Author: Zen, PANews
This week, the Kaia blockchain became one of the focal points in the crypto market with its strong token momentum. Since merging and launching with Klaytn and FINSCHIA in August 2024, Kaia has been continuously focusing on technological performance and ecosystem development. Its recent moves in stablecoin and payment scenarios have made it a hot topic among industry investors. The foundation's CEO openly stated, "Kaia's Stablecoin Summer is coming," signaling that its fiat-pegged token plan is about to enter the implementation phase.
Since the inauguration of President Lee Jae-myung, supporting the issuance of a won-anchored stablecoin has become the latest policy trend. The Kaia team has also taken the opportunity to announce a collaboration with super apps like Kakao Pay and LINE NEXT to plan the launch of a won stablecoin. Upon the news, Kakao Pay's stock surged nearly 30%, and the Kaia token also saw a significant increase, rising from around $0.10 to a high of $0.17, indicating the market's high expectations for the Korean domestic stablecoin project.
Leveraging Policy Tailwinds, Kaia Launches Stablecoin Project
After South Korea's new president Lee Jae-myung proposed a policy supporting the domestic stablecoin in 2025, Kaia quickly responded and announced plans to launch a won stablecoin. Following this announcement, related concept stocks like KakaoPay surged nearly 30%, with the market full of anticipation for the won stablecoin.
The won stablecoin project proposed by Kaia is jointly promoted by Kakao and LINE (in collaboration with KakaoPay, LINE NEXT, etc.), and is currently still in the planning stage with no specific issuance timeline. With its digital wallet infrastructure and QR code payment system, Kakao Pay is widely seen as a potential beneficiary of the domestic stablecoin.
Currently, the South Korean government is drafting the "Digital Asset Basic Law," actively discussing a regulatory framework that allows private institutions to issue stablecoins. The draft bill aims to permit non-bank institutions and payment service providers to issue stablecoins and relax cryptocurrency exchange rules, enabling them to participate in lending and choose which tokens to list. Under this proposed framework, the approval rights for stablecoin issuers will no longer be handled by the Bank of Korea (BOK) but will fall to the Financial Services Commission. The bill also significantly lowers regulatory barriers, reducing the capital requirements for issuers from the previously proposed 5 billion won to 500 million won (approximately $365,000).
However, according to the South Korean Constitution, the right to issue legal tender belongs to the central bank, and private institutions face legal obstacles in issuing fiat-pegged tokens. The Bank of Korea has also pushed back against these proposals. Yonhap News reported that the Bank of Korea showed a "panic" reaction, stating that indiscriminately issuing won-denominated stablecoins could lead to "monetary displacement" and affect the won's competitiveness.
In terms of policy inclination, the head of the ruling party's digital asset committee stated support for private issuance and plans to include a clause legalizing stablecoins in the "Basic Law". The Kakao Group, on which Kaia is based, already has a large-scale payment and financial infrastructure, providing a convenient channel for future stablecoin practical use.
However, despite the market's enthusiastic response, the prospects for the Kaia stablecoin project remain unclear. On one hand, issues such as monetary sovereignty and anti-money laundering compliance are still difficult to overcome. On the other hand, the issuance and redemption mechanism of the stablecoin itself has yet to be verified, and multiple potential competitors have already set their sights on this opportunity. During the Bank of Korea's recent experiments with tokenized deposits and wholesale central bank digital currency (CBDC), several major Korean banks publicly announced plans to jointly issue stablecoins.
Therefore, while the policy opportunity provides much speculation about Kaia's stablecoin plan's launch and advancement, whether it can obtain regulatory approval and successfully land remains highly uncertain.
Social Media Giants Unite, Possessing 250 Million "Potential Users"
Kaia blockchain is a large blockchain network primarily targeting the Asian region, formed by the merger of Klaytn chain (from Korea's Kakao) and Finschia chain (from Japan's LINE) in August 2024. Its aim is to bring Web3 services to hundreds of millions of Asian users through seamless integration with Kakao Talk and LINE.
Kakao Talk is one of the most popular instant messaging apps in South Korea, with nearly 95% penetration and around 50 million monthly active users. LINE, as Japan's most popular communication platform, covers 70% of Japan's population and dominates markets in Thailand and Taiwan. Based on the distribution capabilities of these two social platforms with a cumulative user base of over 250 million, Kaia, positioned as a high-performance and user-friendly public chain, has long been viewed as a potential stock for promoting crypto application popularization. This year, the Kaia Foundation has raised external funds from investment institutions like Blockchain Capital and 1kx to support ecosystem incubation and market promotion.
Before the two merged into Kaia, Klaytn was developed by Kakao's blockchain subsidiary Ground X and officially launched in 2019. It was an important representative of Korean blockchain networks and saw a stunning 1,100% user growth in 2023, reaching 873,000 users. Finschia (formerly LINE Chain) was launched in 2022 and provided an NFT platform DOSI within LINE, accumulating over 5.6 million users and completing approximately 560,000 Non-Fungible Token transactions. After the chain merger, Kaia inherited Klaytn's DeFi and gaming ecosystems and Finschia's NFT and payment application scenarios to achieve technical and user complementarity. The official vision emphasizes that Kaia will "place Web3 at the fingertips of hundreds of millions of Asian users" and create an efficient platform to support large-scale decentralized application development.
As an Ethereum-compatible Layer 1 public chain, Kaia inherits and optimizes Klaytn's IBFT consensus framework. Its consensus algorithm is based on an optimized Istanbul BFT, enabling rapid block finality and supporting multi-node participation. Official documentation indicates that the Kaia network can process up to 4,000 transactions per second, with a block generation time of just 1 second and instant transaction finality. Unlike conventional PoW/PoS, Kaia adopts a BFT consensus oriented towards enterprise and service scenarios, ensuring that blocks are immediately final once generated, without the traditional block rollback risk. Kaia network nodes are divided into Consensus Nodes (CN), Proxy Nodes (PN), and Endpoint Nodes (EN), with Consensus Nodes managed by Core Consortium Operators (CCO) responsible for block generation and verification. The network design ensures that over 50 nodes can participate in consensus, balancing throughput and decentralization.
In terms of technical characteristics, Kaia supports account abstraction and fee delegation functions, significantly simplifying user experience. It also integrates LINE and KakaoTalk's identity and payment channels, allowing ordinary users to use chain services without additional registration. Kaia maintains equivalent compatibility with Ethereum and other EVM chains and plans to support CosmWasm smart contracts. Its integration capabilities with industry-leading cross-chain bridges provide developers with flexible multi-chain interoperability. It's worth noting that the Kaia mainnet is actually a hard fork of the original Klaytn mainnet, with all Klaytn states automatically inherited to the Kaia chain.
Expanding from Gaming to Financial Services
Kaia's user and fund indicators are still in the initial stage upon launch. By mid-2025, Kaia ranks around the top fifty in DeFi TVL globally, reflecting the scale of its ecosystem's early stage. In terms of on-chain activity, Kaia officially disclosed that over 40 million users have visited the Mini DApp portal. Wallet numbers and transaction volumes grew rapidly in the early stages of launch, but overall levels remain far below mature mainstream public chains like Ethereum, Solana, and BNB.
In terms of ecosystem, Kaia merged the application ecosystems of Klaytn and FINSCHIA, forming a comprehensive ecosystem covering multiple domains such as DeFi, Non-Fungible Token, GameFi, and Real World Assets (RWA). According to official statistics, over 420 decentralized applications and game services have already been or are planned to be launched on the Kaia network.
Additionally, alongside the Kaia mainnet release, LINE NEXT and the Kaia Foundation jointly launched a builder support program called Kaia Wave. The program aims to provide multi-faceted support for promising Dapps, enabling them to reach consumers in Web2 and Web3, and gain additional advantages from sources like LINE Messenger, Web3 marketing alliances, creators, and vertical services from Kaia and LINE NEXT. Official documents state that the Kaia Wave program will provide KAIA tokens worth a total of 10 million USD, specifically for user acquisition and rewards.
In the DeFi domain, Kaia already has multiple decentralized exchanges and staking and lending projects such as KlaySwap and DragonSwap launched, with platform-level support for stablecoins, cross-chain bridges, and other infrastructure; in the Non-Fungible Token aspect, Kaia inherited the user base of FINSCHIA's DOSI platform, and its GameFi ecosystem benefits from the user groups and partner resources of two major social platforms, with some game manufacturers beginning to launch mobile games and Non-Fungible Token items on Kaia.
Emulating Telegram and Ton blockchain, in terms of Mini DApp distribution and user reach, Dapp Portal is one of the main focuses of Kaia's ecosystem development. Dapp Portal, based on the Kaia chain, is opened to users through LINE Messenger's official account, allowing access to games, social, trading, and other Mini Dapps within the chat interface without downloading or installing any new applications. In January this year, LINE NEXT and Kaia jointly launched the first batch of 32 Mini Dapps, enabling users to create wallets, play games, receive rewards, and trade Non-Fungible Tokens with a single click, without installing additional clients.
In terms of official strategy, Kaia is gradually expanding from the gaming domain to financial services and general applications: by early 2025, it had already launched a USD stablecoin yield product on LINE, with subsequent plans including introducing lending, perpetual contracts, payment and asset tokenization DeFi protocols, and achieving seamless conversion between Korean won and stablecoins.
In May this year, Tether officially deployed its USD stablecoin USDT on Kaia, providing stablecoin payment and cross-border transfer services to LINE's 196 million users, marking a further expansion of Kaia's layout in the international stablecoin ecosystem. Overall, Kaia is accelerating the construction of a platform-level ecosystem, jointly promoting the use case of "messaging as entry, on-chain as payment" with industry partners.
