Interview with Klaytn Foundation: Grants and Web3 Gaming Revolution

Dive into our latest interview where we had a captivating conversation with Sam Seo, the Representative Director at Klaytn Foundation. We delved into the intriguing world of Web3 games, discussed the company’s impactful grants, and explored the exciting prospects for real-world assets in the blockchain space.

Meet Klaytn Foundation

If you’re wondering about the force behind Klaytn, let us introduce you to the Klaytn Foundation. It’s a non-profit organization with a clear mission – to accelerate the global adoption and advancement of the Klaytn ecosystem.

Klaytn itself, an innovative creation by the Korean powerhouse Kakao, is a game-changer in the blockchain arena. What sets it apart? Exceptional performance and remarkable user-friendliness, making it the ultimate choice for crafting decentralized applications.

Perhaps now you are definitely ready to discover the essence of this informative conversation. Let’s begin.

Q. What Klaytn is focusing on right now?

A. The Klaytn Foundation is dedicated to driving the growth of the Klaytn ecosystem. Klaytn, as a public layer one blockchain, stands out for its EVM compatibility and high-performance consensus. It’s faster and more cost-effective than many other public blockchains, making it ideal for daily life applications, high-performance DApps, and more. The primary goal of the Klaytn Foundation is to develop and expand the Klaytn ecosystem.

In recent times, our focus has shifted towards bridging the gap between the real world and the crypto or digital world. While Web3 and blockchain primarily emphasize crypto assets, we recognize the need to engage a broader audience. Klaytn aims to bring more people into the blockchain and Web3 industry. We are actively working on bringing real-world assets onto the blockchain, such as physical gold, real estate, artworks, bonds, stocks, and more. This move is driven by the belief that blockchain needs stable, real-life assets to enable a wider range of people to utilize and invest in them.

The tokenization of real-world assets allows even individuals unfamiliar with crypto and NFTs, like my parents, to access and use these assets on-chain. Stocks, bonds, and real estate are assets that resonate with a broader audience. Enabling these real-world assets to be traded on-chain opens up new possibilities for real-world adoption in the blockchain space.

Another area of our focus is Web3 gaming. We believe that games can be a powerful avenue for introducing Web3 and new technologies to a wider audience. By allowing gamers to truly own in-game assets using blockchain technology, we can transform the gaming industry and empower players. Our goal is to explore how blockchain and Web3 technology can enhance the gaming experience and ownership of in-game assets.

Q. Will the Web3 gaming niche experience the same level of hype as it did a year ago?

A. To achieve the true potential of Web3 games, we must focus on improved game design, specifically from the perspective of ownership. Simply providing tokens or NFTs to users does not equate to granting true ownership of in-game assets.

The primary criterion for a game’s success remains its entertainment value, irrespective of token involvement. For Web3 games to flourish and attract more users, a significant shift in game design philosophy is essential.

Ultimately, the growth and appeal of Web3 gaming depend on game design and the inherent enjoyment factor. It transcends the distinctions between Web3 and Web2, centering entirely on the games themselves, their structure, and the experiences they offer to players. As long as games are enjoyable and provide users with tangible benefits and asset ownership, players will naturally gravitate toward them. There’s no doubt about that.

Q. Is there a way for Web3 games to be not just a niche for earning money but also a source of fun?

A. In the Klaytn ecosystem, there are games initially built on Web2. These games, when transitioning to Web3, didn’t undergo a complete overhaul. They essentially remain Web2 games but incorporate certain Web3 elements. This approach allows normal Web2 users to enjoy the games without needing tokens or connecting their wallets initially.

When users decide to move their assets from the game’s database version to the Web3 version, they learn how to install a wallet and connect it to the game. This enables them to engage with the Web3 world. This strategy allows larger games to engage users gradually and educate them on interacting with blockchain and the Web3 ecosystem. It fosters greater knowledge about blockchain and Web3, paving the way for more widespread use of tokens and NFTs for trading and ownership.

This transition from Web2 to Web3 gaming can occur gradually. Alternatively, for a fully Web3 game, the development should include a sustainable economic system. Web3 heavily relies on tokens and assets, but without a stable token economy, players may lose interest if token prices constantly decline. To prevent this scenario, a sustainable economic system needs to be in place both within and outside the game. This approach ensures that games create value for tokens, motivating players to continuously engage with and find value in the game.

Q. Have you seen Web3 games with a sustainable economy?

A. Indeed, I can provide an example that illustrates this concept. While there aren’t many games with such sustainable economics, one standout is the “move-to-earn” game called SuperWalk. This game has effectively implemented a robust tokenomics model.

In SuperWalk, players earn tokens by using the app, and these tokens can be predominantly utilized within the game itself. Even in my own experience, most of the tokens earned are used within the game due to the numerous in-game opportunities for token utilization. However, there are instances where players can transfer tokens from the game to an external wallet and then engage in trading activities.

The game’s sustainable economics are noteworthy because it creates a cycle where players earn tokens, spend them within the game, and may even buy more tokens externally to enhance their in-game experience. This cyclic token flow contributes to the game’s economic sustainability.

In summary, SuperWalk’s model demonstrates how a game can establish a sustainable token economy by offering diverse in-game opportunities for token use while still allowing players to engage in external token transactions.

Q. Is the Klaytn Foundation currently awarding grants?

A. Yes and no, there’s a bit of history here. Last year, we were actively running a grant program to support various services and ecosystem partners. However, this year, we temporarily suspended the grant program due to market dynamics and other considerations.

Recently, we decided to resume our grant program, but with a twist. We’ve introduced a pilot program with a set time limit. This current grant program has been operational for three months, and the upcoming one is expected to conclude next month. This pilot phase allows us to experiment with the grant program’s structure and approach.

After the pilot program ends next month, we’re still uncertain about the grant program’s future. We will evaluate its performance and impact over the last three months to determine whether it continues as-is or undergoes revisions.

Our grant program is open to everyone. Interested parties can apply for a grant through our governance forum. The forum serves as the platform for posting grant applications, which are then reviewed by the community and our governance council members.

Once a proposal is selected as a candidate for voting, our governance council, comprising 35 members from large Web2 and Web3 companies, small teams, and even DAOs, casts their votes to decide whether to support a particular team or project.

Q. What are the sizes of grants?

A. Currently, we are conducting experiments with our new grant program. There’s no set limit on the grant size, but applicants are required to provide a clear explanation of how they intend to use the budget. As long as the proposal aligns with our objectives and doesn’t exceed common market practices, our governance council can consider it.

The success of the grant program largely depends on the grantees themselves. While some teams have excelled and made significant contributions to the Klaytn ecosystem, not all have achieved the same level of success. Last year, we supported numerous teams through the grant program, but fierce competition in the blockchain space and market dynamics limited the number of success stories. Consequently, we’ve made adjustments to the grant program to encourage grant recipients to focus on and contribute effectively to the Klaytn ecosystem.

While it’s challenging to mention specific team names, some teams within the Klaytn ecosystem have notably thrived as a result of the grant program. These teams serve as examples of successful grant recipients who have made valuable contributions.

Q. Which teams are doing the best in the Klaytn ecosystem?

A. Certainly, let me provide an example. While we have numerous teams, I can’t possibly mention them all individually. However, one team that stands out is the SuperWork team. Interestingly, they didn’t receive a substantial grant, but their performance has been remarkable. They have been experiencing substantial user growth and attracting users not only in Korea but also in Japan and various other countries. Their consistent growth is impressive.

Moving into the DeFi sector, we have notable teams such as KlaySwap, an AMM-based decentralized exchange, and SwapScanner, a DEX aggregator. Both of these teams have been performing admirably, contributing to the DeFi ecosystem’s growth.

In the gaming realm, we have several key players. Well-established AAA game companies like Netmarble and Kakao Games are actively involved. Additionally, smaller yet influential gaming teams like Iskra, KlayDice, and DeFi Kingdom have also been making significant strides in their respective games.

Q. Why do fewer projects succeed in the Web3 world compared to those that receive grants?

A. In the broader context, it’s important to understand that not all teams, regardless of their focus on Web3 or other areas, can easily achieve success. Competition is ever-present, and every business encounters its share of challenges. The grant program, while valuable, can’t single-handedly guarantee success. Success is a complex outcome influenced by various factors.

The grant program can certainly play a role in accelerating the growth of certain teams or helping them collaborate with others. It serves as a catalyst for those who receive it. However, it’s crucial to recognize that success is not solely determined by the grant program or any single entity. Instead, it hinges on how well a team executes its service or business model, the value it provides, and how effectively it attracts users.

Q. Do you agree that many Web3 projects lack effective marketing skills?

A. I somewhat agree with your observation. It’s true that some Web3 teams focus primarily on building a large community without necessarily converting it into an active user base. The key distinction lies in recognizing that success in business hinges on actual users. Often, people join these communities attracted by airdrops or promotional campaigns rather than engaging with the core services provided. This disparity highlights a challenge; not all Web3 teams are skilled in effective marketing.

To address this, we need to differentiate between Web3 users and crypto collectors or enthusiasts. The emphasis should be on targeting and engaging true users—those individuals who genuinely utilize the services offered by dApps. By focusing on this user segment, dApps can garner more attention and establish a stronger user base.

Q. Could you tell about the focus that the Klaytn Foundation currently has on real-world assets?

A. Certainly, our current focus on real-world asset (RWA) tokenization is driven by the goal of bringing Web2 users into the Web3 space. RWA tokens represent assets that have intrinsic value and real-world utility. Klaytn recognizes the potential in this area and is actively pursuing RWA tokenization. For instance, we have projects involving the tokenization of assets like gold, U.S. Treasury Bills, and even real estate.

An illustrative example within Klaytn is our collaboration with a gold exchange in South Korea. This initiative involves the tokenization of physical gold onto the Klaytn blockchain. As a result, physical gold is converted into tokens on Klaytn, enabling seamless trading and transfers among users. The motivation behind this tokenization is that gold is a traditional asset, and there are likely more people who own gold than cryptocurrencies. Our aim is to bridge the gap between Web2 and Web3 by providing these traditional asset owners with a superior user experience and investment opportunities.

Furthermore, we also can work with other teams to tokenize various assets, such as account receivables and U.S. Treasury bills. This isn’t just about creating new markets; it’s about connecting Web2 investors to the Web3 ecosystem. By doing so, they can explore the diverse investment opportunities, tools, and products available on the Klaytn platform.

Q. Why would Web2 investors transition to Web3 for tokenized gold?

A. There are at least two compelling reasons for Web2 investors to transition to Web3 for tokenized gold. The first reason revolves around liquidity. Traditional gold owners often face limitations when it comes to trading their physical gold. They must physically go to specific locations or gold exchanges, which can be inconvenient, especially for those residing in distant suburbs. Tokenizing physical gold on the blockchain significantly enhances liquidity. By leveraging the technology and platforms available for gold tokenization, users can seamlessly trade their gold assets with others, eliminating both liquidity and accessibility issues.

The second reason is tied to the ability to utilize DeFi infrastructure. In the traditional Web2 environment, gold owners have limited options — buying or selling physical gold. However, by tokenizing gold on the blockchain, such as the Klaytn platform, users gain access to a broader range of possibilities. These include engaging in yield farming, staking, and participating in various financial products. Tokenized gold opens up diverse opportunities for users, which is a significant differentiator between the Web2 and Web3 gold markets.

Q. Who is the target audience for real-world tokens?

A. I’d like to clarify that not all Web3 enthusiasts seek high volatility. In fact, many prefer stability within their investments. The reason we are focusing on Real-World Asset tokens is to strike a balance between highly volatile assets and stable assets. It’s important to recognize that not everyone is comfortable with extreme market fluctuations. Particularly during times of significant market volatility, individuals tend to lean toward stable assets as a means of risk mitigation.

As we navigate through market changes, such as the ongoing shift towards a more stable market, it becomes essential to introduce stable assets into the blockchain ecosystem. This addition helps create a healthier balance among different asset types. A diversified market with a mix of assets, including stable ones, contributes to a more robust and resilient industry.

Q. Where can users currently buy real-world assets?

A. Currently, there are not many options available for purchasing real-world asset tokens. One example is gold-based tokens, which can be found in some markets and purchased through specific exchanges. However, it’s important to note that many real-world asset tokens are subject to regulatory oversight.

These tokens may fall under various regulatory classifications, such as security tokens. For security tokens, trading is typically restricted to regulated markets rather than public exchanges. This means that users may not have access to purchase these tokens through traditional cryptocurrency exchanges.

As the market for Real-World Asset tokens continues to develop, we can anticipate the emergence of more specialized marketplaces capable of handling these tokens. These platforms will play a crucial role in providing users with access to a broader range of real-world asset tokens.

Q. What types of real-asset tokens should one buy?

A. When considering which real-asset tokens to buy, it’s essential to focus on assets that can provide proof of their existence. This proof is crucial in verifying that the assets you’re investing in actually exist in the real world. While investing in real-world asset tokens, it’s advisable to prioritize those that offer better liquidity, unless you have a specific interest in particular assets.

Proving the existence of real assets in the digital realm often requires trust in external entities or companies that provide this information. However, the blockchain technology ecosystem is advancing, and some oracles now offer mechanisms like “proof of reserve.” Certain token providers are integrating these technologies to demonstrate ownership or the existence of assets, enhancing transparency and trust.

Unlike cryptocurrencies, some real-world asset tokens may have limited liquidity. The liquidity of a token is typically tied to the underlying asset’s value. For instance, if you tokenize a single house, the liquidity is limited because the value of the asset is relatively fixed. On the other hand, assets like gold have higher liquidity due to their substantial value.

When selecting real-world asset tokens for investment, it’s crucial to strike a balance between proof of existence and liquidity. Tokens that offer both these attributes are generally considered safer investments. By prioritizing assets that can provide proof of existence and reasonable liquidity, you can make more informed investment decisions.

The full video can be found below 👇