If you regularly keep tabs on the cryptocurrency market, you may have noticed that a cryptocurrency called Klaytn (KLAY) is up more than 50% in the last 24 hours. Its 7-day price performance gained by 7 percent on Thursday morning courtesy of its strong bullishness. This means that it has recovered from losses it incurred during the strong market correction that took place this past weekend.
KLAY traded at $1.26 at the time of this press and ranked 28th on Coinmarketcap. It currently has a circulating supply of 2.47 billion coins and its market cap is currently at $2.6 billion. The cryptocurrency’s impressive performance on Thursday morning was fueled by an announcement by Binance via its official Twitter handle, revealing plans to list the coin.
The Klaytn coin was developed by a company called Ground X which is a subsidiary of a South Korean technology company called Kakao. The latter is one of the largest companies in its home market, with a market cap of more than $40 billion. Some of Kakao’s largest businesses include the KakaoBank which is the first internet-only bank in the county. It also owns the Kakaotaxi service which is the most used taxi company in South Korea, and Kakaotalk, a messaging app used by 90 percent of the South Korean population.
Kakao went live with the Klaytn ICO in 2018 and it is the native cryptocurrency KLAY on the Klaytn blockchain. The latter aims to be the blockchain that will support South Korean businesses. In other words, Kakao plans to fulfill the demand for blockchain technology by businesses in the country. The Klaytn blockchain went live on Kakaotalk in June 2020 through the Klip wallet which exists in the Kakaotalk ecosystem.
The Klip wallet stores KLAY coins and other fungible, as well as non-fungible tokens. The wallet also allows Kakaotalk users to stake their KLAY tokens. So far the Klaytn blockchain supports more than 60 dapps which means it is already generating a lot of utility. The blockchain relies on a permissioned proof-of-stake mechanism although the number of validators on the network is limited. This allows it to process roughly 4,000 transactions per second but at the cost of relative centralization. Fees are also relatively low at 1/10th the fees on Ethereum.
The Klaytn blockchain supports customizable blockchains called service chains which are operated by participants who are then rewarded through a proof of contribution mechanism. The blockchain also consists of a governance council that consists of multiple entities including Huobi, Binance, LG Electronics, and others. There are 28 members in the governance council and they are all required to stake at least 5 million KLAY to participate as a core cell operator.
There was an initial supply of 10 billion KLAY coins, although roughly a quarter of them are currently in circulation. However, it has an inflationary schedule through which 300 million new KLAY coins will be minted every year. The fact that more than 7 billion of the total supply is locked suggests that there might be a vesting schedule. As such, the price performance of the KLAY cryptocurrency might not be favorable in the future.
The release of more tokens into the market will likely lead to a price decline assuming that the market cap will grow at a slower pace. The lack of a proper roadmap beyond the current year is also something that investors should consider when deciding whether to purchase KLAY or not. On the other hand, Kakao has developed the Klaytn blockchain with a particular focus on enterprise adoption. Growth in enterprise usage might boost the value of the KLAY token but it might require some strategy changes.
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