Analysis of POW public chain Kaspa: a pearl hidden in the old narrative

The Bitcoin ecosystem has been hotly speculated by crypto investors recently, as if minting and purchasing inscribed assets would not miss the code to wealth. However, the old narrative still shows that a coin has increased a hundredfold.

Kaspa was launched in November 2021 at the peak of the crypto bull market, but the bear market in the next two years did not cause it to plummet like most other currencies. Instead, it bucked the trend and rose as a dark horse. As of the time of writing, the project token KAS has risen by about 70,000% so far.

How did Kaspa achieve a 700-fold increase in two years? How much room for imagination is there in the future?

Fundamentals

Kaspa is a POW public chain built on the GHOSTDAG protocol, using a directed acyclic graph (DAG) structure. Kaspa is unique in that it can support high block rates while maintaining the security level provided by the most secure proof-of-work environment.

Kaspa’s current mainnet runs at one block per second. After the ongoing Rust language rewrite, core developers aim to significantly increase the number of blocks per second to attract smart contracts and DeFi development.

The token KAS was launched in November 2021, with a total supply of 28.7 billion and a current circulation of 21.5 billion, accounting for 75.10% of the total circulation, and a market value of US$2.07 billion. Since the launch of the token, the increase has reached about 70,000%.

The current price of KAS is $0.129, and it has hit a record high of $0.14 in the past 24 hours. It is worth noting that KAS has increased by about 2,500% this year.

With the recent resurgence of Bitcoin ecology, BRC20 tokens have led to a substantial increase in mining fees. In the article "Calm Thoughts on the Hot BRC20", Golden Finance mentioned that BRC20 mining fees account for about 30% of Bitcoin's handling fees. In other words, the popularity of the inscription track has also triggered the popularity of the POW track.

Based on this, in November alone, KAS rose from around $0.05 to $0.14, an increase of about 180%. Binance also announced on November 17 that it would launch KAS 1-50 times U-based perpetual contracts.

OKX also supports KAS. On November 3, official news indicated that the OKX Web3 wallet has been connected to the Kaspa Network.

Judging from the actions of the leading exchanges, Kaspa has the potential to further enter a larger market.

Project development history and highlights

At present, there are not many reports on Kaspa in domestic media, and the only research report that can be found is "In-depth Interpretation of Kaspa: POW Public Chain Based on GHOSTDAG Protocol" produced by LD Capital. It can be seen that for this L1 public chain that has increased by 700 times, the domestic attention to it is obviously low.

Kaspa is a blockchain L1 network that uses the Proof of Work (PoW) consensus mechanism and implements the blockDAG (block directed acyclic graph) structure, allowing multiple blocks to coexist in parallel and solving the problem of high orphan block rate in blockchain (two blocks are mined at the same time, but the network only accepts one of them).

It was conceived and launched by the R&D company DAGLabs and supported by PolyChain. However, its official website still claims that Kaspa is a community project, fully open source, and decentralized.

The founder is Yonatan Sompolinsky, a postdoctoral fellow in the MEV research team at Harvard University. As early as 2013, he conceived the GHOST protocol with his then doctoral supervisor, and the related papers were cited in the Ethereum white paper.

In addition to the founders, there are 5 core developers. Michael Sutton studies parallel algorithms and distributed systems. Shai Wyborski is one of the authors of the GHOSTDAG paper and studies classical and quantum cryptography. Mike Zak and Ori Newman study distributed system development. Elichai Turkel is an applied cryptographer and blockchain high-performance developer.

This year, Kaspa has been listed on major exchanges, such as Bitget, Kucoin, CoinEx, etc. Recently, on October 25, Kaspa was listed on Coinone, one of the four major exchanges in South Korea.

In terms of publicity and promotion, Kaspa has set up operations in many countries, and has held online and offline events in Japan, Chicago, Nigeria, Uganda and other places to build brand awareness.

In terms of ecological construction, in the second half of this year, Kaspa released the mobile wallet Kaspium v1.0.1, and expanded the mining pool to add the Hiveon pool. In addition, in September, the project updated the Kaspa memory pool, and the new Mempool implementation can manage thousands of pending transactions.

In terms of project vision, Kaspa is committed to becoming the world's fastest, open source, decentralized and fully scalable Layer-1. In terms of operating mechanism, Kaspa claims to be the fastest proof-of-work, mineable token currently available while still maintaining decentralization. The blockDAG architecture with a fast block rate allows for more mining decentralization and enables efficient individual mining with lower computing power.

The KAS mining algorithm is kHeavyHash, which supports GPU single mining or dual mining with ETHW and ETC, and supports mining with some FPGA and ASIC mining machines.

As of writing, according to f2pool data, Kaspa's 24-hour output value is currently second only to Bitcoin, but higher than Dogecoin, ETC and Litecoin.

From the perspective of computing power distribution, Kaspa's computing power concentration is not too high, at 7.5%. In the latest 998 blocks, the output of the top five mining pools accounted for 31.6%; 64% of the blockchain was produced by unmarked addresses.

Token Economics:

KAS was launched in November 2021, with no pre-mine, zero pre-sale, and no token distribution; the maximum supply is 28.7 billion tokens, and its emission is planned to be halved every year by steadily reducing it once a month by (1/2)^(1/12).

This strategy, inspired by the 12-tone musical scale, also known as the chromatic phase, reduces the block reward in a manner consistent with the frequency of successive semitones in the moderated chromatic scale. The initial block reward is set at the frequency of Note A4, with the reward halved once a year. Therefore, the project can achieve geometric reductions over time.

According to the emission plan, KAS reduces its output in a given way every month, so that the output can be reduced by half every year. The above figure is a schematic diagram of the release. It can be seen that there is a higher release rate in the early stage. Early miners have the first-mover advantage and can accumulate a large number of chips.

Conclusion

This month happens to be the second anniversary of Kaspa’s birth. The recovery of the crypto market, the BRC20 narrative, and the recognition of multiple exchanges have led to its recent price increase, bringing it back into the public eye.

However, we need to be vigilant that the rise in the price of "mining" chain coins is likely driven by the hidden dealers behind it, and this is used to attract more miners to buy mining machines. However, with the increase in mining difficulty, the tightening of the regulatory environment and the change of the consensus proof mechanism, whether POW can regain its glory in the future remains to be tested.