Leveraging the Korean policy tailwind, can the Kaia public chain step into the "stablecoin summer"?

Since the inauguration of the new President Lee Jae-myung, support for the issuance of stablecoins pegged to the Korean won has become the latest policy trend indicator. The Kaia team also took the opportunity to announce that it will collaborate with super apps such as Kakao Pay and LINE NEXT to plan the launch of a Korean won stablecoin.

Written by: Zen, PANews

This week, the Kaia public chain has become one of the highlights of the cryptocurrency market due to its strong token rally. Since its merger and launch with Klaytn and Finschia in August 2024, Kaia has been continuously pushing forward in terms of technical performance and ecological construction; meanwhile, its recent moves in stablecoins and payment scenarios have made it a hot topic among industry investors. The CEO of the foundation publicly stated, "Kaia's Stablecoin Summer is coming," indicating that its fiat-backed coin plan is about to enter the implementation phase.

Since Yoon Suk-yeol took office as the new president, the support for the issuance of stablecoins pegged to the Korean won has become the latest policy trend. The Kaia team also took this opportunity to announce that it will collaborate with super apps such as Kakao Pay and LINE NEXT to plan the launch of a Korean won stablecoin. Following the news, Kakao Pay's stock price surged nearly 30%, and the price of Kaia tokens also soared, increasing from nearly 0.10 USD to a peak of 0.17 USD, clearly indicating that the market is full of expectations for the prospects of local stablecoin projects in South Korea.

Riding on the Policy Winds, Kaia Stablecoin Project Launched

After the newly elected President of South Korea, Lee Jae-myung, proposed a policy to support the issuance of stablecoins in 2025, Kaia quickly responded and announced plans to launch a Korean won stablecoin. Following this announcement, related concept stocks such as KakaoPay saw their share prices soar nearly 30%, and the market is full of expectations for the Korean won stablecoin.

The Korean won stablecoin project proposed by Kaia is jointly promoted by Kakao and LINE (in collaboration with KakaoPay, LINE NEXT, etc.), and is currently still in the planning stage, with no specific issuance timetable yet. With its digital wallet infrastructure and QR code payment system, Kakao Pay is also widely regarded as a potential beneficiary of the local stablecoin.

The current South Korean government is brewing the "Basic Law on Digital Assets" and actively discussing a regulatory framework that allows private institutions to issue stablecoins. The draft bill aims to allow non-bank institutions and payment service providers to issue stablecoins and relax the rules for cryptocurrency exchanges, enabling them to participate in lending and choose which tokens to list. Under this proposed framework, the approval authority for stablecoin issuers will no longer be held by the Bank of Korea (BOK), but will be transferred to the Financial Services Commission. The bill also significantly lowers the regulatory threshold, reducing the capital requirement for issuers from the previously proposed 5 billion Korean won to 500 million Korean won (365,000 USD).

However, according to the South Korean Constitution, the issuance of legal currency belongs to the central bank, and private institutions face legal obstacles in issuing fiat-backed tokens. The Bank of Korea has also countered these proposals, with the Korea Herald reporting that the Bank of Korea showed a "panic" reaction. The report stated that the Bank of Korea originally planned to hold a meeting on stablecoins to express its viewpoint: indiscriminately issuing stablecoins denominated in Korean won may lead to "currency runs," thereby affecting the competitiveness of the Korean won.

In terms of policy inclination, the head of the Digital Assets Committee of the ruling party in South Korea stated that they will support private issuance and plan to clarify the legalization of stablecoins in the "Basic Law." The Kakao Group, which Kaia relies on, has a large-scale payment and financial infrastructure, providing a convenient channel for the practical use of stablecoins in the future.

However, despite the enthusiastic feedback from the market, the prospects of the Kaia stablecoin project remain unclear. On one hand, issues related to currency sovereignty and anti-money laundering compliance are still difficult to overcome. On the other hand, the issuance and redemption mechanisms of the stablecoin itself have yet to be validated, and multiple potential competitors have already set their sights on this lucrative segment. During the recent experiments conducted by the Bank of Korea on tokenized deposits and wholesale Central Bank Digital Currency (CBDC), several large banks in South Korea publicly announced plans for a joint issuance of stablecoins.

Therefore, within the opportunities presented by policy, the launch and advancement of Kaia's stablecoin program sparks much imagination, but whether it can obtain regulatory approval and be successfully implemented still faces numerous uncertainties.

Social giants unite, with 250 million "potential users"

Kaia public chain is a large blockchain network mainly targeting the Asian region, formed by the merger of the Klaytn chain backed by South Korea's Kakao and the Finschia chain backed by Japan's LINE, officially launched in August 2024. It aims to reach hundreds of millions of Asian users by seamlessly integrating Web3 services with Kakao Talk and LINE.

Kakao Talk is one of the most popular instant messaging applications in South Korea, with a penetration rate of nearly 95% and around 50 million monthly active users; while LINE, as the most popular communication platform in Japan, covers 70% of the Japanese population and dominates markets in places like Thailand and Taiwan. With the distribution capability of over 250 million users accumulated from these two major social platforms, Kaia, positioned as a high-performance, easy-to-use public blockchain, has been regarded as one of the "potential stocks" to promote the popularity of crypto applications. This year, the Kaia Foundation has raised external funds from investment institutions such as Blockchain Capital and 1kx to support ecological incubation and market promotion.

Before the merger into Kaia, Klaytn was developed by Kakao's blockchain subsidiary Ground X and officially launched in 2019. It became an important representative of the South Korean blockchain network after its launch, with its user base experiencing an astonishing growth of 1,100% in 2023, reaching 873,000. On the other hand, Finschia (formerly known as LINE Chain) launched in 2022 and provided the NFT platform DOSI internally within LINE, accumulating over 5.6 million users and completing approximately 560,000 NFT transactions. After the merger of the two chains, Kaia inherits the ecosystems of DeFi and gaming from Klaytn, as well as the application scenarios of NFTs and payments from Finschia, aiming for technological and user complementarity. The official vision emphasizes that Kaia will "put Web3 at the fingertips of hundreds of millions of users in Asia" and create an efficient platform to support the development of large-scale decentralized applications.

As an Ethereum-compatible Layer 1 public blockchain, Kaia inherits and optimizes the IBFT consensus framework of Klaytn technically. Its consensus algorithm is based on an optimized Istanbul BFT, allowing rapid final confirmation of blocks and supporting multi-node participation. The official documentation states that the Kaia network can handle up to 4000 transactions per second, with a block generation time of just 1 second and instant transaction certainty. Unlike conventional PoW/PoS, Kaia adopts BFT consensus aimed at enterprise and service scenarios, ensuring that once a block is produced, it is definitively confirmed, eliminating the traditional risks of block rollback. Kaia network nodes are divided into consensus nodes (CN), proxy nodes (PN), and endpoint nodes (EN), with consensus nodes managed by core operators (CCO), responsible for block generation and validation. The network design ensures that more than 50 nodes can participate in consensus, balancing throughput and decentralization.

In terms of technical features, Kaia supports account abstraction and fee delegation, greatly simplifying the user experience; it also integrates identity and payment channels for LINE and KakaoTalk, allowing ordinary users to access on-chain services without additional registration. Kaia also maintains equivalence compatibility with EVM chains such as Ethereum and plans to support CosmWasm smart contracts; its industry-leading cross-chain bridge integration capabilities provide developers with flexible multi-chain interoperability. It is worth mentioning that the Kaia mainnet is actually a hard fork of the original Klaytn mainnet, and all states of Klaytn are automatically inherited by the Kaia chain after the merge.

Expand from the gaming sector to financial services

When Kaia was just launched, user and funding metrics were still in the preliminary stage. By mid-2025, Kaia ranked approximately in the top fifty globally in DeFi TVL, reflecting the scale of its ecosystem at the initial stage. In terms of on-chain activity, Kaia's officials have disclosed that over 40 million users have accessed the Mini DApp portal. The number of wallets and transaction volume grew rapidly in the early stages of launch, but the overall level is still far below that of mature mainstream public chains like Ethereum, Solana, and BNB.

Ecologically, Kaia has merged the application ecosystems of Klaytn and Finschia, forming a comprehensive ecosystem covering multiple fields such as DeFi, NFT, GameFi, and Real World Assets (RWA). According to official statistics, there are already over 420 decentralized applications and game services that have launched or are planned to be launched on the Kaia network after the merger.

In addition, alongside the launch of the Kaia mainnet, LINE NEXT and the Kaia Foundation have jointly introduced a builder support program called Kaia Wave. This program aims to provide multi-faceted support for promising Dapps, enabling them to reach consumer users in both Web2 and Web3, and gain additional advantages from sources such as LINE Messenger, Web3 marketing alliances, creators, as well as vertical services from Kaia and LINE NEXT. According to official documents, the Kaia Wave program offers a total value of 10 million USD in KAIA tokens, specifically for user acquisition and rewards.

In the DeFi space, Kaia has launched multiple decentralized exchanges and staking, lending projects such as KlaySwap and DragonSwap. The platform also supports infrastructure like stablecoins and cross-chain bridges. In terms of NFTs, Kaia inherits the user base of the Finschia DOSI platform, and its GameFi ecosystem benefits from the user groups and partner resources of two major social platforms. Some game developers have started to release mobile games, NFT items, and other content on Kaia.

Inspired by Telegram and the Ton blockchain, Dapp Portal is one of the main tools for the development of the Kaia ecosystem in terms of distributing Mini DApps and user reach. Built on the Kaia chain, Dapp Portal is accessible to users through the official LINE Messenger account, allowing access to games, social interactions, transactions, and other Mini DApps directly within the chat interface without the need to download any new applications. In January of this year, LINE NEXT and Kaia jointly launched the first batch of 32 Mini DApps, enabling users to create wallets, play games, claim rewards, and trade NFTs with a single click, without the need for additional client installations.

In its official strategy, Kaia is gradually expanding from the gaming sector to financial services and general applications: by early 2025, it has launched a USD stablecoin yield product on the LINE platform, with subsequent plans including the introduction of lending, perpetual contracts, payments, and asset tokenization DeFi protocols, as well as achieving seamless exchange functionality between the Korean won and stablecoins.

In May of this year, Tether officially deployed its USDT stablecoin on Kaia, providing stablecoin payment and cross-border transfer services to LINE's 196 million users, marking an expansion of Kaia's layout in the international stablecoin ecosystem. Overall, Kaia is accelerating the construction of a platform-level ecosystem, working with industry partners to promote the usage scenarios of "messages as entry points, on-chain as payments."