Written by: Zen, PANews

This week, the Kaia public chain has become one of the focuses of the crypto market due to its strong token surge. Since the merger and launch with Klaytn and Finschia in August 2024, Kaia has continued to make efforts in technical performance and ecosystem construction; recent actions in stablecoins and payment scenarios have made it a hot topic among industry investors. The foundation's CEO publicly stated, "Kaia's stablecoin summer is about to arrive," indicating that its fiat-pegged token plan is soon to enter the implementation phase.

Since the inauguration of President Lee Jae-myung, support for the issuance of stablecoins pegged to the KRW has become the latest policy trend. The Kaia team has also taken the opportunity to announce plans to collaborate with Kakao Pay, LINE NEXT, and other super applications to launch a KRW stablecoin. Following the news, Kakao Pay's stock price surged nearly 30%, and Kaia's token also rose significantly, with its price increasing from around 0.10 USD to a peak of 0.17 USD, indicating the market's expectations for the prospects of local stablecoin projects in South Korea.

Riding the policy tailwind, Kaia's stablecoin project is underway

After the new South Korean President Lee Jae-myung proposed a policy supporting local currency stablecoins, Kaia quickly responded and announced plans to launch a KRW stablecoin. Following this announcement, related concept stocks such as KakaoPay surged nearly 30%, and the market is filled with expectations for the KRW stablecoin.

The proposed KRW stablecoin project by Kaia is jointly promoted by Kakao and LINE (in collaboration with KakaoPay, LINE NEXT, etc.) and is currently still in the planning stage, with no specific issuance timeline yet. With its digital wallet infrastructure and QR code payment system, Kakao Pay is also widely regarded as a potential beneficiary of the local stablecoin.

Currently, the South Korean government is brewing a (Digital Asset Basic Law) and actively discussing a regulatory framework that allows private institutions to issue stablecoins. The draft legislation aims to allow non-bank institutions and payment service providers to issue stablecoins and relax rules for cryptocurrency exchanges, enabling them to participate in lending and choose which tokens to list. Under this proposed framework, the approval authority for stablecoin issuers will no longer belong to the Bank of Korea (BOK), but will fall to the Financial Services Commission. The bill also significantly lowers regulatory thresholds, reducing the issuer's capital requirements from the previously proposed 5 billion KRW to 500 million KRW (365,000 USD).

However, according to the South Korean constitution, the issuance of legal tender is the prerogative of the central bank, and private institutions face legal barriers to issuing fiat-pegged tokens. The Bank of Korea has also pushed back against these proposals, with the Korea Herald reporting that the central bank has shown a "panic" response, stating that it originally planned to hold a meeting on stablecoins to express its view: indiscriminately issuing stablecoins pegged to the KRW could lead to "currency runs," thereby affecting the competitiveness of the KRW.

In terms of policy inclination, the head of the ruling party's digital asset committee in South Korea stated that they will support private issuance and plan to explicitly include stablecoin legalization clauses in the (Basic Law). The Kakao Group, on which Kaia relies, has a large-scale payment and financial infrastructure, providing a convenient channel for the actual use of stablecoins in the future.

However, despite the enthusiastic market feedback, the future of the Kaia stablecoin project remains unclear. On one hand, issues regarding currency sovereignty and anti-money laundering compliance remain difficult to overcome; on the other hand, the issuance and redemption mechanisms of stablecoins themselves await verification, and several potential competitors have already set their sights on this lucrative segment. Recently, during the Bank of Korea's experiments with tokenized deposits and wholesale central bank digital currency (CBDC), several large banks in South Korea publicly announced plans to jointly issue stablecoins.

Therefore, amid policy opportunities, the launch and advancement of Kaia's stablecoin plan bring much speculation, but whether it can obtain regulatory approval and smoothly land still faces many uncertainties.

Social giants band together, possessing 250 million 'potential users'

The Kaia public chain is a large blockchain network primarily aimed at the Asian region, formed by the merger of the Klaytn chain backed by South Korea's Kakao and the Finschia chain backed by Japan's LINE, officially launched in August 2024. It aims to reach hundreds of millions of Asian users by seamlessly integrating Web3 services with Kakao Talk and LINE.

Kakao Talk is one of the most popular instant messaging applications in South Korea, with nearly 95% penetration and about 50 million monthly active users; LINE, as Japan's most popular communication platform, covers 70% of the Japanese population and holds a dominant position in markets like Thailand and Taiwan. Based on the distribution capabilities of over 250 million users from these two major social platforms, Kaia, positioned as a high-performance and easy-to-use public chain, has been regarded as one of the 'potential stocks' to promote the popularization of crypto applications. This year, the Kaia Foundation has raised external funding from investment institutions such as Blockchain Capital and 1kx to support ecosystem incubation and market promotion.

Before the two merged into Kaia, Klaytn was developed by Kakao's blockchain subsidiary Ground X and officially launched in 2019, becoming an important representative of the South Korean blockchain network; its user base saw an astonishing growth of 1,100% in 2023, reaching 873,000 users. Meanwhile, Finschia (formerly known as LINE Chain) was launched in 2022 and provided an NFT platform DOSI internally within LINE, accumulating over 5.6 million users and completing about 560,000 NFT transactions. After the merger of the two chains, Kaia inherited the DeFi, gaming ecosystems of Klaytn and the NFT, payment application scenarios of Finschia to achieve mutual complementarity in technology and users. The official vision emphasizes that Kaia will "put Web3 at the fingertips of hundreds of millions of users in Asia" and create an efficient platform to support the development of large-scale decentralized applications.

As an Ethereum-compatible Layer 1 public chain, Kaia has inherited and optimized the IBFT consensus framework of Klaytn. Its consensus algorithm, based on an optimized Istanbul BFT, enables rapid final confirmation of blocks and supports multi-node participation. Official documents state that the Kaia network can handle up to 4000 transactions per second, with a block generation time of just 1 second and instant transaction finality. Unlike conventional PoW/PoS, Kaia uses a BFT consensus aimed at enterprises and service scenarios, ensuring that once a block is produced, it is definitively confirmed, eliminating the traditional risk of block rollbacks. Kaia network nodes are divided into consensus nodes (CN), proxy nodes (PN), and endpoint nodes (EN); consensus nodes are managed by core operators (CCO) and are responsible for block generation and validation. The network design ensures that over 50 nodes can participate in consensus, balancing throughput and decentralization.

In terms of technical features, Kaia supports account abstraction and fee delegation, significantly simplifying the user experience; it also integrates identity and payment channels from LINE and KakaoTalk, allowing ordinary users to use on-chain services without additional registration. Kaia remains compatible with Ethereum and other EVM chains and plans to support CosmWasm smart contracts; its leading cross-chain bridge integration capabilities provide developers with flexible multi-chain interoperability. Notably, the Kaia mainnet is actually a hard fork of the original Klaytn mainnet, and all states of Klaytn automatically inherit to the Kaia chain after the merger.

Expanding from the gaming sector to financial services

When Kaia first launched, user and funding metrics were still in the initial stages. By mid-2025, Kaia ranked among the top fifty globally in DeFi TVL, reflecting its scale at the early stage of its ecosystem. In terms of on-chain activity, Kaia's officials have disclosed that over 40 million users have accessed the Mini DApp portal. The number of wallets and transaction volumes grew rapidly in the early stages of launch, but the overall levels still remain far below those of established mainstream public chains like Ethereum, Solana, and BNB.

Ecologically, Kaia merged the application ecosystems of Klaytn and Finschia, forming a comprehensive ecosystem covering multiple fields such as DeFi, NFT, GameFi, and real-world assets (RWA). According to official statistics, there are already over 420 decentralized applications and game services that have been or are planned to be launched on the Kaia network after the merger.

In addition, alongside the launch of the Kaia mainnet, LINE NEXT and the Kaia Foundation jointly launched a builder support program called Kaia Wave. This program aims to provide multi-faceted support to promising Dapps, enabling them to reach consumer users in both Web2 and Web3, and gain additional advantages from sources such as LINE Messenger, Web3 marketing alliances, creators, and the vertical services of Kaia and LINE NEXT. Official documents state that the Kaia Wave program will provide a total value of 10 million USD in KAIA tokens, specifically for user acquisition and rewards.

In the DeFi space, Kaia has launched several decentralized exchanges and staking, lending projects, such as KlaySwap and DragonSwap; at the platform level, it also supports stablecoins, cross-chain bridges, and other infrastructure. In terms of NFTs, Kaia has inherited the user base of the Finschia DOSI platform, and its GameFi ecosystem benefits from the user groups and partner resources of the two major social platforms; some game developers have begun to launch mobile games, NFT items, and other content on Kaia.

Following the example of Telegram and the Ton blockchain, in terms of Mini DApp distribution and user reach, the Dapp Portal is one of the main focuses of Kaia's ecosystem development. The Dapp Portal is built on the Kaia chain and is opened to users through the official LINE Messenger account, allowing access to games, social interactions, transactions, and other Mini DApps within the chat interface without downloading any new applications. In January of this year, LINE NEXT and Kaia jointly launched the first batch of 32 Mini DApps, allowing users to create wallets, play games, claim rewards, trade NFTs, etc., all without needing to install a separate client.

In official strategy, Kaia is gradually expanding from the gaming field to financial services and general applications: at the beginning of 2025, it has already launched a USD stablecoin yield product on the LINE side, with further plans including introducing lending, perpetual contracts, payments, and asset tokenization DeFi protocols, as well as achieving seamless exchange between KRW and stablecoins.

In May of this year, Tether officially deployed its USD stablecoin USDT on Kaia, providing stablecoin payment and cross-border transfer services to LINE's 196 million users, marking further expansion of Kaia's layout in the international stablecoin ecosystem. Overall, Kaia is accelerating the construction of a platform-level ecosystem, promoting the use case of "message as entry, on-chain as payment" with industry partners.