europe, the United States or South America?
Himself:
We made attempts last year, especially to enter the US and European markets. However, these attempts were not very successful due to lack of resources and cultural differences. Therefore, this year we decided to focus our main efforts on the Asian market. Our plan is to build a strong user base and community in Asia first, and then consider expanding to other regions. Currently, we are mainly focusing on the Asian market. Although we also have partners in the United States and Europe, our target audience does not specifically include users in these regions. We cooperate with partners in various ways, but our main user target is Asia.
Symbiotic Relationship with Ethereum
Shenchao: Speaking of development strategy, it is worth noting that Klaytn is a Layer 1 public chain compatible with EVM. Given this compatibility, what kind of symbiotic relationship do you think exists between Klaytn and Ethereum?
Himself:
As an EVM-compatible chain, we attach great importance to the technical progress of Ethereum and EVM. We are always working hard to understand the latest developments and updates of Ethereum and EVM. In addition, we are also actively working to contribute to the technical development of the Ethereum community and the expansion of the developer community.
While our contributions may not be huge, we occasionally submit EIPs (Ethereum Improvement Proposals). This happens when we design certain features in Klaytn and recognize their potential applicability to the wider community. In such cases, we submit our proposals to the EIP, thereby contributing to the technical development of the ecosystem.
Given that Klaytn is an EVM-compatible chain, our smart contracts mainly use the Solidity language. Therefore, we have invested a lot of resources to introduce Solidity and the EVM environment to many developers. Interestingly, we heard from a member of the Ethereum Foundation that the existence of Klaytn has greatly promoted the development of the Korean Solidity developer and the entire Web3 developer community because we actively participate in educating and cultivating this community.
Shenchao: I know that many EIP editors and authors are from Asia, and have witnessed the contributions of practitioners in the Asia-Pacific region to the entire ecosystem. Now, in the Asian market, have you encountered competition from Ethereum in terms of market penetration?
Himself:
No, because Ethereum currently positions itself as a settlement layer or data availability layer. They are focusing on expanding their network by adopting Layer 2 technology and other advanced technologies.
I would not say that we are in direct competition with Ethereum. Instead, we view our relationship as a partnership to jointly develop the market and expand the user base. As an Ethereum-compatible chain, we appreciate the technologies developed by Ethereum and adopt them where applicable. We are also committed to assisting Ethereum in expanding its community and market. Therefore, I would not describe our relationship as a competitive relationship, but rather Klaytn's competition in its own specific field.
South Korea after Luna Crash: Market expansion is no longer a priority
DeepChao: Last year, we experienced the Luna collapse, which led to a crisis for the entire industry. How do you think it will affect the Korean cryptocurrency market?
Himself:
In fact, that incident had a significant impact on the Korean cultural industry. Terra was one of the largest projects in Korea at the time, and many Koreans invested in tokens in it. Many teams were developing distributed file systems (DFS) on Terra, and some of them were also operating services on the platform. However, due to the crash, some teams had to migrate to other chains, and others had to stop operating. This had a profound impact on both businesses and investors.
As a result of the Terra incident, the South Korean government began to pay close attention to the implementation of regulations. While the government was already developing cryptocurrency regulations, this incident prompted the government to pay more attention to investor protection rather than focusing solely on industry expansion. Now, the goal of regulations is to strike a balance between encouraging industry development and protecting investors from fraud and scams.
The Terra Luna incident has sparked more attention from government officials and politicians to the investor protection space. While efforts to promote industry development continue, the main focus remains on how governments and regulations can protect retail investors from incidents like this.
Deep Tide: In the post-crisis era, people are traumatized and regulations have become stricter. How does Klaytn formulate strategies or take actions?
Himself:
Some of the actions we are taking now are not directly because of Terra. But our direction is to prioritize transparency to address issues like the Terra Luna incident, all of which stem from opaque and centralized decision-making processes.
Our focus at Klaytn is to ensure transparency in the decision-making process and to decentralize decision-making as much as possible. Since last year, and especially this year, we have made great efforts in building a management portal called Klaytn Square. Klaytn Square is a platform where all information about our Treasury and governance agenda can be found. Users can visit Klaytn Square to view details such as who has purchased a specific agenda and how the Treasury is managed and used. By disclosing this important information, we aim to show our commitment to providing important information to users and investors. We believe that this transparent disclosure will encourage regulators and investors to consider Web3 and Klaytn and promote investment.
In addition, as a Layer 1 platform, we are actively working on integrating more stablecoins into the Klaytn network. We collaborate with teams that are already developing stablecoins and prioritize those with strong security measures during our research. However, we currently have no plans to issue our own stablecoins.
Klaytn’s Community Gathering Strength
Shenchao: The last question is about Klaytn's high emphasis on user experience. In the bear market, how can people interested in Klaytn learn more and build applications on the platform? Does Klaytn organize some events or workshops for people to participate?
Himself:
In fact, our annual event "KlayMakers23" was launched two days ago. This hackathon will last for more than a month and will accept submissions until the end of November. It is a global online hackathon open to any developer or development team working on Klaytn. The event aims to get more developers on board the Klaytn platform.
In addition to hackathons, we also host monthly all-hands meetings in English and Korean on Discord. These meetings take place in the last two weeks of each month and are open to users, investors, and anyone interested in learning more about Klaytn and the Klaytn Foundation ecosystem.
Additionally, we occasionally attend conferences and have our own booths or participate in panel discussions. For example, at Korea Blockchain Week last month, we organized our own side events, and at the Token2049 conference in Singapore, we had a booth at the main venue. We also host after-conference parties and networking events.
These events, including hackathons, all-hands sessions, and conference participation, are designed to engage users, developers, and investors in the Klaytn community.
Note*
Developed by South Korean internet giant Kakao Group, Klaytn is a global Layer 1 public blockchain designed to power the on-chain world of the future. As the platform with the lowest transaction latency among leading blockchains, with enterprise-grade reliability and a developer-friendly environment, Klaytn provides an unparalleled seamless experience for users and developers. Since its launch in June 2019, Klaytn has accelerated the mass adoption of blockchain through a wide range of use cases, covering areas from DeFi to the metaverse, gaming, and even the Bank of Korea's CBDC pilot project. Today, it is one of the few globally competitive Web 3.0 ecosystems developed in South Korea, and has supported more than 1 billion transactions from more than 300 decentralized applications.
The Klaytn Foundation is a separate entity from Klaytn. The Klaytn Foundation is an independent entity established to support and promote the development and adoption of the Klaytn platform. It operates as a non-profit organization and serves as the governing body of the Klaytn ecosystem. The Foundation is responsible for managing Klaytn's Initial Coin Offering (ICO), overseeing Klaytn's governance model, and driving partnerships with other organizations. Its goal is to foster the growth and sustainability of the Klaytn ecosystem.
Reference Links
South Korean Crypto Regulation:
https://www.iflr.com/article/2c7n2o4rfmoya8grn7cw1/features/korea-the-current-regulatory-landscape-for-crypto-assets
About Kakao Group:
https://www.kakaocorp.com/page/?lang=en
About Klaytn Foundation:
https://klaytn.foundation/