What Is Klaytn?

Sep 06, 2021

Defining Klaytn

Klaytn is a performance-optimized BFT-based smart contract platform that focuses on providing enterprise-grade network reliability. Jaesun Han, the founder and CEO of Ground X, developed Klaytn and officially launched the network in June 2019. 

Ground X, a blockchain development-focused subsidiary of Korea's unicorn startup Kakao, formed the Klaytn Governance Council by extending governance participation privileges to multinational corporations. Ground X created Klaytn in order to combine the best features of both public and private enterprise blockchains. It achieves this through a 'hybrid' design that implements decentralized ledgers and distributed governance, while having high transaction throughput. 

With smart contract functionality through EVM and the execution of Solidity contracts, Klaytn supports various dApps for DeFi, NFTs, and games. As of September 2021, Klaytn is one of the most popular blockchain projects to come out of South Korea, ever. It has the notable backing of major transnational corporations such as Samsung, Maker, and WorldPay FTS.

Klaytn Tech Overview

Klaytn launched its Cyprus mainnet in 2019. Upon that launch, the team began to realize the design goals for the project, which remain the project’s design goals today. These include immediate finality, high TPS that meets real-world use cases, lowering the cost of running blockchain applications, lowering the barriers to entry for end-users, and easing the adoption process for industry.

Klaytn is on its way to achieving these goals, thanks to the technical specifications within its network.


One of the key goals of the Klaytn blockchain network is to ensure the quick finality of transactions. This would be a major improvement over Bitcoin and other PoW networks. Klaytn achieves this by implementing an optimized version of Istanbul BFT, a modified PBFT. In PBFT, each network node communicates with other participating nodes, so that the finality of the block is guaranteed as soon as nodes reach consensus. 


The network uses three types of nodes: Consensus Nodes (CN), Proxy Nodes (PN), and Endpoint Nodes (EN). Consensus Nodes participate in block generation, while Proxy Nodes relay communications between CNs and to the network. Proxy Nodes transmit transaction requests to the CNs and push blocks to the Endpoint Nodes, which help the Klaytn network handle RPC API requests and data sent between service chains.


Bootnodes are special nodes operated by Klaytn to help new nodes register to the network and discover other nodes to connect with. CN bootnodes reside within the Consensus Node Network and are not exposed to the public, while PN and EN bootnodes are publicly visible. PN bootnodes only allow permitted PNs to be registered, and let eligible PNs connect with ENs. EN bootnodes provide ENs with information on which PNs to connect to.


Klaytn Governance 

Governance issues on Klaytn concern three main areas: technology, economy, and governing rule. Kakao aims to have the governance process occur on-chain. In this way, votes are recorded on the blockchain. This arrangement is similar to many other existing blockchains, such as Ethereum and sidechains.

Governance votes pertain to different issues regarding the three main areas of governance. Technological votes are related to technical updates, the blockchain’s basic structure, new features, and software updates. Economical votes are related to the issuance of KLAY, distribution, change of transaction fees, and Klaytn Improvement Reserve spending. Governing rule votes are related to governance processes and the rules and responsibilities of governance council participants.

All other matters are handled internally by Kakao and the core Klaytn team.

Klaytn Governance Council

You might notice that the Klaytn Governance Council has a tremendous amount of power over how the network functions and who may join the council. This council consists of major industry players who run nodes on the Klaytn network by staking KLAY tokens. 

This is unlike most decentralized platforms today, since participation is restricted to just a small handful of players rather than being open to any native token holders. Klaytn operators believe that the Klaytn Governance Council will generate long-term growth for Klaytn.

To become a Council member, a candidate must undergo a qualification review by the Klaytn Governance Process and stake at least 5 million KLAY. As a council member, they are expected to vote on governance issues that arise within the network. Their participation on the council is typically on a timed basis, where the period of time spent on the council is determined by a contract between a company and Kakao.

Council members must also provide safety and functionality assurances to the network. Each council member is assigned to be a Proposer or a Validator of a block on a rotating basis. Failure to perform this duty results in penalties.

A number of enterprise partners have strategically decided to work with Klaytn in order to grow their user base. Most are already within the blockchain industry, and those that are not, like Woori Financial Group (a Seoul-based financial services holdings company) and BCW Group (a global strategy consulting firm specializing in digital payments), have recognized the many advantages of partnership. 

Klaytn Improvement Reserve

In June 2020, the Klaytn Improvement Reserve (KIR) was launched to further reward Klaytn enterprise users and encourage ecosystem growth. This includes partners that have improved Klaytn’s user experience, development environment, infrastructure, and more. It is also meant to provide development support and fund research and community building initiatives. 

Funding for the KIR is made by the Klaytn network itself, since a portion (12%) of each new block’s rewards go to it. The Klaytn Governance Council determines how the funds in the KIR are spent. The first enterprise to receive rewards from the KIR was Ozys. Other initiatives may be funded by the KIR in the future, potentially in real-world uses as well. 


KLAY is the network’s native currency, used to pay transaction fees for on-chain transfers and smart contract interactions. Users can also do yield farming and mint NFTs with their KLAY tokens. Despite its other uses, KLAY is primarily used to interact with dApps and to serve as a store of value on the Klaytn network. 

Although at launch in summer of July, 2019, there was an initial total supply of 10 billion KLAY tokens, the supply is inflationary, with about 2.5 billion tokens in circulation by Q3, 2021. 

As of September 2021, 9.6 KLAY is minted per block. Newly issued KLAY and transaction fees from the block are distributed to three accounts in a predetermined ratio: Governance Council Reward (34%), Proof of Contribution (54%), and Klaytn Improvement Reserve (12%). As usual, it pays to stake native tokens on Klaytn.


There are a number of advantages for businesses in looking at how Klaytn can enhance their operations. And if major corporations like Samsung and Binance can find use for it, then other companies across different industries certainly can too. 

Klaytn facilitates businesses’ technical operations, which is one way of saying it raises the bottom line while increasing efficiency. With its flexible scalable nature, it offers businesses and developers the ability to keep track of the fast-moving world of blockchain. 

Its low transaction fees and flexible use cases also are attractive features that enterprises would like to benefit from. Expect to see more transnational enterprises dabble in the blockchain space by becoming council members on Klaytn’s Governance Council. It could be their gateway to building new and exciting things in the blockchain industry!

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