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A recent report from the crypto analyst firm Messari highlights the incredibly rapid growth of Klaytn’s enterprise-grade blockchain ecosystem, most notably in the DeFi and Gaming sectors. Within those segments, the star of the show is undoubtedly the newly-launched Klaytn Lending Application, better known as KLAP, which has come from nowhere to reach an impressive $32.15 million in total value locked.
KLAP undoubtedly deserves a round of applause for its stunning rise, which saw it emerge as the second most valuable DeFi protocol on Klaytn within just days of its launch, trailing only KlaySwap, which has already been in existence for more than three years.
KLAP might look like just another DeFi protocol but it has many innovative features that have enabled it to win over thousands of users in an incredibly short space of time. KLAP is a decentralized and non-custodial overcollateralized lending protocol, based on a fork of the popular Aave protocol. To date, not only has it amassed millions in TVL, but it has also accumulated more than 37,000 followers on Twitter and Discord.
A Solid Foundation
No doubt, KLAP’s decision to build on Klaytn itself has played a big part in its rise. Klaytn might not be as well known as Ethereum or even the likes of Avalanche, Fantom and Solana, but it is a very promising Layer 1 blockchain network that’s focused on enterprise adoption. Klaytn is designed to provide high-performance, delivering more than 4,000 transactions per second with high throughput and rapid finality, all of which are important considerations for enterprise users. As Messaris report explains, Klaytn’s secret sauce is its novel architecture and proof-of-stake consensus method, which sacrifices a bit of decentralization in order to process and finalize transactions at speeds the likes of Bitcoin or Ethereum can only dream of. Yet that’s not to say Klaytn isn’t decentralized - it is, albeit there are only a limited number of consensus nodes operated by its ruling Governance Council.
The unique design of Klaytn enables extremely rapid performance, making it perfectly suited to the needs of DeFi users. Yet Despite Klaytn’s promise, for a long time it lacked a comprehensive, native lending protocol that would provide enough liquidity for users to earn yield safely and borrow capital at fair rates. KLAP saw the opportunity and arrived on the scene to remedy this situation, and Klaytn’s user base has responded overwhelmingly in favor of it.
One of the main advantages of KLAP is its innovative tokenomics structure. Although it’s based on Aave, it also takes many of the best aspects from other DeF popular protocols. For instance, it includes Solidity-style veNFTs that enable decentralized governance through veNFT voting, as well as yield boosting capabilities that were originally devised by the Platypus Finance protocol. Another cool feature is its Curve-like escrow voting governance, while its penalties for mercenary capital were inspired by Geist and provide added protection for investors and borrowers. Other enticing features of KLAP include the promise of being able to earn rewards in both KLAP tokens and KLAY, the native token of Klaytn.
KLAP’s transparency is equally commendable at a time when DeFi users have become much more nervous in the wake of the disasters that were Terra’s Anchor protocol and Celsius Finance. At the time of its launch, KLAP published a very detailed and transparent explanation of its tokenomics model, ensuring that its users fully understand how its depositing and borrowing algorithms work, as well as the risks involved.
KLAP does have rivals in the Klaytn ecosystem, the most notable being the aforementioned KlaySwap, which was its first AMM when it launched back in 2020. To date, KlaySwap still commands more than half of the TVL on the Klaytn blockchain, thanks to compelling features such as a liquid version of staked KLAY, as well as its voting escrow governance token model.
In any case, a competitive DeFi ecosystem only serves to grow interest in a Klaytn blockchain that is looking primed for enterprise adoption. The launch of KLAP has helped to grow the TVL in Klaytn’s ecosystem by more than 73% over the last year, along with a rising blockchain-based, play-to-earn gaming economy that’s headed up by some of South Korea’s biggest games developers.
“There is currently $317 million total value locked (TVL) in Klaytn DeFi protocols, ranking it 14th among all chains,” Messari said in its report. “Klaytn’s ecosystem faced a significant decrease in TVL calculated in USD starting at the end of April. This drop can be attributed to KLAY price depreciation, resulting from the larger market reduction following macroeconomic headwinds and the Terra collapse. Despite these adverse conditions, the amount of KLAY locked in DeFi protocols has increased by 73% YTD. This is a mark of ecosystem growth and resiliency in the midst of a crypto bear market.”
Looking ahead, Klaytn has plans to boost the performance of its blockchain even further, eying an increase from its current 4,000 TPS to over 10,000 TPS by the end of this year. At the same time, it’s focused on increasing decentralization by adding more Governance Council members, and growing its ecosystem through both partnerships and the well-funded Klaytn Foundation that recently committed more than $20 million towards blockchain research.
With strong front-runners like KLAP and KlaySwap, plus one of the fastest growing blockchain gaming ecosystems in the industry, Klaytn is headed in the right direction. By the time the crypto industry emerges from its current thaw, Klaytn, and projects like KLAP, will be in a very strong position to accelerate enterprise adoption.
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