Klaytn on the Road to Decentralization: Kakao Steps to the Side
Klaytn announces key Steps toward decentralized foundation
Krust, the blockchain and investment subsidiary of South Korean tech giant Kakao, has announced that Klaytn will become a decentralized blockchain platform by separating from Krust and transferring major decision-making power to a Governance Council. This move marks a significant step towards Klaytn’s independence from its parent company, and towards true decentralization in the blockchain industry.
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Looking Back at Korea's Tech Landscape: Major Corporations and Innovation
South Korea's economy has been heavily influenced by major corporations such as Samsung, LG, and Hyundai, which have received government support and investment to become household names in the country. The growth of the Korean version of the dot-com era in the 2000s also led to the development of several major companies, including Naver, Kakao, and various game companies. In this tradition, technological innovations and developments often began with support and investment from these major corporations, underscoring their role in shaping the tech landscape of South Korea.
Kakao’s founders believed the future was in blockchain, leading to the creation of Klaytn. Over the past 4-5 years, Kakao has helped develop Klaytn, which has become the representative blockchain Layer-1 of South Korea.
The Paradox of Klaytn: When What's Good Is Also Bad
Despite its success, Klaytn has faced criticism from the community in 2021-2022 for being too centralized, having unclear reserve status, and investing in privileged projects. Klaytn’s step-by-step plan towards true decentralization involves restructuring its relationship with Krust, a subsidiary of Kakao, and plans for burning 5 billion reserve tokens that are currently under Kakao’s custody (vote in progress).
The move towards true decentralization will transfer major decision-making power to a Governance Council, rather than Kakao and Klaytn Foundation. This is a significant move away from the siloed decision-making structure of the past, towards a more open and transparent governance model, and is necessary for Klaytn’s independence and credibility as a mature platform.
Decentralization in the midst of the winter
Klaytn’s move toward true decentralization is a commendable effort and a testament to the team’s hard work and courage in striving toward the philosophical completeness of blockchain. As the crypto winter continues, Klaytn’s move towards true decentralization is a positive development in the blockchain space, and a model for other blockchain platforms to follow. It's worth noting that not only the US SEC but also the Korean FSC are looking deeply into tokens that could potentially be securities tokens.
