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Klaytn (KLAY) Token Review

KLAY is the native token of the Klaytn network, an EVM-compatible blockchain for  developing decentralized applications for the metaverse, gaming, and creator economy.

About Klaytn Network (KLAY)

In 2019, GroundX, a Kakao Corporation subsidiary, introduced the Klaytn network as an enterprise-grade ecosystem empowering developers to create diverse dApps. It integrated private and public blockchain features, including high scalability and a governance model involving a consortium of trusted entities through an efficient hybrid design. Its modular network enabled businesses to connect and operate their customized service-oriented chains as independent subnetworks. That year, the network went public, attracting 40+ Initial Service Partners (ISPs) from diverse industries, selected based on the quality of their blockchain services and existing user base size.

Two years later, the Klaytn network set up a launchpad on Binance to engage the public and boost token adoption. Coin holders use it to pay transaction fees, generate non-fungible tokens, and provide liquidity to various DeFi protocols within the network.

The Klaytn Network (KLAY) Token Use Cases

1. Network fees: KLAY token holders use the coin to deploy smart contracts and pay transaction fees on the Network.
2. DeFi activities: KLAY holders can engage in the network’s DeFi services by using their coins as collateral to provide liquidity on KLAYstation or KLAYswap, among other DeFi protocols.
3. Minting NFTs: KLAY is used to create and manage non-fungible tokens (NFTs) on the Klaytn Network. The network has a partnership with OpenSea for NFTs listing.
4. Stake to earn rewards: KLAY token holders can stake their coins to secure the network, ensuring the chain's integrity. The minimum staking requirement is 5 million KLAY, providing an estimated Annual Percentage Rate (APR) of 6%.

Economic Value

The circulating supply of KLAY tokens is currently over 3.48 billion out of a total supply of 5.89 billion, with a live market cap of $673,717,113. At the Klaytn mainnet launch, 10 billion KLAY was issued. To enhance the sustainability of the token economy, the Klaytn Foundation strategically removed and burned 5.28 billion KLAY, unused in the last 3 years and 8 months, from the initial issuance reserve of approximately 7.48 billion KLAY. An additional 2 billion KLAY will be burned in 3 years if no use case is identified in collaboration with Klaytn’s Governance Council (GC).

The current annual supply inflation rate for KLAY tokens is 8.57%, leading to an increase of over 258 million coins in the past year. The initial distribution of KLAY tokens included allocations as follows: Private Sale (18%), Protocol Reserves (53%), Business Development (16%), R&D and Technology (8%), and Team (5%).

KLAY token holders can stake their coins to secure the network for rewards, create and manage NFTs in the ecosystem, and participate in the DeFi services and apps by providing liquidity using their coins as collateral. Initially valued at $0.01 per token during the launch of Klay Network, the current coin price is $0.41, shaped by demand, supply, and market dynamics.

Challenges

The Klaytn network has encountered stability issues in its first three years, highlighted by two significant incidents: the Consensus Delay in March 2020 and a Transaction bug in November 2021. These issues may affect the coin's ongoing relevance, value, and functionality, as they depend on the platform's performance and success.