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3Q22 KGF/KIR Funds Update

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TL;DR

  • This article highlights the KGF/KIR grants and payments in 3Q this year
  • 60 payments (54 grants, 5 investments, 1 others), totalling 46,668,939 KLAY

The Klaytn Growth Fund (KGF) is a fund designed to facilitate the growth of the Klaytn ecosystem. Klaytn Foundation uses this fund to offer grants or invest in the growth of various partners contributing to the Klaytn ecosystem. This article highlights the KGF/KIR grants and payments in 3Q this year.

Here is a breakdown of payments by payment method:


1. KGF Grants

KGF Grant Overview and Approval Process

Before sharing the list of KGF payments, we would like to walk you through how KGF grants are awarded. 

  1. Grant proposal submission: Projects that can potentially support the Klaytn ecosystem, improve the developer environment, or expand the Klaytn ecosystem, will submit a proposal to the KGF Review Body.
  2. Preliminary assessment: Proposals submitted to the KGF Review Body are shared with the entire Klaytn team where an open discussion is held on whether the grant amount proposed is properly earmarked to the project’s potential contribution to the Klaytn ecosystem. After a one-person-one-vote voting process, only proposals approved by 70%+ votes from the team are submitted for review by the KGF Committee
  3. KGF Committee review: Klaytn team members specialized in each evaluation category (service, operation, technology, budget, marketing) are assigned to review projects based on the categories they fall under. Each proposal is assessed by dedicated evaluators in the Klaytn team and a third-party evaluator. Only proposals approved for all categories they fall under will be qualified for grant funding.
  4. KYC/KYB and contracting: Once grant funding is approved by the KGF Committee, a person in charge of the account does a KYC/KYB check to verify the identity of a grantee and to assess the risks such as money laundering. This process is conducted by a specialized third-party agency to ensure objectivity. Only entities or individuals that pass the entire process can sign a grant agreement and receive grant funding.
  5. Grant payouts and milestone management: Even if a grant is approved, this doesn’t mean immediate payment. Each grant agreement specifies various milestones which a grantee needs to fulfil before any grant amount can be paid out. If a grantee violates the agreement, grant payment is suspended accordingly. Milestones for grants are set and managed very thoroughly to prevent any scams in the Klaytn ecosystem or unfaithful implementation of an agreement. If a grantee requests a milestone change, it needs to be re-approved at the KGF Committee.
  6. Post-grant review: It takes at least 1~2 months and up to 1 year or more for a project to accomplish an outcome depending on grant type. Each account lead in the Klaytn team analyses the performance of each project after the grants have been fully paid out. The review carries out a mandatory retrospective of what went well or wrong, serving as a foundation for improvement and refinement of the KGF grant process.  

3Q Grant Payments by Sector

In 3Q 2022, Klaytn Foundation offered 54 grants to quality projects in the Klaytn ecosystem to help them grow and expand to wider communities. As a result, a total of 13,713,799 KLAY was paid out.

Overview of 3Q KGF Project Grantees

Klaytn Foundation has decided to disclose to the community key details of grants such as payment size, date and background from 3Q 2022. You may access the full list here. Due to the confidentiality clause in the past contracts, we could only unveil the grant size of some projects in question and are now seeking to add a clause for data revelation as a way to live up to our commitment to being transparent.

In general, there is a 1~2 month lag time between grant approval/contracting and actual payouts. Hence, 3Q grantees in this article refer to projects mostly approved in 2Q or earlier and paid upon completing a milestone slated for 3Q. With worsening market conditions in the 2nd half of 2022, the Klaytn team approved fewer new grants in 3Q and decided to pause most of the grants from mid-October until year-end.

Below are the details of 3Q key project grantees by sector and our expectations for their contribution to the Klaytn ecosystem.

(1) Development Relationships & Marketing (A total of 19 grants amounting to 3,007,203 KLAY)

Developer Relationship

The No.1 goal of Klaytn is to bring in more DApps and infrastructure and achieve the growth of the Klaytn ecosystem. Thus, grants have been offered as the team believes broadening a developer network is indispensable as much as securing end users.   

  • ABGA Blockchain Gaming Hackathon
    • 668,003 KLAY equivalent to $200,000 paid on August 17
    • The grant was used to co-host a global hackathon with the Asia Blockchain Gaming Alliance (ABGA) to attract game studios to the Klaytn ecosystem in Singapore where Token2049 was also held. A total of 83 teams participated in the hackathon, and about 1,800 people visited the venue on the demo day. Hosting the event served as an opportunity to demonstrate Klaytn’s position and competitiveness to the gaming and blockchain communities and strategic partners based in Southeast Asia and Greater China. The Klaytn team is also offering technical support to onboard multiple participating projects to Klaytn.   
    • After co-hosting the event, the ABGA informed that they saw the potential of the Klaytn ecosystem and purchased more than one million KLAY from the spot markets to galvanize the ecosystem in the future. 
  • HackBoston
    • 123,991 KLAY equivalent to $25,000 paid on September 23 
    • Klaytn sponsored Hack Boston organized at Harvard University in late September. This grant was approved for the purpose of creating a presence of Klaytn among US developers and building a developer community with MIT and Harvard University.

Marketing

“Marketing Activities” of the Klaytn team encompass all of Klaytn team’s activities to raise the awareness of Klaytn and the ecosystem and secure builders and end users. As part of a concentrated effort to expand the Klaytn ecosystem, the Klaytn team has been conducting activities such as attending offline conferences as well as virtual sessions to introduce Klaytn.

  • Huobi X-Change
    • 33,401 KLAY equivalent to $10,000 paid on August 17 
    • The grant was used to host two live interviews via Huobi X-Change platform to promote Klaytn with our partner, MBX, along with an airdrop event.

(2) Ecosystem Enhancement (A total of 35 grants amounting to 10,706,596 KLAY)

Gaming (A total of 4 grants worth 1,271,341 KLAY): For the gaming sector, grants were paid to introduce gaming projects on Klaytn to more users and onboard new projects onto Klaytn.

  • Drawshop Kingdom Reverse
    • 423,575 KLAY equivalent to $100,000 paid on July 4 
    • This grant was paid to a leading tycoon-genre game in the Klaytn ecosystem, Drawshop Kingdom Reverse, and the Klaytn team is also looking at a joint global marketing opportunity.
  • KlayCity
    • 517,703 KLAY equivalent to $155,000 paid on August 17 (This project was part of the grantee list released in July and paid in 3Q.)
    • The grant was paid to co-host events such as “New Land Exploring” and “DeFi Reward” with the KlayCity team. 

DeFi (A total of 3 grants worth 1,067,456 KLAY): For the DeFi sector, grants were paid mainly for the initial bootstrapping of projects.

  • Klap
    • 651,953 KLAY equivalent to $166,667 paid on August 24
    • This grant was paid as an incentive to increase the initial liquidity of wormhole bridged assets.
  • Pangea Swap
    • 147,080 KLAY equivalent to $30,000 paid on September 28  
    • This grant was paid as a liquidity incentive for wormhole assets on Pangea Swap, and the entire KLAY-denominated grant was paid to all liquidity providers. 

NFT (A total of 9 grants worth 3,244,748 KLAY): Grants were paid to support marketing activities for leading NFT projects in the Klaytn ecosystem to show the community the potential for continuous business expansion in Klaytn.

  • Doge Sound Club
    • 494,440 KLAY equivalent to $116,730 paid on July 4 (2nd payment) 
    • 197,763 KLAY equivalent to $57,820 paid on August 11 (3rd payment) 
    • The grants were used to support the marketing activities of a representative Klaytn NFT project, DSC, including sponsoring an EDM Festival and building its metaverse. 
  • Shy Ghost Squad
    • 386,646 KLAY equivalent to $90,000 paid on July 13 (2nd payment)
    • 175,483 KLAY equivalent to $50,000 paid on August 2 (3rd payment)
    • The grants were used to sponsor Shy Ghost Squad’s exhibition during the NFT.NYC and support marketing activities in Korea. 

Infrastructure (A total of 19 grants worth 5,123,051 KLAY): These grants contributed to improving infrastructure components, such as bridge, mobile wallet, data management gateway and security system. 

  • Uppsala Wallet Crawler System
    • 114,789 KLAY equivalent to $27,100 paid on July 4
    • The grant was paid for system implementation to label suspicious transactions or wallets in the Klaytn ecosystem.
  • Dexata
    • 51,002 KLAY equivalent to $12,000 paid on July 20
    • The grant was offered to develop a user-friendly web application to look up the prices of Klaytn-based tokens and NFTs with a chart.  

Future Direction of Grant Funding 

The Klaytn team takes an active approach to listen to the opinions of the community about grant approval criteria and fairness. We constantly aim to expand a community-driven open source ecosystem and so we listen to our community as we plan our strategy going forward. From now on, the Klaytn team will be endeavouring to disclose facts on KGF payments more transparently and share the grounds for funding with the community.

The Klaytn team is also expanding at the moment. With a stronger sense of purpose to help more builders to implement a variety of ideas in Klaytn, the team will make sure to establish a more open and concrete process to build trust in the community.

Like other grant policies of layer 1 ecosystems, KGF grants are not designed to generate profit. Similar to a service contract, our grant agreement includes agreed project deliverables (milestones), and the agreed quantity of KLAY is paid only when milestones and contractual responsibilities are fulfilled within a committed timeline. 

The Klaytn team is now seeking to eliminate practices accepted under the name of “an early-stage industry” as much as possible. To this end, the team will carry out a quantitative/qualitative assessment of whether a grantee actually contributes to the Klaytn ecosystem and decisively pause payments to projects whose contribution is not measurable. Also, the team will perform an exhaustive pre/post-grant analysis of KFG grantees to maximize the positive impact on the Klaytn ecosystem and reflect lessons learned from previous grant funding in future grant approval criteria. 

Furthermore, the Klaytn team is aiming to make a grant application open to the public while raising the bar for final approval to ensure that grant payments are convincing to the community. The KGF Grant Program is always open to blockchain projects striving to get closer to the general public via Klaytn. With the redesign of the Klaytn Foundation homepage in 4Q, applications for KGF grant will be open to any projects, and once a new proposal is submitted, it will go through the evaluation and approval process described above. 

On top of 3Q KGF grant funding activities and future plans shared in this section, the Klaytn team will make sure to continue disclosing more information from this quarter and periodically share the list of KGF grants every quarter. In the long term, the team is considering changing the grant approval structure to engage much more Klaytn participants including GC in the decision-making process, which would be gradually executed in line with the growth of the Klaytn ecosystem.


2. KGF Investments

3Q Investments by Sector 

Below is the breakdown of KGF investments, another pillar of KGF funding. A total of 5 investments worth 28,955,140 KLAY equivalent to $7.2 million were made through KGF in 3Q. 

Klaytn Eco Fund

The Klaytn Eco Fund is established for indirect investments to activate the Klaytn ecosystem by leveraging KGF as a source of funding in 2Q 2022, and the gains from this fund are used to burn KLAY. VCs equipped with a regional network and expertise take responsibility as a GP and are making strategic investments for the ecosystem. As Klaytn is an indirect investor in this fund, it is not involved in each VC’s decision-making on strategic investments and remains neutral.

The Klaytn Eco Fund consists of diverse sub-funds depending on the purpose. The Klaytn team introduced the Alphanonce Klaytn Growth Fund (AKGF) as the first case of the Klaytn Eco Fund. In 3Q 2022, a total of $3 million equivalent KLAY was paid additionally to the AKGF in two rounds, and the Klaytn Universe Fund (KUF) was newly set up and paid with $3.8 million equivalent KLAY. The KUF is notable for its structure where a myriad of VCs can be delegated as a general partner (GP) of this single fund. As of now, 5 VCs in total have been onboarded, and 4 global VCs would be joining. The list below shows VCs acting as a professional investor as of late 3Q 2022 since joining the KUF and their headquarters.  

  • Factorial Funds (US)
  • Draper Dragon (US)
  • Leap (UAE)
  • Vista Labs (South Korea)
  • Edimus Capital (South Korea)

Direct Investments by Klaytn Team 

The Klaytn team has refrained from making direct investments for a long time. But as a growing number of largely successful projects in other chains including Ethereum proposed integration with Klaytn from the second half of this year, the team has decided to invest in such projects. The gains from the investments will be only used for the development of the Klaytn ecosystem, and the team is planning to provide additional benefits to the ecosystem by broadening the scope to direct investments. 

In Q3, there was one direct investment case, and the recipient is Friendly Fork project by Balancer which is ranked at #4 with a nearly $1.83 billion TVL. The Klaytn team believes that  Balancer’s success recipe will help bring in assets from third-party chains.

Through strategic investments, the Klaytn team is aiming to contribute to the growth of the Klaytn ecosystem and will share investment activities each quarter in a transparent manner going forward.


3. Other KGF Payments 

Other KGF Payments in 3Q 

Lastly, below is the KGF payment neither categorized into grant nor investment.

Vested GC Sales (Single payment worth 4,000,000 KLAY): This is the vested KLAY amount agreed to be paid to a GC member under a token swap agreement.


4. 2022 3Q KIR Payments 

3Q KIR Grants by Sector 

The Klaytn Governance Council provided KIR (Klaytn Improvement Reserve) grants totaling 4,961,733 KLAY to 11 projects.

Overview of 3Q KIR Project Grantees   

The contents of each proposal to KIR and approval status are publicly available at the KIR forum, and application for KIR grants is open at the forum. The grant amount and proposals of 3Q KIR Grantees are as follows:

  • Research
    • NetS&P Lab (KAIST, 87,742 KLAY equivalent to $25,000)
      • 8th KIR approval 
      • Research on BFT consensus protocols  
    • BaSE Lab (Sogang University, 475,557 KLAY equivalent to $97,000)
      • 10th KIR approval 
      • Research on a new consensus algorithm
    • Zkrypto (701,931 KLAY equivalent to $200,000)
      • 12th KIR approval 
      • Research on the application of zero-knowledge proofs to Klaytn
    • Distributed Computing Systems Lab (Seoul National University, 494,910 KLAY equivalent to $100,000)
      • 13th KIR approval
      • Klaytn KV Database performance enhancement 
    • Beyond Future (Soongsil University, 263,778 KLAY equivalent to $78,975)
      • 14th KIR approval 
      • Blockchain structure research for better scalability and stability
  • Education & Activity
    • Like Lion (441,239 KLAY equivalent to $90,000)
      • 11th KIR approval
      • Program to nurture Klaytn developers 
    • Code States (301,528 KLAY equivalent to $70,945)
      • 16th KIR approval 
      • Program to nurture Klaytn developers
    • Blockchain at Yonsei (25,644 KLAY equivalent to $5,210)
      • 17th KIR approval
      • Using Klip to carry out NFT projects of Yonsei University/Korea University and promote Klaytn 
  • Development
    • Soramitsu (1,143,955 KLAY equivalent to $342,500)
      • 13th KIR approval 
      • 1st open source DEX development in Klaytn 
  • Infrastructure
    • Fantrie (441,239 KLAY equivalent to $90,000)
      • 13th KIR approval 
      • Operating public end-point nodes that support external connections 
  • Audit Fund
    • Blaize Technology (709,580 KLAY equivalent to $180,000)
      • 16th KIR approval
      • Audit fund set-up with key auditors to support audit services for Klaytn ecosystem projects 

The Klaytn team will keenly pay attention to the opinions of the community to improve the KGF grant process and evaluation process and make sure that KGF/KIR helps implement a solid ecosystem infrastructure and eventually contribute to the Klaytn ecosystem. 

Thank you. 

[3Q Klaytn Ecosystem Update]
The 3Q Klaytn ecosystem updates will cover key initiatives the Klaytn team is currently undertaking in our continued efforts to achieve an optimal and sustainable Klaytn ecosystem.

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