On January 16th, the Finschia Foundation proposed the [FGP-23]Finschia x Klaytn Mainnet Merge governance proposal to the governance and community, outlining the mainnet merge plan with Klaytn. While the sudden proposal surprised many, it quickly gained attention through various media outlets and social media platforms, sparking significant interest from the public. For approximately a month, the foundation provided explanations of the merge proposal, leading to the vote on February 15th, which passed, marking a new leap forward with Klaytn.

 

Thanks to the support of the community, we have been able to start launching the merged mainnet of Finschia and Klaytn, enabling us to establish Asia's leading Web3 governance. We sincerely appreciate your support. The Finschia Foundation will endeavor to meet your expectations jointly with the Klaytn Foundation.

 

For additional information, including the Finschia x Klaytn mainnet merge plan, please refer to the link below:

 

• Initial Guidance on Finschia x Klaytn Mainnet Merge
• Addendum for Finschia x Klaytn Mainnet Merge Proposal 
• Supplementary Documentation on Project Background and Effects (EN)
• Approval Notice for the Merger Proposal 
• [Article #1] Crafting the Core of Project Dragon’s DeFi Ecosystem
• [Article#2] Project Dragon: Responding to Institutional Demand

✥ Please note that the merge proposal is currently referred to as 'Project Dragon' and may be subject to change during the full-fledged merge process.

 

Finschia & Klaytn Merge Roadmap

 

With the approval of the recent vote, both the Finschia and Klaytn foundations are set to move swiftly to realize the roadmap (image). Initially, the two foundations will establish a task force (TF) by the second quarter of this year to facilitate a chain merger and establish a unified foundation in Abu Dhabi. Subsequently, to ensure efficient operation, the foundations will establish a unified governance framework and transfer respective organizations and tasks to the integrated foundation. Additionally, the boards of directors will participate equally from both Finschia and Klaytn, jointly overseeing operations. Based on this, the two foundations aim to proceed with the Finschia & Klaytn merge roadmap.

 

Finschia Community Offline Meetup

 

Since the proposal of the Finschia x Klaytn mainnet merge, there have been many opportunities to engage with the Finschia community. Particularly, on February 6th, we hosted a Finschia Community Offline Meetup with FNSA holders at Lotte Hotel Jamsil. It was a valuable time spent with our holders, although we regretted not being able to accommodate more participants due to physical space limitations. To those who couldn't attend the meetup, we conclude this newsletter by sharing the key points mentioned by Woosuk Kim, a director of the Finschia Foundation.

 

✥ The tone/manner and nuances of the content below have been preserved closely to the original content spoken by Woosuk at the meetup.

 

> Why Integration with Klaytn is Necessary Now

I believe the process of sifting through Layer 1 projects is intensifying.

 

When we look at the top 15 projects, excluding Ethereum, over the past 6 to 18 months, we observe continuous fluctuations in rankings. Projects like Sui, Astar, and Aptos, which you may have heard of, are all experiencing the same trend. It's a market with significant volatility, where rankings can change rapidly within a short period. Thus far, I've considered it a market where creating any momentum can lead to substantial growth opportunities.

 

However, if you ask, "Will this trend continue? Will it remain an opportunity-rich market two or three years from now?" I don't believe so. With the Bitcoin ETF approval serving as a catalyst, we anticipate an influx of more capital, leading to market maturation. As the market matures and the number of providers and users increases, the weeding out process will occur. We'll see the phenomenon where the top 1 or 2 positions become more dominant while the 3rd and 4th positions fade away. I believe similar trends will emerge in the blockchain Layer 1 market as well.

 

> Advancing Towards a Web2 & Web3 Dual-Track Strategy Through Integration with Klaytn

When it comes to whether Finschia has been doing things wrong, I don't think so at all. Especially for those who have been supporting Finschia, you might know that there are many illusions in the on-chain metrics and a lot of wash trading going on. Things like Inscription aren't actually used in real life, but it's still a reality that market capitalization grows, becomes viral, and an economy of scale is created based on such metrics.

 

Our strategy for mass adoption is necessary for the future. However, guaranteeing short-term growth through this strategy can be really difficult. Taking gaming as an example, starting this year, when trading items in various games, not only crypto game users but also many more general users are expected to join. However, the number of traders will be much lower, and the average revenue per user (ARPU) will also be much lower. The crypto market is currently a market where a thousand people trade 10 billion won or even 100 billion won, but it won't be the same for regular games or mass markets. The average ARPU for regular services is likely to be between 100,000 and 1 million KRW. Of course, there will be users trading high-priced items, but the reality is that the majority trade things averaging around 100,000 KRW. These users will be coming in large numbers. So, even if we succeed in mass adoption, there's uncertainty about how it will reflect in on-chain metrics.

 

You might have thought about this at least once. "Even though LINE NEXT received 180 billion won in investment, onboarded SEGA, and announced cooperation with Naver before, why hasn't the price of FNSA changed?" I believe it's because we haven't been effectively creating and communicating narratives tailored to the crypto scene, leveraging on-chain metrics.

 

So, our current strategy is essential for transcending the limitations of existing Layer 1 projects and achieving significant growth in the future. However, it's also true that it's uncertain how long it will take for this strategy to be recognized and whether it will guarantee short-term market capitalization or profit. From this perspective, I've been thinking a lot about how to formulate a Web3 crypto strategy since last year, regardless of this integration.

 

We can internalize this on our own. I've thought about hiring more talented individuals or even entirely outsourcing operations, marketing, and strategy to well-known Web3 companies. However, it wasn't easy due to time constraints and various practical difficulties, and while continuing to search, including for responses to various market changes, we began to consider the integration with Klaytn.

 

Klaytn has been solely focused on Web3. Although Klaytn had the backing of Kakao, it didn't invest as much as us in products from a mass adoption perspective. Klaytn hasn't been continuously discovering or releasing SDKs for companies like we have. So, they don't have many assets in this area. Instead, Klaytn has been focusing more on laying the foundation for crypto infrastructure as a public blockchain, onboarding experimental projects, and inscriptions. Thus, they possess more assets, know-how, and specialized organizations in the Web3 domain.

 

I firmly believe that we can achieve greater growth in both the short and long term only by having both Web2 and Web3 aspects. I believe that integration can make this possible. Our strengths and advantages lie in models suitable for general Web2 companies or category-wide expansion and products for ordinary users, which have created a continued bias in this direction. Conversely, Klaytn has developed a bias towards the opposite side.

 

Many teams, including Klaytn and other mainnets, are contemplating adopting the advantages and strategies that Finschia possesses. There are many considerations regarding products based on mass adoption perspectives or middleware. What's lacking in Finschia right now are Web3-native strategies, and even if we achieve results this year according to our existing strategy, I have concerns that due to these reasons, market capitalization may not increase. If that happens, I might just keep these concerns to myself and move on, but I don't think that's the right approach. I believe it's my role to develop momentum and strategies to overcome this.

 

> Background on Providing a New Integrated Mainnet with EVM and CosmWasm Compatibility

There's often the question of "Why bother integrating with Klaytn to implement EVM* when you can do it with CosmWasm*?" It's a valid question. Indeed, we've been researching and developing such solutions ourselves. There are already several solutions available. However, we believe that higher levels of compatibility than what currently exists are necessary. In the blockchain market, we anticipate that both CosmWasm and EVM will coexist, and there will continue to be demand for both technologies. With years of development experience on both sides, we believe that we have the expertise to integrate them more tightly, thus creating a clear competitive advantage.

 

*CosmWasm: A platform that allows smart contracts to operate on blockchains built using the Cosmos SDK.

*EVM: Ethereum Virtual Machine, which executes code written for Ethereum.

 

FNSA Overview