Web3 Blockchain Research and Investment

Klaytn: The Most Interesting Metaverse Blockchain You’ve (Probably) Never Heard About

There’s a buzz in the air. A sense of anticipation. A ‘pregnant pause’ as my English teacher used to say. It’s the sound of untold billions getting ready to be spent (yes, with a B). The sound of trillions (yes, a T) of dollars in market value just waiting, nay begging to be created.

It’s the sound of the metaverse and web3 — and it’s coming to a computer near you

You might have heard about it. Facebook, rebranding as Meta. Sleepy Microsoft announcing its ‘work centric’ metaverse. ‘The Sandbox’, loved by Snoop Dogg and all sorts of brands.

In this article, I’ll introduce you to the most interesting Metaverse Blockchain you’ve probably never heard about: Klaytn. Together, we’ll undertake an investment and product analysis to see what it really is and if it’s really all it promises to be.

Read on to find out more!

We’ve Got a Metaverses Problem

All these metaverses (or is the plural metaversii?) being created have caused a bit of a problem. Two problems to be exact. You’ve probably already thought of them, but as a consumer of these metaverses let me be explicit. Do you ever find yourself wondering:

  1. How do I interact with different metaverses?
  2. How can I (as someone who doesn’t have $Billions), create metaverses for products I love?

It’s a big problem and only getting worse. And it’s exactly what Klaytn aims to solve.

Let’s explore this compelling and interesting Metaverse Blockchain.

About Klaytn

Klaytn Stock Ticker Symbol

Klaytn calls itself as “The trust layer of the metaverse”. First listed on CoinMarketCap in April 2020, they’ve rapidly found themselves intimately involved in the fast and rapidly evolving area of GameFi, also known as ‘Play-to-Earn’.

They market themselves as offering something different, in three specific areas:

  1. Easy to Use. A set of easy-to-use tools for anybody to create their own Metaverse
  2. Blockchain Technology. Offering all the benefits of blockchain technology, without the challenges of integrating them
  3. Integrated. Ensuring that all metaversii (built with their tools) work together

With an all-time high of $4.24 USD (currently $0.2273), and listed on many major exchanges such as Binance, it certainly seems like they’ve got a lot to offer.

However, is this for you?

Investment Analysis

Disclaimer. As with any project or potential investment, you should exercise caution and Do Your Own Research (DYOR). I’ve linked my research below so you can do exactly that.

Let’s dive into our Klaytn investment analysis. We’ll explore four areas:

  1. Developer resources
  2. Product roadmap
  3. Industry mindshare
  4. Investment access

Developer Resources

A projects developer resources are a great way to confirm their likelihood of success. If a project is easy to use, makes it easy for others to use, and lowers the barriers to entry for their product, they’ll have a much greater chance of being successful.

Klaytn ticks a number of boxes in this area. Their developer resources are:

  1. Easy to Use
  2. Well laid out
  3. Include the basics such as Quick Start, Setting Up Your Development Environment and Deploying a Smart Contract
  4. Regularly Updated. Their documentation appears to be updated regularly and includes full code samples as needed.

Product Roadmap

In a fast-innovating environment such as blockchain, a product roadmap is critical. It demonstrates to users and developers that the project will stay relevant, continue to incorporate the latest advances, and the team is committed to the future.

Klaytn’s Product Roadmap scores a mixed result:

  1. Well Thought Out. The product roadmap is well thought out, and does include a number of different areas, including Metaverse Packages to lower the barrier to entry, Transactions Per Second and plenty of insight into the current challenges in the Metaverse.
  2. Lacks Transparency. What is lacking is any insight into roadmap progress. There is no ability to understand and assess the team’s ability to deliver on their grand idea, nor is there any way to see how they respond to the inevitable challenges and delays which come from building something entirely new.

This is a troubling lack of transparency, particularly for such a new project (only started in 2019), and has been addressed by many of their industry peers.

Industry Mindshare

Any blockchain project not backed by industry giants requires broad adoption to build successfully. This raises the project to a higher level of mindshare, which encourages more early adopters to use the product. It gives them space, time and money to implement their vision.

Klaytn appears to be doing extremely well in this area. Their ecosystem page shows broad industry buy in for the project, as well as a number of active development projects. Here’s a few highlights:

  1. Listing on major Centralised and Decentralised Exchanges. This includes industry heavyweight Binance
  2. NFT listings, including one of 3 chains with OpenSea
  3. Integration with trust oracle heavyweight Chainlink
  4. 100’s of gaming, entertainment and enterprises being built with / on their technology

It would be safe to say that Klaytn appears to have won significant mindshare in their area of expertise — however this appears to be in the blockchain equivalent of the B2B space. Basically, if you’re a blockchain developer in the Metaverse you’ve probably heard of it. If you’re a casual user, probably not — and hence the title.

Investment Trading Access

Finally, for a community sourced project to be useful, it needs to have access to capital markets. This ensures that they are able to gain the capital required to invest in development.

Klaytn has achieved a high level of penetration into the Crypto capital markets. As well as the previously mentioned Binance, they are listed on many different DEXES and CEXES — a full list of which can be found here.

They also offer a staking product — albeit with a low APY. For instance, on Binance you can stake for 30 days and receive 6.54% (for comparison, many other products on Binance staking offer a much higher APY).

Is it a Good Investment?

While every investment decision remains your own, here’s a list of what’s been discussed so far:

  1. Great developer resources
  2. A solid product roadmap, however it lacks transparency
  3. High level of industry mindshare if you’re a metaverse builder, lower if not
  4. Easy to trade, but low APY for staking

Klaytn As a Product

Klaytn Homepage: https://klaytn.foundation/

To fully understand Klaytn, we need to understand how it connects to the overall blockchain ecosystem.

Blockchain Ecosystem in 60 Seconds

We’ll do this by framing Klaytn within the blockchain ecosystem using the Blockchain Layer Model. While it’s is a simplistic model, and definitely prone to complexities (i.e. do we need layer 2 if layer 1 is fast enough?), it does allow us to understand the target market for Klaytn.

Layer 1 blockchains deal with the actual recording of transactions and smart contracts into blocks. For example, Ethereum or Solana. These are the blockchains which underpin the entire ecosystem, but are limited by one or more of the aspects of the Blockchain Trilemma (decentralised, scalable, secure). Importantly however, any future layer which works on a given layer 1 solution is compatible with all other solutions built on that layer 1 solution.

Layer 2 blockchains such as Polygon aim to provide solutions to one of the Blockchain Trilemma issues, typically speed. These layers use their original layer 1 solution for their block finality, but extend the given layer 1 solutions functionality / usefulness.

Layer 3 onwards deal with end user interactions with blockchain, including metaverse games like Axie Infinity and more. They may use layer 2 solutions as an intermediary to solve a particular issue (i.e. Transactions Per Second or speed).

Even if you’re not a developer, I’m sure you can already imagine that this can be quite a complex environment to develop in. If you want to read more, refer to this article and this article.

Klaytn: Layer 1 Metaverse

The layer model above gives insight into Klaytn’s purpose. Their stated goal is to be “The trust layer of the metaverse”. Or, in our terms, Klaytn aims to be a Layer 1 solution to the metaverse.

Why this matters. Until Klaytn, there existed no ‘one-stop-shop’ Layer 1 type solution for metaverses to build on. This meant that every metaverse had to solve for themselves problems like:

  1. Compatibility. Making sure that their solutions worked on the Layer 1 solution of their choice (and the impacts when they didn’t)
  2. Complexity. Navigating the complexity and intricacies of a given blockchain solution
  3. TPS. Dealing with the inevitable ‘blockchain is way to slow for the real world’ challenge — for instance, checkout what Ronin Chain, built by Axie Infinity
  4. Expensive. The inevitable expense which came from solving the above challenges

Klaytn’s Value Proposition

Klaytn’s value proposition is clear. It offers to solve these challenges for metaverse builders. They even explicitly state it in their documentation like this:

“With our metaverse package, the complexity of blockchain will no longer get in the way of realizing your aspirations.”

Framed in developer terms, they are offering to:
  1. Abstract away the complexity of blockchain layer 1 challenges
  2. Offer a robust set of API’s to make building your metaverse awesome, beautiful and userful
  3. Ensure that TPS and blocksize are not limiting factors
  4. Ensure that your metaverse solution works with everyone else’s metaverse solution provided they use Klaytn.

They are also implicitly claiming that they are not metaverse builders themselves (outside of the requirement for some level of expertise to build useful tools).

Are They Delivering?

Builders for the Builders. Klaytn’s documentation does reveal a number of libraries to assist with Layer 1 challenges. Things like Smart Contracts, account management and transaction management appear to be pretty simple. What’s missing is any reference to the kind of tooling required to build a good looking metaverse. It’s arguable whether this is part of their core mission, however, it does seem like a strange omission.

Connecting Blockchain Infrastructure to the Builders. Klaytn’s one-stop-shop approach to being a layer 1 solution is very evident in their documentation and resources. On multiple occasions they demonstrate ‘one-line solutions’ to typically challenging blockchain problems. Their roadmap also reveals an intensive focus on continuing in this vein.

Funding Builders. Klaytn has a purported $1 Billion fund which is used to fund builders on their blockchain solution.

Klaytn Product Rollup

Our analysis of Klaytn shows the following:

  1. As a Layer 1 solution for Metaverses, Klaytn is delivering on their promise, and has the structure to continue doing so.
  2. Using Klaytn will potentially make your layer 1 challenges easier, but doesn’t solve any of the challenges around visuals.
  3. There will remain gaps in building compelling metaverses which you may still have to solve.

Is Klaytn Really Needed?

An analysis of Klaytn wouldn’t be complete without touching on the question, “Is this product really needed?”

Let me provide three opposing thoughts for your analysis.

Firstly, there are a whole range of GameFi and Metaverse’s which have had to solve the Layer 1 Challenge. Examples such as Axie Infinity and others show that for a Metaverse / GameFi Product to be successful, significant development in Layer 1 solutions is needed. Any product which can substantially reduce this development at scale for metaverse builders is likely to create long term value.

However, recent examples show that native Layer 1 chains may already be solving this. Star Atlas, a game I’ve already written about, is built on the Solana blockchain (a layer 1 solution) and appears to be achieving significant breakthroughs in terms of game development. If this solution turns out to be viable long term, we may find that the issue is resolved through native layer 1 development, which would reduce the value of Klaytn’s offering.

A hybrid (Why Not Both) solution may appear. We may find that Klaytn becomes the solution of choice for a range of metaverses, with native Layer 1 solutions serving other metaverses. After all, in an industry projected to be worth billions, we may simply find solutions resolving themselves in market segments — an entirely normal function of capitalism’s creative destruction.

Let me know your thoughts 😃

That’s A Wrap

And that’s a wrap on our Klaytn Analysis. Like I said, it’s probably the most interesting blockchain, web3 and metaverse project you’ve never heard about — so I hope you found it interesting!

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