Rapidly growing Klaytn Blockchain shows it is ripe for enterprise adoption

Decentralization is one of the first things that comes to mind when most people hear the term “blockchain”. After all, blockchain technology is defined as a distributed ledger that is permissionless, public and transparent, meaning that anyone can access it and use applications built on it, without any restrictions.

The open nature of blockchain is great for accessibility, but the most decentralized networks, such as Bitcoin and Ethereum, are not always the best fit for organizations looking to move business processes to a DLT network. The priority for businesses is not a high level of decentralization, but rather a blockchain that delivers high performance and throughput, with low transaction fees, high customizability and a seamless onboarding experience.

According to a recent report from Messarithe South Korean blockchain project Klaytn is increasingly looking like the perfect network to meet these requirements, while providing additional benefits for the largest enterprises to run their applications and accelerate the adoption of distributed ledger technology.

What is Klaytn?

Klaytn is not one, but three separate networks working together. Developed by South Korean internet conglomerate Kakao, it consists of the Core Cell Network and Endpoint Node Network, which together form the main network, along with the Service Chain Network, which hosts a number of enterprise-grade side chains that can host independent decentralized apps. .

The Core Cell Network consists of independent cells, including a consensus node and at least two proxy nodes, which are run by a permission group called the Klaytn Governance Council. These consensus nodes perform consensus, create new blocks, verify and execute transactions. The proxy nodes, meanwhile, serve to relay information to the Endpoint Node Network, which in turn is used to communicate with the Service Chain Network and all its independent side chains. These service chains are a key part of Klaytn’s design, enabling companies to create their own dedicated and customizable blockchains for specific dApps. With them, companies can tailor their networks to meet the needs of their dApps, whether it’s a focus on data protection or higher transactions per second or throughput.

Smooth network performance

The Messari report reads like a glowing endorsement of Klaytn’s network architecture. It makes it clear that for enterprise dApps, TPS is just one consideration. Equally important to network performance are latency (the time it takes for a transaction to be sent to the network) and finality (how long it takes for a transaction to be verified and made irreversible), and this is where Messari says Klaytn really delivers.

Not only does Klaytn’s network deliver a TPS that leaves Ethereum in the dust, but it also provides extremely low latency and near-instant finality. Klaytn’s unique network architecture does this by sacrificing a degree of decentralization, with a limited number of Core Cell Network nodes. It’s a trade-off that seeks to appease the vast majority of business users, who are used to Web2-like transaction speeds, Messari explains.

“Beyond its base-layer architecture, Klaytn offers enterprises the ability to deploy their own Service Chain, allowing them to easily create custom blockchain solutions anchored to the Klaytn mainnet,” the report noted.

One of the keys to Klaytn’s high TPS is its new consensus mechanism, which is based on Proof-of-Stake and uses an optimized Byzantine fault tolerance model in Istanbul. Klaytn’s IBFT is designed to enable higher scalability by randomly selecting a fixed number of nodes to perform consensus for each block. With it, a single cell network is randomly selected to propose each new block, while 30 others are selected as validators to form a committee for the round. Consensus is achieved when two thirds of this committee agree on the proposed block.

Messari explains that this is a unique model that allows Klaytn to add new nodes without increasing the communication volume. However, it notes that because the nodes communicate with each other to reach consensus, the possibility of cooperation exists. That said, the model’s fast time to finality makes it ideal for enterprise blockchains where consensus nodes are run by trusted validators.

Growing DeFi ecosystem

Although Klaytn is more centralized compared to some other blockchains, the model has not stopped it from achieving amazing growth in the last couple of years. At the time of the report, Messari said Klaytn’s DeFi protocols had a combined value of $317 million locked up, ranking 14th overall in the entire blockchain industry. Like most chains, the TVL has dropped significantly since April, when the broader DeFi market was knocked sideways by the sudden and shocking collapse of the Terra blockchain ecosystem.

Still, Klaytn’s TVL is still up around 73% compared to a year ago, meaning it has shown high resilience amid one of the most severe crypto winters the market has seen.

One of the main reasons for Klaytn’s strong DeFi ecosystem is Klap (Klaytn Lending Application) protocol that was launched in June. Within days of its launch, Klap accumulated millions of dollars in TVL, quickly becoming the number one overcollateralized lending protocol on Klaytn with an impressive $18 million in TVL (this has grown to $32 million since Messari’s report was published).

Despite launch just a few months ago, Klap has already become one of the flagship projects at Klaytn. It is a decentralized, non-custodial liquidity market protocol that allows anyone to participate as a depositor or borrower. With Klap, depositors receive liquidity against passive income, while borrowers can take out loans with over-collateralisation on a perpetual basis, or loans with collateral for short periods.

There are high hopes that Klap will contribute to strengthening Klaytn’s DeFi ecosystem in the long term. As a fork of Aave, it is modeled after one of the most popular and successful DeFi protocols in the industry. However, it goes further than that, mixing in additional functionality such as veNFTs from Solidly, yield boosters from Platypus, vote escrow management from Curve and penalties for mercenary capital, first introduced by Geist. In this way, Klap attempts to merge the most popular features of DeFi’s leading protocols into one mega-project, built on top of Klaytn’s high-performance, enterprise-grade blockchain infrastructure.

Roadmap of the future

Messari’s report notes that despite its early success, Klaytn’s plans to become the most enterprise-focused blockchain in existence are not yet complete. By introducing improvements to its consensus mechanism, Klaytn aims to increase its TPS from 4,000 to more than 10,000 by the end of this year. In addition, there are plans to add more service chains to the network to reduce congestion on the main network. To encourage more service providers to build these service chains, Klaytn plans to enable more seamless bridging between them and the main network. It will also introduce the concept of nested service chains, which will have the ability to act as a hub for other service chains and scale them to greater heights.

That’s not all, because Klaytn is also making an effort to appeal to companies that still place a premium on the idea of ​​decentralization. To do this, Klaytn is working to bring in more Klaytn Governance Council members. Currently, the network can only support a maximum of 50 GC members, but the project is also working to increase this to 100 in total.

Finally, there are plans to introduce more transparency into Klaytn’s overall governance process, Messari said. The idea here is to transfer management processes to a chain portal, instead of the current practice of using Web2 tools such as Slack and Google Forms

Ready for adoption

For businesses, there is clearly a lot to like about Klaytn. Organizations have become increasingly aware of blockchain’s potential to improve business processes, reduce operational costs and create more value for users.

The problem for companies is not so much the concept, but rather the implementation. High transaction costs can hurt their ability to compete with rivals and attract new users, while complex administration, onboarding and lack of customization options can lead to greater friction than found in traditional, centralized infrastructure.

By solving these problems and with its focus on improved developer, enterprise and user experiences, Klaytn provides a solid framework for running global-scale dApps that can serve millions of users simultaneously. If Klaytn is able to deliver on its promises to increase TPS and reduce network congestion, it could turn out to be just the platform the enterprise has been looking for – and one that could accelerate mass adoption of blockchain in business.

To date, Klaytn has already made great strides with its incredibly ambitious blockchain infrastructure and secured a number of business partners along the way. Klaytn is heading in the right direction, and it is unlikely to take a wrong turn anytime soon.