Dialogue with Klaytn Foundation Director on Koreas Web3 Nautical Map

TechFlow: Sunny, David & Zolo

Klaytn Foundation: Sam Seo

"Domestic influence, global competition. Our edge: user experience expertise."

----Sam Seo, Representative Director of Klaytn Foundation

Editor's Note

After Token2049, the cryptocurrency market once again turned its attention to Asia. While the general consensus is that Asia's crypto industry lacks infrastructure innovation compared to Western markets, Asia excels in internet application engineering capabilities, government policy inclusiveness, and tight-knit communities, even surpassing the West to some extent.

 

South Korea, the crypto nation that faced challenges due to the Luna Crash last year, has become even more resilient.

On the cryptocurrency policy front, the local government, known for its openness to cryptocurrencies, is actively promoting policies to protect crypto investors. At the level of tech giants, South Korea's Web2 oligarchs are actively advancing regional public blockchain initiatives, leveraging their centralized engineering advantages to significantly enhance user experiences.

In terms of international market expansion, they employ a development strategy of "expanding territory is not accomplished overnight." They nurture the domestic crypto industry while establishing a presence in Singapore to leverage their user experience advantages and drive the Asia-Pacific and Southeast Asian markets, all while keeping an eye on the Western markets.

For example, KakaoTalk, a mobile social networking app with over 95% market share in South Korea, equivalent to China's WeChat, allows users to transfer funds using a built-in crypto wallet, with all gas fees abstracted away in the background. User abstraction protocols and other technologies are applied in this wallet. In terms of tolerance level and the leadership of tech giants, the user experience in the South Korean crypto market is relatively good.

In the realm of Real-World Assets (RWA), the South Korean crypto industry is closely collaborating with the Korea Gold Exchange to promote the tokenization of gold assets, enhancing market sales and liquidity in gold trading.

Who is the leading project behind all these strategies?

Klaytn is a public blockchain project invested in by the South Korean internet giant Kakao Group. Every move Klaytn makes is driven by its deep understanding of the South Korean internet market users and its daring spirit to challenge conventions. Similar to China's Tencent, Kakao Group is a significant technology company in South Korea, operating diverse services including messaging, gaming, e-commerce, and fintech.

The following is a conversation between TechFlow and Sam Seo, representative director of the Klaytn Foundation, hoping to provide some insights or resonance to readers regarding the neighboring country's crypto market and project developments.

Background Story and Thoughts about Web3

TechFlow: Can you please introduce yourself and how you joined Klaytn initially?

Sam:

I completed my PhD in computer science, specializing in high-performance computing, with a strong focus on optimizing software performance. Prior to transitioning to Web3, I worked at a research institute where I concentrated on code optimization and improving convenience for developers. In 2017, during my time as a research engineer at Samsung Research, a friend introduced me to Bitcoin, prompting me to delve into its paper and related materials. This marked the beginning of my deep understanding of Bitcoin and its underlying blockchain technology.

I found Bitcoin's philosophy inspiring, particularly its emphasis on decentralization and transparent systems that could revolutionize decision-making and financial systems. However, I also became aware of Ethereum and its distinct features and philosophy, which led me to believe that it could shape the future of the internet and software systems. Motivated by this vision, I joined Ground X, a blockchain subsidiary of Kakao, as a software engineer and protocol engineer. Within the core development team, my role involved designing and implementing Klaytn as a public blockchain.

TechFlow:

You achieved a PhD in high-performance computing, and then you learned about the Bitcoin whitepaper early in your career. Eventually, you read about Ethereum, which not only powers financial transactions but also empowers the future of the internet, known as Web3. From your instinct, given your strong software background, what is the actual overlap between the traditional web and blockchain that can empower Web3 beyond just financial transactions?

Many people currently believe that the biggest application of blockchain is finance. Even Elon Musk mentioned in his podcast with Lex Fridman that he believes blockchain can eventually solve financial problems. However, he didn't emphasize other potential applications. So, from your perspective, could you provide more information on how blockchain can empower the next web instead of just the next fintech?

Sam:

First of all, I also agree with others that the most prevalent application of blockchain currently is in finance. However, I believe that blockchain and smart contracts have a broader scope beyond the financial system. In Web3, the internet was originally designed and developed as a decentralized system. However, due to operational and technical issues, Web 1 and Web 2, the current internet, became centralized by big companies. Nevertheless, the design of the internet was initially decentralized. This means that we have the browser and the interface, the front end, and the backend, where data is stored and who owns the data. Currently, due to system efficiency and security concerns, centralized entities like Google or Meta own and manage all user data.

With Web3 and the implementation of blockchain and smart contracts, everything becomes transparent and accessible. The system itself is highly secure, with blockchain technology based on cryptography ensuring data security. Data is securely stored, and ownership can be granted back to creators and users. By owning the data ourselves, we can earn money or utilize data without relying on third-party intermediaries or central entities. However, big companies may still be necessary to provide a better user experience. But when it comes to data ownership and transfer, blockchain and Web3 technologies can enable a decentralized approach. This is where the difference lies and what makes Web3 distinct from legacy technologies or legal systems.

User Experience is the Mission of Klaytn Layer 1

TechFlow: I'm aware that Klaytn is building the fundamental trust layer for Web3, the metaverse, or the future of the internet. Currently, there are many layer-one blockchain platforms available. I understand that Klaytn has achieved mass adoption in the Korean market. Aside from this regional difference, what sets Klaytn apart from other blockchain platforms?

Sam:

Apart from regional differences, what is Klaytn focusing on and how is it trying to differentiate itself from other blockchain platforms? Klaytn is prioritizing a better user experience, which entails providing a low-latency platform and high throughput. While blockchain platforms are generally secure, unless they have security flaws, many of them still struggle with speed and responsiveness compared to existing Web2 systems and software. People are accustomed to highly responsive and high-performance systems, such as those found on mobile phones. However, when using blockchain, things often feel slow, and users have to be mindful of their private keys and potential hacking risks.

Addressing these user experience issues is crucial, and what sets Klaytn apart is its ability to offer one-second block time with immediate finality. When using Klaytn, users may not even notice a difference between Web2 and Web3 applications. Additionally, while not claiming to be the best, Klaytn aims to provide high throughput and transaction per second (TPS), enabling service developers to build apps in a high-performance environment. Lastly, Klaytn offers a native fee delegation feature from the start, allowing users and services to abstract the complexities of gas payments or transaction fees. This capability distinguishes Klaytn from other chains, and it is believed that this technology can enhance the user experience of Web3 technologies.

TechFlow: In blockchain space, there is an ongoing effort to address the trilemma problem of scalability, decentralization, and security. So, if Klaytn manages to achieve low latency and high throughput that is indistinguishable from Web2 in terms of speed, which factor in its trillemma would need to be sacrificed to achieve this goal?

Sam:

At the beginning, we often sacrifice the decentralization aspect of blockchain to address the scalability problem. Security is always a crucial factor that needs to be guaranteed. However, when we prioritize scalability, it may require sacrificing some level of decentralization. Nevertheless, our technology teams are dedicated to finding ways to improve decentralization while maintaining high performance. They are actively conducting research and making significant progress in this direction.

Preferences of 6 million Korean crypto users

TechFlow: South Korea has emerged as a prominent player in the blockchain and Web3 industry, thanks to its history of significant developments and contributions in the field. Now, how would you describe the current state of the Korean Web3 industry? I understand that you're currently based in Singapore, but the fact that Klaytn is expanding internationally indicates a high level of confidence in Korea's domestic market. Are there any unique characteristics or strengths that differentiate the Korean industry from others in its current state?

Sam:

As you mentioned, Klaytn was started in South Korea, and although we are currently based in Singapore, our major market is still the Korean market. Understanding the Korean market is crucial.

The Korean market differs significantly from Western markets, particularly in terms of the preferences of Korean users, whether they are crypto users or general website users. They prioritize trustworthiness and usability more than decentralization. Therefore, it's interesting to note that they tend to use centralized exchanges more frequently.

In Korea, there are more than 6 million crypto users, and while not all of them use blockchain wallets, many of them have accounts on centralized exchanges. This characteristic is unique to the Korean industry and market. The reason for this preference is the usability of centralized exchanges. They are faster, cheaper, and more convenient compared to decentralized exchanges. Users do not have to worry about managing their private keys and tend to trust the operators of these exchanges.

Considering this, the Korean Web3 industry and blockchain industry are centered around centralized exchange activities and user experience. Klaytn's goal in Korea is to attract these centralized exchange users to the world of Web3. While many of them are currently only interested in trading, if we can provide them with a better decentralized finance (DeFi) experience and enhanced user experience on Klaytn, they may be willing to explore and use Web3 services.

One of our approaches to achieve this is by developing a Crypto Wallet within KakaoTalk. KakaoTalk is a popular mobile messenger in South Korea, used by over 95% of the population. We have integrated the Klaytn wallet into this platform, hiding the complexity of user interfaces such as private keys and addresses. Users can send tokens and use DeFi services seamlessly within KakaoTalk. This integration has encouraged developers to onboard web 2 users to the world of Web3 and Klaytn services.

TechFlow: That's truly impressive. Have you observed any other South Korean projects addressing user experience issues? Have these applications contributed to the mass adoption of the Klaytn ecosystem?

Sam:

One area that has gained popularity on Klaytn is gaming. Although it's not an emerging area, the adoption of games on Klaytn has been significant. To address the user adoption challenge, they implemented Klaytn's fee delegation feature.

The game, called SuperWalk, offers two modes: free mode and professional mode. In the professional mode, users need to acquire NFTs to participate. This poses a challenge for users as they have to obtain tokens and purchase NFTs to start the game. However, in the free mode, users don't have to deal with this complexity. The team behind Superwork pays the gas fees using the fee delegation feature of Klaytn. This way, users can simply play the game without worrying about acquiring tokens or dealing with other complexities. The SuperWalk team hides this complicated interface from the users, allowing them to start playing the game in a user-friendly manner, similar to traditional web applications. Gradually, they educate the users about additional features and models that require token purchases.

Additionally, they have integrated the Klip Wallet, as mentioned earlier. KakaoTalk users can easily start using this DeFi application by utilizing only their wallet. They can engage with the app even if they don't initially possess any tokens. Over time, they learn about purchasing NFTs and other aspects of the game. This approach has helped SuperWalk gain more users in the Korean market, and they are now expanding to Japan and other countries. The focus is on providing a seamless user experience without the need to worry about token systems. Users can start playing and then switch to the professional mode when they feel comfortable. This approach addresses the user experience problem in the emerging gaming sector.

In terms of upcoming developments, the team is looking into the Digital World Asset Organization. While still a work in progress, one of the anticipated services is the tokenization of gold. The Korea Gold Exchange, a gold exchange in South Korea, wants to bring transparency and liquidity to physical gold by allowing users and investors to buy, sell, and trade gold tokens on-chain. Although the service is not yet released, it is expected to launch later this month or early next month. Once this feature is available on Klaytn, it will bridge the gap between the on-chain world and tangible assets like gold. People will be able to buy gold on Klaytn without needing to physically store it, as the gold will be securely held by the gold exchange. This development is expected to pave the way for the creation of various applications and services built on top of these gold tokens.

International Expansion or Asia-Pacific Market First?

TechFlow: I understand that Kakao is an important partner and endorser of Klaytn. In your opinion, what significant role does this partnership play in the development of the project? What challenges would Klaytn face without this collaboration?

Sam:

I mean, we understand that it's challenging to compete with other chains outside of Korea. Within Korea, we have a significant presence, but internationally, we have to compete with others. However, one advantage we can leverage is our user experience expertise. We have successfully developed and deployed various use cases and applications on Klaytn in South Korea. We can use these as references and collaborate with local teams in other countries to easily adapt our previous experience to new markets and different applications. This is our strategy, and I believe it is a strength that sets us apart from other teams. We have firsthand knowledge of how to onboard users and make them comfortable with Web3 and DeFi. This is how we enter other markets, relying on our existing experience and partnerships.

TechFlow: Because the international team of Klaytn has been in Singapore for a while, what kind of relationship have you observed between your team members in the South Korean market and the Asian market? Additionally, in order to be competitive, what does Klaytn need to do in the Asian market by leveraging its native user experience expertise?

Sam:

So this could be a common approach, but our strategy is to work with team members in Singapore and other countries to localize Klaytn's services in each specific country. For example, this year we focused on raising awareness in the Vietnamese market. To achieve this, we hired local Vietnamese team members and partnered with a local marketing team in Vietnam. Instead of solely relying on our existing members, we empowered the local team members to introduce our history, partners, and ecosystem to the local market. As a result, we established numerous partnerships with local entities.

When engaging with the local market, we don't just highlight our success in South Korea. We emphasize that our goal is to foster the growth of the Web3 industry in the country we're targeting. By taking this approach, people become more receptive to Klaytn, and they are more inclined to listen to our message. Our strategy revolves around localizing our content and DeFi offerings to suit the specific needs of each country.

TechFlow: For example, let's consider the difference between the builder market in Vietnam and the South Korean market. In the South Korean market, there is a strong emphasis on user experience. However, in Vietnam's local market, builders have different priorities. So, what aspects do they mostly care about, both from the builder's perspective and the users' perspective?

Sam:

Based on my experience and perception of the Vietnam market, Vietnamese builders tend to prioritize the practical aspects. Despite having numerous developers, their experience and maturity in website technology are still at an early stage. This is why they focus on building small-scale projects or applications that can be quickly deployed to users. On the other hand, in South Korea, people place greater importance on enhancing user experience. Many users and developers in Korea already have experience with developing Web3 apps.

In Vietnam, however, the market and developers are still in the early stages, lacking extensive experience. As an ecosystem and Layer 1 platform, we strive to assist them in minimizing trial and error. Without the collaboration and support provided, Vietnamese developers would have to undergo numerous trials and errors independently. Again, the key difference lies in the fact that Vietnamese builders have limited experience, which leads them to focus on building smaller projects and prioritizing quick service launches.

TechFlow: I think that's what's beautiful about Web3. Collaboration and competition across borders come naturally. People can collaborate even in the face of competition because local teams, markets, and builders in different countries have their own unique strengths and disadvantages. Web3 is about combining these diverse elements to create a truly global recipe.

Beyond the Asian market, has Klaytn considered entering wider markets such as Europe, the United States, or South America?

Sam:

We made attempts last year, especially to enter the US and European markets. However, due to a lack of resources and cultural differences, those attempts were not very successful. Consequently, this year we have made the decision to focus primarily on the Asian market. Our plan is to build a strong user base and community in Asia before considering expansion into other regions. Currently, our main focus is on Asia. While we do have partners in the US and Europe, our target audience does not specifically include users from those regions. We collaborate with our partners in various ways, but our primary user targeting is in Asia.

Symbiotic Relationship with Ethereum

TechFlow: When it comes to development strategies, it's worth noting that Klaytn is an EVM-compatible Layer 1 public blockchain. Given this compatibility, what kind of symbiotic relationship do you think exists between Klaytn and Ethereum?

Sam:

As an EVM-compatible chain, we deeply value the technological advancements in Ethereum and EVM. We make a concerted effort to stay updated with the latest developments and updates in Ethereum and EVM. Moreover, we actively strive to contribute to the Ethereum community in terms of technical development and expanding the developer community.

While our contributions may not be numerous, we occasionally submit EIPs (Ethereum Improvement Proposals). This occurs when we design certain features in Klaytn and recognize their potential applicability to a wider community. In such cases, we submit our proposals to the EIP, thus contributing to the technical development of the ecosystem.

Given that Klaytn is an EVM-compatible chain, our primary language for smart contracts is Solidity. Consequently, we dedicate resources to educate numerous developers on Solidity and the EVM environment. Interestingly, we have heard from a member of the Ethereum Foundation that the presence of Klaytn has significantly contributed to the growth of the Solidity developers and the overall Web3 developer community in South Korea, as we have actively engaged in educating and fostering this community.

TechFlow: I'm aware that many EIP editors and writers come from Asia, and it's truly remarkable to witness the regional contributions made to the entire ecosystem. This aspect never fails to amaze me. Now, in the Asian market, have you encountered any competition with Ethereum in terms of market penetration?

Sam:

Not really, as Ethereum is currently positioning itself as a settlement layer or a data availability layer. They are focusing on scaling their network through the adoption of layer 2 technologies and other advancements.

I wouldn't say that we're in direct competition with Ethereum. Instead, we view our relationship as collaborative, working together to grow the market and expand the user base. Being an EVM-compatible chain, we appreciate the technologies developed by Ethereum and adopt them where applicable. We are also committed to assisting Ethereum in community expansion and market growth. Therefore, I wouldn't characterize our relationship as competitive, but rather, Klaytn is competing in its own specific area.

Post-Luna Crash Korea: Expansion is no longer the priority

TechFlow: Last year, we experienced the Luna crash, which led to an entire crisis. How do you view its impact on the South Korean cryptocurrency market?

Sam:

Actually, that incident had a significant impact on the Korean cultural industry. Tara was one of the largest projects in South Korea, and many Koreans had invested their tokens in it. Numerous teams were developing Distributed File System (DFS) on Terra, and several of them were operating services on the platform. However, due to the collapse, some had to migrate to other chains, and others had to cease their operations. This had a profound effect on both businesses and investors.

As a result of the Terra issue, the Korean government began to pay closer attention to implementing regulations. While the government had already been working on crypto regulations, the incident prompted a greater emphasis on investor protection rather than solely focusing on industry expansion. The regulations now aim to strike a balance between encouraging industry growth and safeguarding investors against fraud and scams.

The Terra Luna issue has generated increased interest among government officials and politicians in the realm of investor protection. While efforts to foster the industry continue, the primary focus remains on how the government and regulations can shield retail investors from such incidents.

TechFlow: How is Klaytn formulating strategies or taking action in this post-crisis period when people have been traumatized and regulations have become more stringent?

Sam:

No, it's not directly due to the Terra issue, but our direction is to prioritize transparency in order to address issues like the Terra Luna incident, which arose from opaque and centralized decision-making processes.

Our focus at Klaytn is to ensure a transparent decision-making process and decentralize it as much as possible. Since last year, and especially this year, we have made significant efforts to establish our governance portal called Klaytn Square. Klaytn Square serves as a platform where all information regarding our Treasury and governance agendas is accessible. Users can visit Klaytn Square to view details such as who bought specific agendas and how the Treasury is managed and utilized. By disclosing this crucial information, we aim to demonstrate our commitment to providing important information to users and investors. We believe that this transparent disclosure will encourage regulators and investors to consider Web3 and Klaytn and facilitate investment.

Additionally, as a Layer 1 platform, we are actively working on integrating more stablecoins onto the Klaytn network. We collaborate with teams already working on stablecoins and prioritize those with robust security measures during our research process. However, we currently do not have plans to issue stablecoins ourselves.

Community Cohesion in Klaytn

TechFlow: The last question is about Klaytn's strong focus on user experience. In the bear market, how can individuals who are interested in Klaytn discover more about it and build applications on the platform? Are there any events or workshops organized by Klaytn that people can attend?

Sam:

We actually kicked off our annual event called KlayMakers23 two days ago. This hackathon will last for more than one month, with submissions accepted until the end of November. It is a global online hackathon, open to any developers or development teams working on Klaytn. This event aims to onboard more developers to the Klaytn platform.

In addition to the hackathon, we also host monthly town hall meetings conducted in both English and Korean on Discord. These meetings take place in the last two weeks of every month and are open to users, investors, and anyone interested in learning about Klaytn and the Klaytn Foundation ecosystem.

Furthermore, we occasionally attend conferences where we have our own booth or participate in panel discussions. For instance, during Korea Blockchain Week last month, we organized our own side event, and at Token2049 in Singapore, we operated a booth as part of the main event. We also hosted after-party and networking events.

These initiatives, including the hackathon, town hall meetings, and conference participation, serve to engage users, developers, and investors in the Klaytn community.

N.B.*

Developed by the South Korean internet giant Kakao Group, Klaytn is a global Layer 1 public blockchain designed to power the future decentralized world. As a leading blockchain platform with low transaction latency, enterprise-grade reliability, and developer-friendly environment, Klaytn offers unparalleled seamless experiences for users and developers. Since its launch in June 2019, Klaytn has accelerated the mass adoption of blockchain through a wide range of use cases, including DeFi, metaverse, gaming, and even a CBDC pilot project with Korean banks. Today, it stands as one of the few globally competitive Web 3.0 ecosystems developed in Korea, supporting over 1 billion transactions from more than 300 decentralized applications.

The Klaytn Foundation is a separate entity from Klaytn itself. It is an independent organization established to support and promote the development and adoption of the Klaytn platform. Operating as a non-profit entity, the foundation serves as the governing body of the Klaytn ecosystem. It is responsible for managing Klaytn's initial token offering (ICO), overseeing Klaytn's governance model, and driving partnerships with other organizations. Its goal is to foster the growth and sustainability of the Klaytn ecosystem.

Reference:

1. Korean Crypto Regulation: https://www.iflr.com/article/2c7n2o4rfmoya8grn7cw1/features/korea-the-current-regulatory-landscape-for-crypto-assets

2. Kaokao corporation: https://www.kakaocorp.com/page/?lang=en

3. Klaytn Foundation: https://klaytn.foundation/