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Kaspa's growth: revealing strategic moves and technological advancements

24-10-17 16:43

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Authors: Yinliang (Former Researcher at BlockBooster, Lead Author) and Caiya (From BlockBooster, Supporting Author)

The information related to the development of Kaspa ecosystem in this study is supported by Kaspa Ecosystem Foundation

Grayscale has released a list of crypto assets that are being considered for inclusion in future Grayscale investment products and a list of crypto assets for released products, which are divided into several categories: currency, smart contract platform, finance, consumer and culture, utilities and services. Among them, the crypto assets that Grayscale is considering for inclusion in future Grayscale investment products include: Kaspa (KAS).

(Source: grayscale)

Since the launch of the mainnet in 2021, Kaspa has a total supply of 28.7 billion KAS, with a current market value of approximately US$3.4 billion. With a strong and supportive community, Kaspa continues to rise in the blockchain industry.

As part of its continued efforts to strengthen its ecosystem and community, Kaspa has hosted a series of developer-focused events, including Advances in Financial Technologies in September 2024, the upcoming Kaspa Innovation Summit in Hong Kong on October 27, and the Australian Crypto Convention in November.

In addition, the Kaspa Ecosystem Foundation also plays a key role in nurturing and expanding the Kaspa ecosystem, providing financial support and strategic guidance, and recently announced a series of initiatives to promote the development of the ecosystem: Kasplex and KEF Katalyst Program Season1.

Kasplex is a comprehensive solution designed to improve the efficiency and sustainability of the Kaspa network, integrating a data insertion protocol, an open source indexer, and a powerful API. It currently supports the seamless creation and management of KRC-20 tokens, and will also release standards for NFTs in the future. By leveraging Kaspa's high block rate and decentralized Proof-of-Work (PoW) Layer-1, Kasplex lays the foundation for the development of a diverse ecosystem of decentralized applications.

KEF Katalyst Program Season1 is a series of initiatives designed to accelerate the growth of the Kaspa ecosystem. The first phase of the program received $10 million in funding, covering grants, infrastructure construction, and educational activities, aiming to promote Kaspa, encourage developer collaboration, and provide a platform for innovative projects.

These recent initiatives launched by Kaspa are all in preparation for the expansion and application of the ecosystem. Next, let's take a deeper look at the project status and technical progress of Kaspa.

Overview

Kaspa is a Layer-1 blockchain based on the blockDAG structure, using the GHOSTDAG consensus protocol, a consensus protocol evolved from the PHANTOM mechanism. The main difference between Kaspa and Bitcoin is its structure. Bitcoin uses a single chain structure, while GHOSTDAG uses a directed acyclic graph (DAG), where one block can point to multiple other blocks.

This design improves transaction finality and speeds up block generation through parallel processing. Unlike traditional PoW chains, Kaspa uses the KHeavyHash proof-of-work consensus algorithm, which optimizes energy efficiency while increasing hash power to ensure blockchain security and decentralization. Through innovative pruning technology, Kaspa can minimize storage requirements and only retain about three days of transaction history. However, in order to support future transaction outputs, certain key blocks may still need to be pruned under certain conditions. Kaspa currently runs at a block generation rate of one per second and plans to expand to 10 or even 100 blocks per second. It is worth noting that in 2024, Kaspa's smart contracts transitioned from the original GoLang to the Rust language, and mining nodes also began to migrate to Rust earlier that year, marking a major progress in its technology ecosystem.

Migration from GoLang to Rust

Rust is known for its high performance and security, which is in line with Kaspa’s goal of increasing transaction speed and network capacity. The migration involved rewriting Kaspa’s full node and related libraries to Rust to leverage the potential of modern computing and benefit from Rust’s active developer community.

Kaspa’s reasons for switching from GoLang to Rust include:

- Performance optimization: Rust is known for its excellent performance and has advanced parallel processing capabilities, which can process multiple blocks concurrently across CPU threads. This feature is critical for Kaspa’s blockchain network, especially its goal of processing a large number of transactions and blocks per second.

- Modern Computing Potential: By adopting Rust, Kaspa aims to maximize the power of modern computing hardware and optimize energy efficiency.

- Security and Reliability: Rust prioritizes security, reducing security vulnerabilities caused by common programming errors. Security is critical in blockchain networks, and Rust's compile-time safety checks provide additional assurance against potential threats.

- Community and Ecosystem: The Rust developer community is rapidly expanding. Kaspa's migration to Rust allows it to integrate into this ecosystem and gain access to the rich knowledge, tools, and libraries contributed by Rust developers.

The impact of this migration on the Kaspa network is far-reaching:

- Increased Transaction Throughput: By increasing the speed of transaction processing, Kaspa aims to significantly increase its transaction throughput, which is critical for the widespread adoption of its technology. This migration is fundamental to Kaspa's future goal of processing 100 blocks per second.

- Energy Efficiency: Rust’s energy-efficient execution model aligns with Kaspa’s commitment to sustainable development in blockchain technology. This shift supports a more environmentally friendly approach compared to traditional proof-of-work systems.

- Scalability: Rust’s efficiency and performance improvements are expected to enhance Kaspa’s scalability, enabling the network to handle growing transaction volumes without sacrificing speed or security.

- Attracting Developers: Rust’s adoption is likely to attract more developers to the Kaspa project. Rust is well-regarded among developers for its performance and security features, which could expand the talent pool contributing to the Kaspa ecosystem and innovation.

As of press time, over 96.49% of nodes have completed the migration from GoLang to Rust.

Hash rate

Hash rate is an indicator used to measure computing power in blockchain networks. It refers to the number of hash calculations that a miner or network can perform per second. A higher hash rate means more calculations are completed per second, thereby increasing the chances of successfully mining and receiving rewards. Mining machine performance is measured in h/s (hashes per second).

- 1 Kh/s = 1,000 h/s

- 1 Mh/s = 1,000 Kh/s = 1,000,000 h/s

- 1 Gh/s = 1,000 Mh/s = 1,000,000 Kh/s = 1,000,000,000 h/s

- 1 Th/s = 1,000 Gh/s = 1,000,000 Mh/s = 1,000,000 000 Kh/s = 1,000,000,000,000 h/s

The hash rate of the Kaspa network reflects the overall performance of all miners. The current hash rate of the Kaspa network is 763.92 PH/s, with a peak of 843.44 PH/s on August 13, 2024.

Architecture

Bitcoin operates on the "longest chain" principle, ensuring the integrity of the blockchain by linking honest blocks together, thereby ensuring the security of the network. However, this approach limits network throughput and scalability due to its sequential processing characteristics.

Structural Model: Directed Acyclic Graph

Kaspa introduced the PHANTOM protocol based on a directed acyclic graph (DAG), a permissionless ledger protocol. Unlike Bitcoin's single-chain structure, PHANTOM allows references to multiple previous blocks, thereby achieving a total ordering of all blocks and transactions and ensuring a consistent set of accepted transactions. The core of PHANTOM lies in the parameter K, which adjusts the protocol's tolerance for simultaneous block creation to adapt to higher throughput scenarios. When K=0, the protocol is similar to Bitcoin's fork-free structure.

Linear Ordering

To solve the double-spending problem, Kaspa uses the GhostDAG protocol. GhostDAG evaluates each block based on its connectivity in the past set of blocks and selects the block with the highest score to form the main chain. This main chain constitutes the initial subset, and subsequent blocks vote in sequence according to this main chain. The entire network votes based on the connectivity trend from high to low.

Traditional blockchain systems often generate competing blocks when encountering blocks generated at the same time, resulting in the waste of orphan blocks. GhostDAG solves this problem by adopting a DAG structure, in which blocks can reference multiple parent blocks, forming a BlockDAG instead of a linear chain. This design supports parallel block creation, significantly improving the throughput of the system without sacrificing security.

In addition, the GHOSTDAG protocol includes sub-protocols such as block data pruning, SPV proofs, and proof of work enhancements, which together improve performance. Block data pruning reduces the size of the blockchain by discarding unnecessary data, while SPV proofs allow lightweight clients to verify the validity of transactions without downloading the entire blockchain. These innovations improve Kaspa's scalability and efficiency in blockchain operations.

Token Economics

Kaspa was launched in November 2021 through a fair launch without a pre-mine, pre-sale, or token distribution. Kaspa is fully decentralized, open source, and community-governed. The protocol has a total token supply cap of 28.7 billion, with a current circulation of 24.9 billion. Kaspa currently has a total market cap and fully diluted valuation of $4 billion.

Kaspa’s token issuance is designed to decrease year by year, with each year halving through a smooth monthly reduction. Initially mineable via CPU, the network gradually incorporates GPU and ASIC mining power. Kaspa follows a carefully designed issuance schedule to manage the growth of the token supply.

Mining Partnership

On June 26, 2024, Marathon Digital announced that its Kaspa mining operations had mined 93 million KAS, worth approximately $15 million, since its launch in September last year.

In May 2023, Marathon began evaluating Kaspa as a potential way to diversify its revenue streams while continuing to leverage its existing infrastructure and digital asset computing expertise. Following the successful deployment of its first Kaspa ASIC miners in September 2023, the company began scaling its operations. Marathon has purchased approximately 60 PH of KS3, KS5, and KS5 Pro ASIC miners, each with a profit margin of up to 95% in some cases, based on current network difficulty and KAS prices. Of these, 30 PH of Kaspa ASIC miners are currently operating at the company's own facilities in Texas, and the remainder are expected to be fully operational in the third quarter of 2024.

"By mining Kaspa, we are able to create a revenue stream that is distinct from Bitcoin and directly tied to our core competency in digital asset computing," said Adam Swick, Chief Growth Officer at Marathon. "With our existing infrastructure, unique relationships with hardware manufacturers, strong balance sheet, and team expertise, Marathon is uniquely positioned to mine Kaspa and capitalize on the high margins currently available on Kaspa ASICs. We look forward to continuing to support innovation in the proof-of-work ecosystem while expanding our position as a leader in digital asset computing."

Once fully deployed, Kaspa will account for 1% of Marathon's 1,100 MW data center portfolio.

About BlockBooster:BlockBooster is an Asian Web3 venture studio backed by OKX Ventures and other top institutions, committed to being a trusted partner for outstanding entrepreneurs. We connect Web3 projects with the real world through strategic investments and deep incubation, helping high-quality entrepreneurial projects grow.

Disclaimer:This article/blog is for informational purposes only and represents the personal opinions of the author and does not necessarily represent the views of BlockBooster. This article is not intended to provide: (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets, including stablecoins and NFTs, carries a high degree of risk and may fluctuate in price or become worthless. You should carefully consider whether trading or holding digital assets is appropriate for you based on your financial situation. If you have questions about your specific situation, please consult your legal, tax or investment advisor. The information provided in this article (including market data and statistics, if any) is for general informational purposes only. Reasonable care has been taken in preparing these data and charts, but no responsibility is assumed for any factual errors or omissions expressed therein.