"After the Digital Asset Basic Act (virtual asset phase-two law) is legislated, Kaia DLT Foundation will rise in the first half of next year as a won-based stablecoin (a virtual asset whose price is linked to legal tender or real-world assets) infrastructure corporations."Seo Sang-min, Kaia DLT Foundation chair
Kaia, a Layer 1 virtual asset that last September laid out a blueprint to integrate Asian finance with a won-based stablecoin, said it will unveil a stablecoin in the first half of next year. The goal is to build a system that exchanges directly between the won and local currency without the dollar as an interim settlement step, improving expense and speed. Recently, together with major commercial banks and partners (Lambda256, AhnLab Blockchain Company, OpenAsset), it completed the initial stage of stablecoin proof of concept (PoC). The PoC results were released on the 26th on Kaia's official blog.
Kaia was born from the integration of the 'Klaytn Foundation,' Kakao's Blockchain mainnet, and the 'Finschia Foundation,' LINE's Blockchain mainnet. It is now operated independently of Kakao and LINE by Kaia DLT Foundation, a nonprofit corporation in Abu Dhabi.
Chair Seo Sang-min said the foundation plans to enter the Southeast Asian remittance market using a won-based stablecoin. After graduating from Seoul National University's Department of Computer Science and Engineering, Seo served as chief technical officer (CTO) and chief product officer (CPO) at Ground X, Kakao's Blockchain technology and services affiliate, chaired Klaytn, the public Blockchain platform developed by Ground X, and now serves as chair at Kaia. The following is a Q&A with Seo.
─ What are the results and significance of the won stablecoin PoC experiment?
"This PoC was an experiment based on a cross-border remittance scenario. Using the existing Society for Worldwide Interbank Financial Telecommunication (SWIFT)-based commercial bank remittance system to send money overseas takes 1 to 3 business days to settle, and the fee was about 9,600 won.
Using the Kaia network, it is processed within three minutes and the expense is reduced to under 1,250 won. It does not just mean faster and cheaper; we verified that SWIFT's inefficient intermediary structure can be replaced with Blockchain.
This PoC was a process of closely communicating with commercial banks to derive the requirements needed for Blockchain infrastructure to be used in institutional remittances. It is meaningful that we confirmed we are building readiness to introduce stablecoins from technical, operational, and control perspectives."
─ When do you expect commercialization?
"A realistic target for commercialization is the first half of next year. We completed a technology PoC with a tier-one domestic bank and will conduct a pilot operation in the second half of this year. To that end, we plan to verify settlement stability for transaction volumes at the level of large banks and implement the ISO 20022 messaging standard, which is becoming the global payment standard. We also plan to build a direct exchange system between the won and various Asian stablecoins."
─ Is the stablecoin business a strategy to overcome the limits of mini dapps?
"Mini dapps (Mini Dapp, Mini Decentralized Application) were a strategy to lower the barrier to entry to Web3 in the familiar environment of the LINE messenger platform. While leveraging the messenger platform was good, mini dapps had difficulty sustaining content. In particular, game-centric mini dapps with short trend cycles had limits in driving continued user engagement.
As we shift the center of gravity to financial activities, we aim to link the existing mini dapp ecosystem with stablecoins. Kaia's stablecoin strategy is to provide an environment in which not only dollar stablecoins but also various local stablecoins can be used in everyday life."
─ What is the potential for overseas expansion?
"If a won stablecoin is confined to domestic payments, there is no reason to change the existing infrastructure. The market we are most focused on now is Southeast Asia. Southeast Asia has rapidly growing cross-border remittance demand and a strong willingness to embrace digital financial infrastructure. Through the LINE messenger, Kaia is connected to a channel of more than 250 million active users in Asia. Multiple Asian currency stablecoins, including Indonesia (IDRX), Malaysia (MYRC), and Japan (JPYC), are already cooperating with Kaia or in talks to do so."
─ What will be discussed at the seminar at the National Assembly on the 7th?
"At the seminar "Tasks for designing a stablecoin regime — analysis of overseas cases and response strategies," to be held on the 7th at the National Assembly Members' Office Building, Seminar Room 3, we will present stablecoin infrastructure design as seen in global cases and a strategy for domestic adoption. Korea is currently discussing the Digital Asset Basic Act bill, and where there is no regime, institutional funds or large partnerships do not come in.
Kaia has proactively designed the FrAML (Fraud and Anti Money Laundering) integrated security framework, which integrates the Fraud Detection System (FDS) and Anti Money Laundering (AML) system to comply with the Travel Rule. As the regime is refined, Kaia will position itself as the most prepared infrastructure."
☞ What is the Travel Rule?
A Financial Action Task Force (FATF) regulation that requires collecting relevant information, such as the real name of the transactor, when transferring virtual assets.