What is the cryptocurrency KAIA? A Comprehensive Guide to the Background and Future of the Klaytn and Finschia Integration!

In 2024, a major merger in the Asian blockchain industry drew widespread attention. The Layer 1 blockchain “Klaytn,” developed in South Korea, and the public chain “Finschia” (formerly LINE Blockchain), based in Singapore, announced their integration to form a new ecosystem called “KAIA.”

This integration goes far beyond a simple network merger; it is a bold initiative to rebuild the Web3 economic sphere. By combining the technologies, user bases, and partnerships of both chains, KAIA is set to become one of the largest blockchain infrastructures in Asia.

This article offers a comprehensive overview of the backgrounds and characteristics of both Klaytn and Finschia, the purpose of the integration, the mechanism and design of the new KAIA token, and future prospects and challenges.

What is Klaytn?

Klaytn is a Layer 1 blockchain platform launched in 2019 under Kakao Corp., a leading South Korean internet company. From the outset, it emphasized enterprise-oriented use cases, offering fast transaction processing, low costs, and a user-friendly UX.

The Klaytn Foundation, based in Hong Kong, has also focused on global expansion, building a unique ecosystem spanning DeFi, NFTs, and GameFi. Its native token, KLAY, is used to pay network transaction fees and is also integrated into staking and reward mechanisms.

On the other hand, Finschia is a blockchain developed by LINE Tech Plus, a subsidiary of LY Corporation, which operates the messaging app LINE. Originally launched in 2020 under the name “LINE Blockchain,” the platform was designed as a foundation for Web3.0 applications leveraging LINE’s massive user base of approximately 180 million monthly active users (MAU).

Finschia placed strong emphasis on user experience (UX), aiming to enable users to interact with blockchain-based features without being consciously aware of the underlying technology. Its native token, FNSA (Finschia Network Standard Asset), served as a utility token for transaction fees and governance participation.

Over time, Finschia cultivated a wide range of partnerships with companies, games, and NFT projects tied to the LINE ecosystem. It gradually grew into a foundational Web3 infrastructure across Asia, particularly in countries like Japan, South Korea, Taiwan, and Thailand.

Background of the Integration: Why Now?

The integration of Klaytn and Finschia stems from a shared recognition of the challenges facing Layer 1 blockchains in today’s competitive Web3 landscape—particularly the need for scale and sustainability.

In recent years, the Layer 1 ecosystem has become increasingly saturated, with rapid growth from players such as Solana, Avalanche, Cosmos, and Ethereum-based Layer 2 solutions. These dominant platforms have made it difficult for emerging chains to secure user traction, grow developer ecosystems, and increase TVL (Total Value Locked).

In Asia specifically, inconsistent regulatory environments across countries further complicate the task of building user trust and delivering practical, localized use cases. While both Klaytn and Finschia have strong corporate backing and robust regional communities, each recognized the limitations of continuing to operate in isolation amid intensifying global competition.

As a result, the two platforms chose to unite their technological resources, developer communities, and strategic partnerships under a single vision: the creation of a sustainable Web3 ecosystem originating from Asia. This merger marks a strategic shift toward long-term viability and global competitiveness in the evolving blockchain landscape.

Following the integration of Klaytn and Finschia, their native tokens, "KLAY" and "FNSA," have been merged into a new token called "KAIA." This token serves fundamental use cases in the unified chain, including transaction fee payments, governance participation, staking, and reward distribution.​NEOPIN Introduction | NEOPIN Docs

Overview of KAIA Token

In August 2024, the KAIA mainnet was launched, consolidating the existing KLAY and FNSA tokens into KAIA.KAIA is positioned as the primary asset for transaction fee payments and staking (block generation) on the Kaia chain.Its token design emphasizes long-term sustainability, incorporating features such as an inflation rate and a token burn model.​MediumMedium

Supply and Exchange Ratios

Initially, a supply of approximately 10 billion KAIA was anticipated. However, through the complete burning of uncirculated tokens, the actual initial supply was reduced to about 5.768 billion tokens. This figure reflects only the existing circulating supply of KLAY and FNSA at the time of integration.​

The exchange rates were as follows:

• KLAY: 1 KLAY = 1 KAIA​Medium+1Medium+1
• FNSA: 1 FNSA ≈ 148.08 KAIA​Kaia

This automatic conversion encompassed the entire circulating supply of both tokens, requiring no action from users.​Kaia Docs | Kaia Docs

Incentive Measures

With the launch of KAIA, extensive incentive programs have been implemented for existing users and developers.​

• For Users: The "Kaia Portal Mission," a DeFi participation-based point system, has been introduced, featuring a reward pool of up to 50 million KAIA. Additionally, users who participated in the Finschia integration vote have been allocated 40 million KAIA as "on-chain contributor rewards."​
• For Developers: Through the "Kaia Wave" program, jointly initiated by LINE NEXT and the Kaia Foundation, a support fund totaling $10 million in KAIA has been established. This initiative provides funding, marketing, and infrastructure support to promising Web3 projects.​

Token Allocation and Inflation Model

The initial circulating supply of 5.768 billion KAIA is distributed as follows:​Kaia Docs | Kaia Docs

• Conversion of Existing Circulating Supply (KLAY + FNSA): Approximately 4.968 billion KAIA (about 86% of the total)​
• Allocated to LINE NEXT: 330 million KAIA (approximately 5.7%)​
• Kaia Ecosystem Fund: 270 million KAIA (about 4.7%)​
• Kaia Infrastructure Fund: 200 million KAIA (approximately 3.5%)​

Furthermore, an annual inflation rate of 5.2% has been established as block rewards for network operations, which are distributed as validator and staking rewards. A three-tier burn model (including portions of gas fees, rewards, and voluntary burns) has also been adopted to effectively control the actual inflation rate based on network usage.​Medium

Features and Benefits of the Unified Chain

The KAIA chain is being developed as a next-generation Layer 1 blockchain that combines the technological strengths of Klaytn and Finschia. Key anticipated features include:​

• High-Speed, Low-Cost Processing: Inherits Klaytn's high-performance Byzantine Fault Tolerant (BFT) consensus algorithm, capable of supporting commercial-level dApp operations.​
• Rich Use Cases and Migration of Existing Partners: LINE's dApps, games, and NFT services are transitioning to KAIA, along with DeFi projects previously supported by the Klaytn Foundation.​Kaia Docs | Kaia Docs
• Adaptability to Asian Regulatory Environments: Operated by teams well-versed in cryptocurrency regulations in South Korea and Japan, leveraging the corporate networks of Kakao and LINE for political stability.​Medium
• Developer-Friendly SDK and EVM Compatibility: Maintains compatibility with the Ethereum Virtual Machine (EVM) and offers developer tools that support multi-chain deployment.​

Challenges and Concerns: Token Migration and Integration Uncertainties

While large-scale chain integrations offer numerous benefits, they also present challenges and uncertainties, including:​

• User Confusion and Token Migration Risks: The process of exchanging KLAY and FNSA for KAIA may pose challenges for holders, necessitating seamless support from wallets and exchanges, as well as clear guidance on tax implications.​
• Community Integration: Given that both chains have distinct cultures and user bases, it's crucial to design post-integration governance and communication strategies that prevent perceptions of bias and maintain community support.​
• Maintaining Security and Reliability: Codebase changes and node operation transitions associated with the integration could increase security risks. Thorough testing and a phased migration approach are essential to ensure that existing dApps continue to function properly.​

KAIA is positioned as a blockchain infrastructure with one of the largest user bases and enterprise networks in the Asia-Pacific region, and its future developments are being closely watched. Key areas of interest include:

• Expansion of regulation-compliant dApps in Japan, South Korea, and Taiwan
• Commercial deployment of Web3.0 games and NFT marketplaces
• Seamless integration with Web2.0 services such as LINE and KakaoTalk
• Expansion of DeFi services through stablecoin issuance and partnerships with financial institutions

If KAIA successfully delivers on these fronts and establishes itself as a truly usable blockchain for end users, it has the potential to gain international recognition as a next-generation platform on par with Solana and Avalanche.

Conclusion: The KAIA Integration is a Litmus Test for Asia’s Web3.0 Strategy

The integration of Klaytn and Finschia and the birth of the new cryptocurrency KAIA is not merely a project merger. It represents a fundamental restructuring of Web3.0 infrastructure in Asia and a direct challenge to the increasingly competitive global crypto market.

While the integration brings significant scale advantages and potential for real-world adoption, it also comes with challenges such as token migration, governance design, and community management.

However, with backing from two of East Asia’s most prominent tech conglomerates—LINE and Kakao—KAIA is more than a passing headline. It should be viewed as a long-term Web3 infrastructure initiative worthy of attention. Continued monitoring of its official launch, token distribution, and project milestones will be essential.

Image: Shutterstock

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