Author: Yinliang (Former Researcher at BlockBooster, Lead Author) and Caiya (From BlockBooster, Supporting Author)
The information on the development of the Kaspa ecosystem in this research was supported by the Kaspa Ecosystem Foundation
Grayscale has released a list of cryptocurrencies being considered for inclusion in future Grayscale investment products and existing products, divided into categories of currencies, smart contract platforms, finance, consumer and culture, and utilities and services. Among them, Grayscale is considering including Kaspa (KAS) in future Grayscale investment products.
(Source: grayscale)
Since the mainnet launch in 2021, the total supply of Kaspa is 28.7 billion KAS, with a current market capitalization of around $3.4 billion. Supported by a strong and supportive community, Kaspa's position in the blockchain industry continues to rise.
As part of its ongoing efforts to strengthen the ecosystem and community, Kaspa has hosted a series of developer-focused events, including the Advances in Financial Technologies in September 2024, the upcoming Kaspa Innovation Summit to be held in Hong Kong on October 27, and the Australian Crypto Convention in November.
Additionally, the Kaspa Ecosystem Foundation plays a key role in nurturing and expanding the Kaspa ecosystem, providing funding support and strategic guidance, and recently announced a series of initiatives to drive ecosystem development: Kasplex and the KEF Katalyst Program Season1.
Kasplex is a comprehensive solution aimed at improving the efficiency and sustainability of the Kaspa network, integrating data insertion protocols, open-source indexers, and powerful APIs, currently supporting seamless creation and management of KRC-20 tokens, and will also release standards for Non-Fungible Tokens in the future. By leveraging Kaspa's high block rate and decentralized Proof-of-Work (PoW) Layer-1, Kasplex lays the foundation for a diverse ecosystem of decentralized applications.
The KEF Katalyst Program Season1 is a series of initiatives aimed at accelerating the growth of the Kaspa ecosystem. The first phase of the program received $10 million in funding, covering grants, infrastructure building, and educational activities, with the goal of promoting Kaspa, encouraging developer collaboration, and providing a platform for innovative projects.
These recent initiatives by Kaspa are all in preparation for the expansion and application of the ecosystem. Now, let's dive deeper into the project status and technical progress of Kaspa.
Overview
Kaspa is a Layer-1 blockchain based on a blockDAG structure, using the GHOSTDAG consensus protocol, which is an evolution of the PHANTOM mechanism. Compared to Bitcoin, the main difference of Kaspa lies in its structure. While Bitcoin uses a single-chain structure, GHOSTDAG utilizes a Directed Acyclic Graph (DAG), where a block can point to multiple other blocks.
This design, through parallel processing, improves the finality of transactions and accelerates block generation. Unlike traditional PoW chains, Kaspa adopts the KHeavyHash Proof-of-Work consensus algorithm, which enhances hash power to ensure blockchain security and decentralization while optimizing energy efficiency. Through innovative pruning techniques, Kaspa can minimize storage requirements, retaining only about three days of transaction history. However, to support future transaction outputs, certain critical blocks may still need to be pruned under specific conditions. Kaspa currently operates at a block generation rate of one block per second and plans to scale up to 10 blocks per second, or even 100 blocks per second. Notably, in 2024, Kaspa's smart contracts will transition from the original GoLang to the Rust language, and mining nodes will also begin migrating to Rust earlier that year, marking a significant advancement in its technical ecosystem.
Transitioning from GoLang to Rust
Rust is renowned for its high performance and safety, aligning with Kaspa's goal of increasing transaction speed and network capacity. This migration involves rewriting Kaspa's full nodes and related libraries in Rust to leverage modern computing potential and benefit from Rust's active developer community.
The reasons for Kaspa's transition from GoLang to Rust include:
- Performance Optimization: Rust is known for its excellent performance, with advanced parallel processing capabilities that can concurrently handle multiple blocks across CPU threads. This feature is crucial for Kaspa's blockchain network, especially its target of processing a large number of transactions and blocks per second.
- Modern Computing Potential: By adopting Rust, Kaspa aims to maximize the capabilities of modern computing hardware and optimize energy efficiency.
- Security and Reliability: Rust prioritizes security, reducing common programming errors that can lead to security vulnerabilities. In a blockchain network, security is paramount, and Rust's compile-time safety checks provide an additional safeguard against potential threats.
- Community and Ecosystem: The Rust developer community is rapidly expanding. Kaspa's migration to Rust allows it to integrate with this ecosystem, gaining access to the rich knowledge, tools, and libraries contributed by Rust developers.
The impact of this migration on the Kaspa network is far-reaching:
- Increased Transaction Throughput: By improving transaction processing speed, Kaspa aims to significantly increase its transaction throughput, which is crucial for the widespread adoption of its technology. This migration lays the foundation for Kaspa's future goal of processing 100 blocks per second.
- Energy Efficiency: Rust's energy-efficient execution model aligns with Kaspa's commitment to sustainable development in blockchain technology. Compared to traditional Proof-of-Work systems, this transition supports a more environmentally-friendly approach.
- Scalability: The efficiency and performance improvements of Rust are expected to enhance Kaspa's scalability, allowing the network to handle growing transaction volumes without sacrificing speed or security.
- Attracting Developers: The adoption of Rust may attract more developers to the Kaspa project. Rust is highly regarded among developers for its performance and security features, which could expand the talent pool contributing to the Kaspa ecosystem and innovation.
As of the publication date, over 96.49% of the nodes have completed the migration from GoLang to Rust.
Hash Rate
Hash rate is a metric used to measure the computational power of a blockchain network, representing the number of hash calculations a miner or the network can perform per second. A higher hash rate means more calculations can be performed per second, increasing the chances of successfully mining and receiving rewards. Miner performance is measured in h/s (hashes per second).
- 1 Kh/s = 1,000 h/s
- 1 Mh/s = 1,000 Kh/s = 1,000,000 h/s
- 1 Gh/s = 1,000 Mh/s = 1,000,000 Kh/s = 1,000,000,000 h/s
- 1 Th/s = 1,000 Gh/s = 1,000,000 Mh/s = 1,000,000 000 Kh/s = 1,000,000,000,000 h/s
The hash rate of the Kaspa network reflects the overall performance of all miners. Currently, the Kaspa network hash rate is 763.92 PH/s, with a peak of 843.44 PH/s on August 13, 2024.
Architecture
Bitcoin operates based on the "longest chain" principle, ensuring the integrity of the blockchain by linking honest blocks together, thereby guaranteeing the security of the network. However, this approach, due to its sequential processing nature, limits the network's throughput and scalability.
Structural Model: Directed Acyclic Graph
Kaspa introduces the PHANTOM protocol, a permissionless ledger protocol based on a Directed Acyclic Graph (DAG). Unlike Bitcoin's single-chain structure, PHANTOM allows referencing multiple preceding blocks, enabling a total ordering of all blocks and transactions, and ensuring a consistent set of accepted transactions. The core of PHANTOM is the parameter K, which regulates the protocol's tolerance for simultaneous block creation, thereby accommodating higher throughput scenarios. When K=0, the protocol resembles Bitcoin's no-fork structure.
Linear Ordering
To solve the double spend problem, Kaspa has adopted the GhostDAG protocol. GhostDAG evaluates each block based on its connectivity within the past block set, and selects the block with the highest score to form the mainnet. This mainnet constitutes the initial subset, and subsequent blocks vote in order based on this mainnet. The entire network votes based on the trend of connectivity from high to low.
Traditional blockchain systems often encounter competing blocks when multiple blocks are generated simultaneously, leading to the waste of orphan blocks. GhostDAG solves this problem by adopting a DAG structure, in which blocks can reference multiple parent blocks, forming a BlockDAG rather than a linear chain. This design supports parallel block creation, significantly improving the system's throughput without sacrificing security.
In addition, the GHOSTDAG protocol also includes some sub-protocols, such as block data pruning, SPV proofs, and enhanced proof-of-work, which collectively improve performance. Block data pruning reduces the size of the blockchain by discarding unnecessary data, while SPV proofs allow lightweight clients to verify the validity of transactions without downloading the entire blockchain. These innovations enhance the scalability and efficiency of Kaspa's blockchain operations.
Token Economics
Kaspa was launched fairly in November 2021, without any pre-mining, pre-sales, or token allocations. Kaspa is fully decentralized, open-source, and community-managed. The protocol has a total supply cap of 28.7 billion KAS, with a current circulating supply of 24.9 billion KAS. Kaspa's current market capitalization and fully diluted valuation are around $4 billion.
Kaspa's token issuance design features a gradual yearly reduction, with a smooth monthly halving. Initially, mining was possible through CPUs, and the network has gradually integrated GPU and ASIC mining capabilities. Kaspa follows a carefully designed issuance plan to manage the growth of its token supply.
Mining Collaboration
On June 26, 2024, Marathon Digital announced that its Kaspa mining operations, which began in September of the previous year, have mined 93 million KAS, worth approximately $15 million.
In May 2023, Marathon began evaluating Kaspa as a potential avenue to diversify its revenue sources, while continuing to leverage its existing infrastructure and digital asset computing expertise. After successfully deploying its first batch of Kaspa ASIC miners in September 2023, the company has been scaling up its operations. Marathon has purchased approximately 60 PH of KS3, KS5, and KS5 Pro ASIC miners, which in some cases have profit margins as high as 95% based on the current network difficulty and KAS price. Of this, 30 PH of Kaspa ASIC miners are currently running in the company's own facilities in Texas, with the remainder expected to be fully operational by the third quarter of 2024.
"By mining Kaspa, we are able to create a revenue stream that is distinct from Bitcoin and directly tied to our core competency in digital asset computing," said Adam Swick, Chief Growth Officer of Marathon. "Leveraging our existing infrastructure, unique relationships with hardware manufacturers, strong balance sheet, and team expertise, Marathon is uniquely positioned to mine Kaspa and capitalize on the current high profitability of Kaspa ASICs. We look forward to continuing to support innovation in the proof-of-work ecosystem while expanding our position as a leader in digital asset computing."
Once fully deployed, Kaspa will account for 1% of Marathon's 1.1 GW data center portfolio.
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