Table of Contents

1. Project Overview

2. 2024 1H Highlights
2-1. Key highlights
2-2. Key metrics

3. Major Partnerships and Updates
3-1. Integrating with the Optimism Superchain: Evolving into a self-sustaining ZK rollup
3-2. Reorganizing tokenomics for network activation and sustainability
3-3. Kroma to gradually solidify its position as a game-specialized chain via night crows onboarding
3-4. Key checkpoints in Kroma's quest to acquire users and activate the network

4. On-Chain Performance
4-1. Network activity
4-2. Development activity

5. Conclusion

1. Project Overview

Kroma is an Ethereum-based layer 2 solution, combining ZK fault proofs and Optimistic Rollup on the Scroll zkEVM. The project features its own tokenomics governance, and validators, and is transitioning to fully compatible ZK rollups via the Tachyon library. As a gaming-specific Layer 2, Kroma focuses on expanding the gaming ecosystem, collaborating closely with the WEMIX chain to support various web3 applications, including DeFi and NFTs.

2. 2024 1H Highlights

2-1. Key highlights

Major updates and partnerships to become a self-sustaining, universal ZK rollup

• Enhancing technology and strengthening self-sustainability by joining the Optimism Superchain
• Revamping tokenomics to boost network activity and sustainability

Key events for Kroma to solidify its position as a game-specialized chain

• Night Crows game onboarding and $KRO airdrop event to attract users

Key events to activate the network and attract users

• Kroma Quest: A nine-week event ending January 29, concluding the previous quarter
• KGH (Kroma Guardian House) NFTs: Sold out in collaboration with validators
• Kroma Pro Gamer Campaign: Promoting Kroma’s gaming ecosystem and onboarding users

2-2. Key Metrics

3. Major Partnerships and Updates

In Q1, Kroma implemented a comprehensive strategy to expand its ecosystem and solidify its position as a gaming-specific blockchain. Key initiatives included organizing a Kroma Meetup with a local game studio in Vietnam, engaging game players, and onboarding numerous users and capital through strategic partnerships and quest events. The Kroma Quest and Aroma Pro Gamer campaign were pivotal in leveraging and promoting these partnerships.

In Q2, Kroma focused on strengthening its self-sustainability as an Ethereum Layer 2 network. The development of the Tachyon library marked a significant step towards transitioning from a hybrid rollup to a full ZK rollup. Additionally, Kroma joined the Optimism Superchain, aiming to become a self-sustaining universal ZK rollup. The overhaul of tokenomics further ensured network sustainability, with new features like support for liquid restaking.

3-1. Integrating with the Optimism Superchain: Evolving into a self-sustaining ZK rollup

On June 14, 2024, Kroma announced its integration into the Optimism Superchain through an official post on Medium. The Superchain, a network of L2 chains built on Optimism's open-source standardized codebase (OPStack), shares security, communication layers, and a technology stack. By joining the Superchain, Kroma is expected to receive technological development support and grants from Optimism. This support will enhance the development of the Tachyon library and expedite the transition to a full ZK rollup. Additionally, the Superchain ecosystem will facilitate the seamless sharing of users and funds across networks, thereby activating and benefiting Kroma's ecosystem.

The Tachyon Library is an independent Kroma project, a general-purpose zkSNARK open-source library written in C++. It is GPU-compatible, designed to reduce complex proof generation times, achieve cost efficiencies, and simplify the implementation of various proof schemes for developers.

Kroma also plans to deploy Native Account Abstraction (AA) on OPStack. Native AA, where the entry point is inherent to the protocol rather than deployed as a contract, offers lower costs and simpler implementation. It can enhance the Web3 user experience by providing Web2-familiar methods such as paying for gas through Paymaster and social login. Leveraging the Rollup Improvement Proposal (RIP)-7560 from November 2023, Kroma intends to develop and deploy Native AA for the Optimism Superchain environment.

Once the Tachyon Library and Native AA are deployed, achieving interoperability between Superchain networks will become easier. ZK rollups built with the Tachyon library do not require a 7-day challenge period like optimal rollups, and Native AA implements account abstraction within the rollup while ensuring compatibility with ERC-4337. If these technologies are successfully established as standards within SuperChains, Kroma could become a self-sustaining Ethereum rollup. However, Kroma is not yet ready for general availability and still needs additional features and technical validation.

Source: Optimism

3-2. Reorganizing tokenomics for network activation and sustainability

In Q2, Kroma implemented a major reorganization of its tokenomics to ensure network activation and sustainability. Previously, Kroma used the Zero-Start tokenomics, which distributed tokens fairly without initial issuance and gradually generated and distributed tokens through network participation and contributions.

Under Zero-Start Tokenomics, the maximum issuance of $KRO is 50M (soft cap), and one $KRO is minted per block. Every 90 days, the number of $KRO tokens minted in a block is reduced by 7.88%. The token distribution is as follows: 15% to investors, 15% to the WEMIX Foundation, 15% to the core team, 38% to the ecosystem fund, 7% to the community airdrop, and 10% to the WEMIX community.

The previous tokenomics structure, characterized by a low maximum supply and a gradual reduction in token issuance over time, presented several challenges. It resulted in 1) insufficient initial airdrop distribution and 2) posed long-term sustainability issues due to decreasing rewards. In response, Kroma implemented a major reorganization of its tokenomics in June 2024 with the following key changes:

• $KRO is 100% minted during the TGE (Token Generation Event) and immediately sent to the vault. It will then be distributed according to the vesting schedule.
• To better reward real contributors to the Kroma ecosystem, we're merging the WEMIX community quota with the community airdrop quota, changing the community airdrop quota from 7% to 17%.
• The WEMIX Foundation and Investor allocations are combined, reallocating 5% of the 30% to the Ecosystem Fund.
• The TGE is rescheduled to Q3 2024.

While these changes align broadly with tokenomics structures of other networks, they are notable for their high allocation to the community and ecosystem, making them particularly favorable for early-stage bootstrapping. This strategy allows Kroma to reward developers, users, and other contributors to the ecosystem, which is critical in a market where the development of killer dApps lags behind infrastructure advancements. However, concerns remain about potential short-term selling pressure from the large initial token volume and the difficulty in sustaining growth over the medium to long term if not managed properly. Kroma must effectively leverage its initial tokens to facilitate meaningful application onboarding and user acquisition.

3-3. Kroma to gradually solidify its position as a game-specialized chain via night crows onboarding

The success of Night Crows, released in March, has significantly contributed to WEMIX's growth. This popular game has also been integrated into Kroma, a Layer 2 chain, and promoted through the following events:

• Mission: Reach level 45 by playing and minting $CROW tokens on the Kroma chain.
• Rewards: A total of 100,000 $KRO airdrops distributed, full coverage of Crow minting gas fees, and a 100% chance to win Kroma Ore (Ore) NFTs and in-game items as part of the Kroma Pro Gamer campaign.

By onboarding a successful game like Night Crows to the Kroma Chain, Kroma can significantly enhance its network profile. Currently, Kroma leverages the WEMIX gaming ecosystem to drive growth. However, once Kroma firmly establishes itself as a gaming-specific Layer 2 chain, it will have the capacity to develop its own robust gaming ecosystem.

3-4. Key checkpoints in Kroma's quest to acquire users and activate the network

The nine-week Kroma Quest, which commenced on November 27 last year and concluded on January 29, generated substantial interest and engagement, attracting over 160,000 followers and accumulating 937.24K quest interactions. This event allowed Kroma to introduce core concepts to new users, foster community building, and enhance liquidity and interoperability within the network. Initially, Kroma Quest propelled the project into the global market and boosted ecosystem activity, with daily transactions peaking at 350K. However, post-event, daily transactions saw a decline, underscoring the challenge of maintaining a sustainable influx of users and applications.

Kroma Guardian House (KGH) strengthens network security by offering economic incentives

Source: Kroma Guardian House

During Q1, the Kroma Network successfully sold out its Kroma Guardian House (KGH) NFT collection. These NFTs democratize network security and governance by enabling ordinary users to participate through staking NFTs on the validators. Staking KGH NFTs not only provides economic incentives to enhance network stability but also motivates validators to maintain high performance. This approach maximizes network participation and security, encourages broad community involvement in network governance, and is poised to become a trend in the democratization of blockchain technology.

Key checkpoints in the Kroma Pro Gamer campaign

Following the conclusion of the Kroma Quest in January, Kroma launched a new Pro Gamer Campaign in March. This campaign aimed to revitalize the gaming ecosystem, enhance capital liquidity, and promote interoperability. The following provides an overview of the quest and rewards, organized by game and DeFi.

The Pro Gamer campaign featured simple, arcade-style games. These ranged from betting games, such as roulette, dice, and rock-paper-scissors, to content that interacts with the Kroma network by creating contracts, such as minting character NFTs used in racing games.

In the future, Kroma will onboard games from Night Crows and WEMIX, and will continue to strengthen its gaming ecosystem by partnering with promising developers like Redbrick and SOUNI.

The Pro Gamer campaign also aimed to secure capital liquidity and facilitate trading within the gaming ecosystem. We partnered with various bridge-enabled dApps to help users move assets from other chains and set up missions within the campaign to bridge real-world assets, leading to increased trading activity.

Users who completed the missions in these campaigns were rewarded with a common Kroma Ore (Ore) NFT in addition to each project's own airdrop point rewards. Kroma Ore is a fundamental resource used in the Factory within the Kroma Creative Universe (KCU), where Ore is required to craft various items. Ore can be converted into various items in the KCU, and users can collect these items to earn points and receive point boosts. For more information, please refer to this link.

4. On-Chain Performance

4-1. Network activity

Kroma's average daily active wallet count in Q1 more than doubled compared to the previous quarter, indicating increased network activity. The Kroma Quest and Pro Gamer campaigns seem to have successfully attracted new users and sustained engagement on the Kroma network. However, the number of daily active wallets decreased slightly in Q2 following the end of the main quest. With the Kroma Token launch scheduled for Q3, we expect continued network activity from users anticipating the Kroma Token airdrop.

Along with the rise in daily active wallets in Q1, Kroma's average daily transactions also increased by about 60% compared to the previous quarter. The highest transaction day was January 28, 2024, with a total of 368,567 transactions, likely due to the fact that the next day marked the end of the Kroma Quest. In Q2, Kroma's daily transaction count increased significantly from mid-May, though it also showed greater volatility. Daily transactions rose to nearly 350,000 but at times dropped below 50,000.

4-2. Development activity

Kroma's development activity remains robust in both the network core and ecosystem. The number of commits related to core development continued its upward trend in Q1, increasing by 33%, following a 384% spike in 4Q23 compared to the previous quarter. Q2 saw a slight slowdown, with a 23% decrease from the previous quarter.

The number of new contract deployments spiked more than sevenfold quarter-over-quarter in Q1, confirming the accelerated growth of the Kroma Network on the development front. This upward trend continued in Q2, with new contract deployments up approximately 13% quarter-over-quarter.

The heightened development activity since 4Q23 is attributable to the merging of Optimism code to minimize code differences between Kroma and Optimism, which has been rapidly evolving. It also reflects the active development of the Tachyon library, in line with Kroma's roadmap.

5. Conclusion

Kroma is an Ethereum-based Layer 2 solution that is gaining significant traction in the gaming and DeFi ecosystems. Its technological innovations, such as KGH NFTs and the Tachyon library, aim to enhance network efficiency and security. These advancements lay the groundwork for attracting a broader range of users to the Kroma platform. Additionally, economic incentivization mechanisms, like staking validation-linked NFTs (KGH) and quest points, foster network participation and make governance more accessible for users.

Kroma has also undertaken strategic initiatives to bolster its self-sustainability and longevity as an Ethereum Layer 2 solution. The platform has transitioned from a tokenomics model focused on preventing inflation to one designed to ensure ecosystem revitalization and sustainability. By joining the Optimism Superchain, Kroma aims to evolve into a universal ZK rollup through advanced development and accelerated ZK conversion.

Despite not yet fully achieving its potential, Kroma's efforts to become a self-sustaining Ethereum Layer 2 solution are impressive. The comprehensive revamp of its tokenomics underscores the imperative of attracting robust applications. The key to Kroma's success will lie in its ability to draw early users and dApps, potentially through killer applications, and to activate the surrounding ecosystem. The remainder of 2024 will be critical for observing Kroma's progress and innovations.