Director of Klaytn: Terra's collapse spurred cautious investment among Korean youth

In May 2022, Terra, the third-largest cryptocurrency ecosystem after Bitcoin and Ethereum, experienced a rapid three-day collapse, wiping nearly $50 billion USD from the market. This dramatic fall of a crypto "empire" prompted Korean officials to tighten their regulatory grip and led domestic investors to adopt a more cautious approach.

More than a year later, Coin98 Insights had a conversation with Sangmin Seo, the Representative Director of Klaytn, to discuss the state of crypto investments in Korea in the aftermath of Terra's demise.

Mr. Seo, who previously worked at Samsung Research and holds a Ph.D. in Computer Science, was drawn to blockchain technology and the decentralized philosophy of the crypto space through his study of the Bitcoin white paper. This eventually led him to Klaytn.

The Spotlight is a series of conversations between Coin98 and industry builders about hot topics in the market.

- On the streets of Korea, there are numerous advertisements for crypto and NFT projects. Does this mean that cryptocurrencies have seen widespread adoption in Korea?

Sangmin Seo: Despite the abundance of advertisements, I believe that the widespread adoption of blockchain and crypto in Korea is still a long way off, especially in terms of the user base. Everything is still in its early stages. However, the Korean government is actively introducing crypto regulations, and people here are increasingly interested in adopting new technology and products.

- What specific measures is the Korean government taking to support the blockchain industry?

Sangmin Seo: Following various incidents, especially the collapse of Terra-Luna, the Korean government recognized the need to protect investors, as retail investors often bear the brunt of such incidents. Consequently, they began developing legal frameworks to guide crypto participants on what to do and what not to do. I believe that these legal frameworks can contribute to the industry's healthy growth.

- How has the collapse of Terra affected the way Korean youth perceive crypto investments?

Sangmin Seo: I believe that after Terra's collapse, Korean youth have become more cautious with their investments. Previously, they invested in whatever caught their fancy, but now, I see them conducting more thorough research on crypto projects. This shift in behavior can be seen as a positive development.

- Klaytn is a Layer 1 blockchain. Can you explain why Layer 1 blockchains have gained prominence recently?

Sangmin Seo: I see two main reasons for this trend.

First, technology is continuously evolving, particularly in terms of security, scalability, and programming languages. New Layer 1 blockchains can leverage these technological advancements to create a better environment for developers.

The second reason is that, despite the market's growth, the current blockchain industry is still relatively small and in its early stages compared to the legacy of Web 2. Consequently, individuals with new ideas and business models are eager to test and develop this market together.

- What sets Klaytn apart from other Layer 1 blockchains?

Sangmin Seo: We believe Klaytn possesses several strengths compared to other Layer 1 blockchains. For instance, we offer very low transaction latency. Last year, we conducted numerous experiments comparing Klaytn's transaction latency with other networks.

In terms of concrete numbers, Klaytn's transaction latency is approximately 2 seconds, including transaction submission to the network. This sets us apart from other blockchains, which, despite their claims of speed, often have actual transaction latencies exceeding 2 seconds.

Moreover, Klaytn was launched in 2018 and had its mainnet released a year later, making us a relatively "established" blockchain in this market. As a result, we have a well-established ecosystem with numerous business partners. Teams looking to build projects on Klaytn have ample opportunities to collaborate and attract more users from our existing community.

- Klaytn has been in the market for nearly 5 years. What vision did the founders of Klaytn have when they launched the project, and how has that vision evolved since 2019?

Sangmin Seo: At the time of Klaytn's inception, the market predominantly featured Bitcoin, Ethereum, and a few mainnet networks. Kakao, the driving force behind Klaytn, sought to explore new ideas on existing blockchains.

However, they found that the performance and development environment of these networks were insufficient to meet their requirements. They aimed to create a more ideal experience for both developers and users, leading to the birth of Klaytn.

Since 2019, our core vision has remained largely unchanged: to promote the widespread adoption of blockchain technology to create a better world.

Our core vision has remained largely unchanged: to promote the widespread adoption of blockchain technology to create a better world.

Nevertheless, we have experimented with various strategies to realize this vision. For example, we initially tried to integrate blockchain technology into existing Web 2 services, as they already had a user base and established operating and business models. However, we realized that it was still too early to introduce a decentralized environment to average Web 2 users.

Subsequently, we shifted our focus more toward Web 3 users, with an emphasis on growing the DeFi ecosystem and addressing systemic issues. Today, we are striving to facilitate more real-world applications.

Read more: Co-founder of Sei Network: Allow users to become part of 'the blockchain tribe'.

- A few months ago, Klaytn passed a governance proposal to burn nearly 50% of the token supply. Could you share more about this plan?

Sangmin Seo: Certainly. This decision was driven by our belief that the value of tokens is intricately tied to the principles of supply and demand. An excessive token supply can negatively impact demand, as people are concerned about the implications of a substantial supply entering the market. This was a valid concern voiced by many members of the KLAY community.

Another factor in this decision was our initial tokenomics strategy for KLAY, which included reserving a significant portion of tokens for ecosystem development and project investments.

However, after four years, we observed that this token reserve wasn't playing a substantial role in fostering ecosystem growth. We struggled to identify a practical application for this reserve.

In light of these factors, we proposed the burning of 5 billion KLAY tokens, a move that received consensus approval from the community and the Klaytn Governance Council.

- Klaytn also has plans to gradually grant decision-making power to the community, allowing token holders to have a say in the activities of the Klaytn Governance Council. Could you share more about this vision?

Sangmin Seo: Absolutely. Our long-term vision revolves around empowering the KLAY-holder community as a central pillar of Klaytn's governance structure.

At present, the Governance Council serves as the representative entity responsible for conducting votes on behalf of the community. Nevertheless, we are actively exploring methods to involve the entire community in the governance process. This could include soliciting ideas and opinions from community members to inform decision-making.

We're implementing two primary approaches to achieve this goal. One is to maintain the current Governance Council structure and incorporate community sentiment by delegating voting rights to the Governance Council, which is our current practice.

The other approach is to establish a separate platform where members can directly express their views and submit suggestions. Klaytn Square will serve as the governance portal for the community to actively engage in this process.

- What do you foresee as future trends in the industry, and are there any notable projects in Vietnam currently?

Sangmin Seo: I believe one of the promising areas could be gaming, given its inherently engaging nature and its ability to attract a large user base.

Additionally, there is a need for a bridge between the crypto world and the real world. In this regard, asset tokenization and their use on the blockchain can play a pivotal role in popularizing new technology. I see this as a significant area for development in the near future.

As for Vietnam, I think the gaming and technology-based infrastructure projects here show great promise. Vietnam has already achieved success in Web 3 gaming. From a security and data analysis perspective, Vietnam excels in technology development and has numerous opportunities to attract investment capital.

- Given your optimism about the gaming sector, how do you view the role of NFTs, which can play a significant role in gaming?

Sangmin Seo: Certainly, NFTs are a crucial area. However, I view NFTs as tools for realizing ideas, like tokens. Tokens represent digital assets, while NFTs represent ownership of these digital assets. NFTs could indeed become a trend as they are used to signify ownership of various types of digital assets in games.

- Do you have any memorable stories or experiences to share from your time working at Klaytn?

Sangmin Seo: One unforgettable moment was when we launched our mainnet. We had spent over a year preparing for this pivotal moment. Everyone was anxious because any mishap would mean starting over. Fortunately, everything went smoothly, and when the genesis block was created, we were yelling and screaming, including me.

Another memorable experience was when we competed with other teams for the Bank of Korea CBDC pilot project. Initially, even the Bank of Korea didn't think that Klaytn could compete in the contest. Nevertheless, we put in hard work, presenting numerous ideas and technologies. In the end, the judges selected Klaytn as the winner.

Read more: The Future Plan of Contentos Post 5-Year Mainnet Journey.