Korean and Japanese crypto giants Klaytn and Finschia merge their mainnets. How will Asian power affect the global ecosystem?

Written by: Jay Jo, Yoon Lee

Compiled by: Xiaobai Navigation coderworld

Introduction:

On January 16, 2024, two leadingBlockchainPlatforms Klaytn and Finschia announced plans to launch a unified mainnet. The move aims to combine their respective ecosystems and assets to build an Asian giantBlockchain, leading the global Web3 market. This report deeply analyzes the highlights of the merger between Klaytn and Finschia, the advantages and potential of the combination of the two parties, and explores the potential risks faced by the merger.

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On January 16, 2024, two leadingBlockchainThe two platforms Klaytn and Finschia announced a major plan to launch a unified mainnet. The goal of this plan is to create a giant Asian blockchain by combining their respective ecosystems and assets.Blockchain, and lead the global Web3 market.

This combination of two mainnets is a first in the Web3 market, especially considering that the two mainnets originated from two major technology giants in South Korea and Japan, Kakao and LINE. Both Klaytn and Finschia are relatively mature projects with more than five years of experience. They have different cultures, visions, and underlying technologies that make up their respective ecosystems. This report will analyze the highlights of the merger of Klaytn and Finschia, as well as the advantages and potential of the combination of the two mainnets.

Klaytn and Finschia Merger Highlights

The merger of Klaytn and Finschia is expected to bring about three major changes:

• Release new unifiedToken

• Creating an integrated network across Ethereum and Cosmos

• Building the largest Web3 governance body in Asia, including affiliates of Kakao and Line

The first is to issue a newToken,ShouldToken将整合 Klaytn 和 Finschia 生态系统。 KLAY 和 FNSA 代币的每个持有者都有权根据计算出的比例领取新的集成代币。该比率是根据过去两周代币的平均汇率确定的。新的代币经济学也将围绕代币实施。

The second is to create a unified network covering Ethereum and Cosmos. Klaytn and Finschia plan to build a new compatible network based on their respective mainnet technologies and assets. However, due to limited time and resources, the first integrated network will be established by issuing KLAY-based upgraded tokens in the Ethereum ecosystem, which is due to Ethereum’s low-cost entry barrier and relatively moreexchangeSubsequently, Cosmos-based technologies and assets will be integrated to create a fully compatible network.

Finally, we will further strengthen decentralization by establishing Asia’s largest Web3 governance body. Under unified governance, we will strengthen theCommunityThe respective governance committees will be merged and expanded to a maximum of 100 participants, including affiliates of Kakao and Line.

In addition, the team also announced its ambition to combine the technologies and assets of each mainnet to create more synergies. This includes building infrastructure to meet institutional needs, strengthening large-scale DeFi infrastructure construction, and large-scaleXiaobai NavigationWeb2 assets on-chain. Particularly worth looking forward to is the plan to build infrastructure for institutional needs, because usingcryptocurrencyThe launch of traditional financial products has been a hot topic since the approval of the Bitcoin ETF. Creating a larger, more decentralized project is likely to attract the attention of major institutional investors, making it a popular choice for those looking to invest in Asia.cryptocurrencyIn addition, issuing “native stablecoins” is a new business initiative integrating mainnet and tokens that is attracting attention.

Project Dragon's strengths and potential

Securing global competitive advantage

The launch of the integrated mainnet of Klaytn and Finschia is expected to combine the financial and technical resources of both parties to create a strong competitive advantage in the global Web3 market. In particular, one of the main advantages of the merger is the ability to effectively utilize the resources of early developers Kakao and Line. The two companies have approximately 250 million users on their communication services, and their rich user base will play a key role in acquiring potential Web3 users.

In addition, they are also expected to gain competitive advantages by fully utilizing the communication-based infrastructure. Kakao and Line's instant messaging tools are super applications covering finance, shopping, entertainment and other fields, and there is the potential for explosive synergy by combining with Web3 technology. Communication-based FT/NFT transmission and payment, as well as profile functions utilized by NFT, are some examples. Therefore, the integration of the two mainnets is expected to play an important role in increasing the acceptance and awareness of new technologies.

Strengthening decentralization

The integration of Klaytn and Finschia could be an important strategy for further decentralization. In particular, it is expected to reduce direct ties with early developers Kakao and Line.

目前，Kakao的附属公司在Klaytn的治理委员会中拥有超过50%的投票权，而Line的附属公司在Finschia中拥有超过30%的投票权。预计成立统一基金会的推出有望大幅减少公司的代币股份，自然也会减轻证券等监管负担。此外，两家公司投票权的减弱可能导致去中心化的加强，这可能是在更多cryptocurrencyexchangeAn important factor that increases the likelihood of going public.

在韩国，《关于报告和使用特定金融交易信息的法律》禁止加密货币exchange交易由相关方发行的加密资产。在过去，由于Kakao在Dunamu中的股份，Klaytn难以在Upbit上市。这与Com2Us在Coinone中持有股份，使得难以在该交易所上市的情况。随着这次整合，人们对新整合的代币能否在Upbit上市持谨慎的猜测。

Global coverage expanded

Klaytn and Finschia website traffic percentage by country

The integration of Klaytn and Finschia is expected to significantly increase global coverage. Kakao already has a strong presence in South Korea and Vietnam, while Line also has a strong presence in Japan, Thailand, and Indonesia. Both Klaytn and Finschia are competitive in their respective regions. Country-specific traffic analysis of Klaytn and Finschia's official websites over the past three months shows that they dominate in different markets. Their integration is expected to be a project that covers the Asian ecosystem and will rapidly expand its presence in the global market.

Source: Tiger Research

Their integration is not only important for the global market, but also for their home markets of South Korea and Japan. Currently, South Korea and Japan are global Web3 hotspots, and projects such as Avalanche and Solana are actively entering the market. In this context, the launch of the Klaytn and Finschia joint foundation is a strategic decision. It is expected that in the same market, their competitive advantages will not offset each other, but will be unified and synergistic to gain an advantage over other projects.

Synergy and development

Klaytn and Finschia have unique strengths in their respective fields, and their relationship is often viewed as a complement to each other's weaknesses. Klaytn has an advantage in developing infrastructure. According to their technology development roadmap, Klaytn launched KAS (Klaytn API Service) in 2020 and quickly opened endpoints, while Finschia did not open endpoints until three years later in December 2023. In addition, there is a significant difference in the number of Github repositories on each mainnet: Klaytn has 702 and Finschia has 16. Of course, this does not prove the degree of technological advancement of each mainnet, but they do show that Klaytn has a relative advantage in infrastructure technology due to its long history of experimentation and development.

Brown & Friends

In terms of products, Finschia outshines Klaytn. It is one of the largest Web3 product asset projects in Asia, including NFT profiles using Line Messenger, stamp-based NFTs, and NFT marketplaces. In addition, it plans to launch a product usingAIA social application of the technology and a new Web3 game using Brown & Friends characters.

Both projects are very clear in their respective areas of strength and weakness. By combining mainnets, it is expected that the teams will be able to create positive synergies by leveraging each other’s strengths in relatively unfamiliar areas. This will enhance their business operations and enable them to explore diversified approaches to developing their business models.

Potential risks

The risks of mainnet integration cannot be ignored. As with any merger of Web2 companies, integration takes time and effort. In particular, integrating two foundations with different cultures, visions, and technical infrastructures is expected to be a very complex process in a short period of time.

In addition, dApp services in these ecosystems are expected to face significant challenges. Large-scale work such as infrastructure transformation will be a huge burden with limited time and resources. This may lead to a loss of trust in the ecosystem and may cause some projects to leave.

The Web3 ecosystem is made up of a variety of players, and the combination of various stakeholders is more like the integration of countries than a corporate merger. Therefore, it is unclear whether a unified foundation can be launched in a short period of time. It is also possible that the team will miss the critical opportunity for mass adoption due to the mainnet integration.

Another concern is the issue of delisting on global cryptocurrency exchanges such as Binance. Klaytn and Finschia expect that delisting issues will be minimal as they are technically compatible and will focus on the EVM listed on many exchanges. However, some believe that since the integration is not only a change in the underlying network but also introduces a new governance and ecosystem, a new listing review process will most likely be required.

While trading was maintained during WeMix’s migration from Klaytn to its own Ethereum-based mainnet, the integration of Klaytn and Finschia is a more complex affair. Therefore, the potential risk of delisting cannot be ignored.

Since liquidity provision is the most important factor in Web3, the delisting issue can have a negative impact on the ecosystem. Risk management through preventing delisting of cryptocurrency exchanges is very important.

in conclusion

The merger of such large projects as Klaytn and Finshcia is a very unusual and important project for the Web3 ecosystem. The integration of these two projects has raised many expectations and concerns. However, the outlook is generally positive from the perspective of market expansion and technological progress. This is because the creation of a large blockchain representing Asia is expected to be highly competitive from a global perspective. In addition, based on enhanced decentralization, such as reduced direct contact with initial developers, it is expected that the interest of institutional investors will increase.

However, ideals and reality are different. Business and technology are not the only factors that make up the Web3 ecosystem. The Web3 ecosystem is a complex and dynamic market consisting of many different participants, including end users, investors, and builders. While it is impossible to meet all of these requirements, it is necessary to develop reasonable standards that take into account their respective interests.

The article comes from the Internet:Korean and Japanese crypto giants Klaytn and Finschia merge their mainnets. How will Asian power affect the global ecosystem?

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