Eric
Freeburg

Report

KIN a decentralized ecosystem of digital services for daily life

Intro

KIN is an Ethereum token that held an ICO (Initial Coin Offering) in the second half of September 2017. Kik Enterprises is the Canada based company spearheading the effort. Their primary offering is the Kik Messenger app, one of the first mainstream chat apps.

Kik's Founder and CEO is 31 year old Ted Livingston. Livingston presented his compelling ideas in a succinct and thoughtful manner before audiences at Consensus 2018, an annual cryptocurrency convention held annually in New York City.

His plan is to eschew the groupthink rampant across the cryptocurrency space. In his words

[our] only goal is to build a cryptocurrency that is used by mainstream consumers. That's it."

As he points out, it is shocking to consider that in the decade since the birth of blockchain there has yet to be even one single cryptocurrency adopted by mainstream consumers.

Livingston thinks he has the answer to this. As he often repeats; it would not take all that much for a cryptocurrency to become the most used cryptocurrency on earth. Insofar as any cryptocurrencies are used at all, this use occurs in the form of speculation.

As such, Livingston sees a massive opportunity. To tap into this opportunity, Kik created KIN and is racing to implement KIN features inside of Kik. Livingston believes that exposing Kik's users to KIN can be the beginnings of a KIN economy.

This economy would be fundamentally different then that of every other cryptocurrency in existence today. Implemented correctly, KIN will actually be exchanged for (digital) goods and services. Speculation will still exist, but this will not be the primary focus of KIN.

The KIN plan involves many moving parts. Code has to be written, users need to adopt, etc. But the key here is that Livingston has already invented something truly novel. He has devised a clever way to combine several ideas into building something bold. If he and those helping him manage to pull it off, his idea might just change the world.

Table Of Contents

ICO

Kik Interactive issued the token via the Ethereum Network in September of 2017. Kik's CEO Ted Livingston initiated the action with support from his board.

10% of all outstanding KIN were offered.

KIN 9/16 - 9/28
1T KIN Sold
For 168K ETH
Worth $50M USD

For twenty years, these 6T KIN will be depleted by 20% annually. The KIN Foundations will make these distributions to participants within the KIN Ecosystem. The Foundation will be allowed to use up to 5% of the annual distributions for it's own operations.

Blockchain Details

KIN on Ethereum

Following the ICO, all 10T KIN were delivered via the Ethereum network. These 10T KIN will be all that ever exists according to the Ethereum blockchain. Insofar as Ethereum continues to exist, these tokens will be recognizable to the Ethereum network.

KIN is an Ethereum Token, but these KIN tokens will have counterpart coins on KIN's own blockchain. Cross-chain inter-operability is possible at this point.

It is possible to lock Ethereum ERC-20 tokens in-state.

This allows for counterpart coins to exist on a separate (second) blockchain.

Ethereum has the track-record, smart contract capability, and proven security measures needed to guarantee the scarcity of a digital asset. Ether's deep liquidity (relatively speaking) is yet another advantage it has over other cryptocurrencies.

These reasons and more make it the sensible venue for token issuance. Thus KIN, the token was issued atop Ethereum

A Second Chain

However, Ethereum is entirely incapable of servicing genuine consumer demand for it's blockchain resources. Running a consumer service, at scale, on top of Ethereum is impossible.

To solve this; Kik are forking the Stellar codebase and modifying it for their particular needs. This will be the KIN blockchain going forward. It will be used for the day-to-day transactions of KIN on platforms like Kik.

By locking the token on one chain, it's counterpart coin can be spent on the other chain. This idea is more clever than it sounds. Because of this, KIN will exist seamlessly across two discrete blockchains.

To those inside of apps like Kik, KIN will be a points system used for interactions. Users will earn, spend, and transact sums of KIN inside digital economies like Kik. Little attention will be paid to the value of KIN beyond it's utility in-app. Instead it will derive value from the utility it can provide it's users.

KIN will of course exist in the broader cryptocurrency ecosystem, being traded in exchanges. It will still be bought and sold by speculators as usual.

The difference is that there is one chain for those who desire liquidity and another for those who just use the products and services integrated with KIN.

One chain with the surety and reliability of Ethereum and another chain for the speed and convenience of a consumer service.

KIN Foundation

The KIN Foundation exists to oversee the KIN Rewards Engine.

The KIN Rewards Engine

This foundation will govern and administer the KIN Rewards Engine (shortened: KRE).

The KRE's mandate is to administer KIN distributions such that they incentivize and cultivate frequent commerce between the consumers and developers that comprise two sides of the KIN marketplace.

KIN plans to incentivize commerce between users, developers, and one another by implementing a Rewards Engine. The details of which are outlined below.

In general, the plan is to measure commerce over 24H periods and then distribute KIN according to an algorithm that measures said commerce. The idea is to drive engagement and commerce, by rewarding those that actually transact in the currency.

In a way, this idea is like having a central bank that distributes inflationary dollars to the venues and individuals according to how much commerce they participate in.

In this example, the KIN Foundation is the central bank, the KRE it's board.

In the beginning, the KRE will be administered manually for obvious technical reasons. See Ethereum's DAO (Dgitially Autonomous Organization) for why this cannot be accomplished at the present time.

However, as the Ethereum blockchain matures, it will be possible to fully automate the process and, at that point, satisfy decentralization ideologues.

In general, the KIN Rewards Engine will issue a daily reward to developers based on a measure of the KIN economy inside of each digital service.

— Kin Rewards Engine RFC

Let i be a digital service eligible for rewards and Ri be the daily reward it will receive on a particular day. Then:

Ri = TDR ⋅ (SSEi/TSE)

Where TDR stands for “Total Daily Reward,” SSE for Size of Service Economy, TSE for Total Size of Economy. The calculations for these variables are described below

The goal of the KIN Rewards Engine is to economically align a large group of developers to work together to build an alternative ecosystem of digital services – an ecosystem that is both compelling and open. To achieve this goal, a simple yet non-gameable rewards algorithm is needed. Developing this algorithm will take time and will require a safe and iterative approach.

Therefore, this algorithm will initially be administered manually, in a transparent process. As new learnings occur, the model can be iterated and fine-tuned, in full transparency and cooperation with the community. The ultimate goal is to make the administration of this algorithm fully automatic and decentralized, guaranteeing developers a fair, open, and lucrative playing field on which to build and grow their digital services.

KRE RFC pdf

SDK

Software Development Kit

KIN also needs to build an entire SDK from the ground up.

An SDK is A Software Development Kit (SDK or devkit) is a set of software development tools that allows the creation of applications for a certain software package, software framework, hardware platform, computer system, video game console, operating system, or similar development platform.

e.g. the iOS SDK enables developers to build apps for the iPhone and iPad devices

This SDK will be the portal thru which developers can reach the mainstream consumers that Livingston wants to target.

Kik itself will serve as the testbed for this SDK.

Developers from KIN sponsored Hackathons have already begun posting their creations to Youtube via the KIN Foundation page. Some of the prototypes showcase extremely tight integrations that could be a clue to how far along this project has already come.

The SDK allows third-party developers to build products and services for the KIN ecosystem. Without it, Kik will be the only team able to produce content for the KIN ecosystem. To understand the importance of this, you need to think of what the iPhone and Android platforms would look like if only Apple and Google could build apps. Needless to say, there would not be the millions of diverse offerings that are available to users of these platforms today.

Contrarian Perspective

Livingston's take on the crypto landscape is a breath of fresh air. At Consensus 2018 he wondered about why cryptocurrencies have failed to achieve even one example of mainstream use.

One way that we are different is that we are not focused on the technology, we are not focused on the announcements, we are focused on actually trying to build a cryptocurrency that is used by mainstream consumers. That's it.

— Livingston

Livingston notes that it feels like no one is worKINg to solve the only problem that really matters. No one has figured out how to get mainstream people to use cryptocurrency.

Even worse, as Livingston points out, the crypto community seems intent on trying to compete with fiat currencies like the US Dollar.

As he points out:

The world already runs on dollars! The physical world runs on dollars, it just does. And it works pretty well actually.

Livingston is laser focus on the digital world and only the digital world. KIN is singularly focused on building a cryptocurrency for the digital economy budding up around us.

He has no interest in solving for: "How do we get people to pay for their morning coffee with Bitcoin?"

Ted Livingston is not exactly a cryptocurrency neophyte; he was one of only a handful of people in attendance at one of the earliest Bitcoin conferences ever held in 2012.

He started Kik and oversaw it during an unprecedented period of growth in which his app (Kik) was downloaded by more than 1 Million people in the span of two weeks.

KIN Marketplace

Three Sided

Consumers, initially, can come from Kik's pre-existing userbase. Kik is taking steps to enable KIN features for their users. Kik users will probably be given sums of KIN at launch to get things started.

Capitalists will participate via speculation on the token in the open market. Like many ICOs, KIN can be traded in various venues 24/7.

Developers, in this context, means individuals and firms that create digital content for users (e.g. writers, graphic artists, chatroom moderators, and other digital entrepreneurs). These developers will sell their services, software, and products in apps like Kik. They will receive KIN from users.

Kik Points

Kik has experimented with a points system (Kik Points) in the past. It appears their efforts were met with some success. In fact, it appears this success is what sprouted the bigger idea in Livingston's mind.

Due to a prior success, and the learning that comes with it, Kik is well suited for the challenge it faces. But again, it is not unreasonable for them to believe that their users might embrace the new KIN functionality which is being closely modeled after Kik Points in several ways.

Kik users can probably be introduced to KIN via some sort of in-app giveaway where users claim some KIN (for free) to get started. For insignificant (USD) sums, Kik can seed KIN into the hands of it's users.

Competition

Kik appears to face very little competition. In some ways, their approach cuts against some of the deeper (entrenched) beliefs of your average crypto-enthusiast.

Livingston's path will ensure the need for certain compromises and concessions. But his mission is to get a mainstream audience using a cryptocurrency, not to build the most advanced blockchain that no one uses.

In his willingness to compromise where necessary, he may be able to deliver a valuable consumer experience for those who use KIN. He understands that the blockchain aspect need only to work just well enough at this stage.

At Consensus 2018, Livingston alluded to how certain aspects of the ecosystem will indeed, be centrally managed.

Livingston and his team of developers are racing to implement the first cryptocurrency to be used by mainstream consumers.

We realized you could create a cryptocurrency, use your community to drive demand for said cryptocurrency. And that by driving demand for that cryptocurrency you drive up the price of that cryptocurrency.... And that this would be a fundamentally different way to monetize, to compete, and to build a consumer service.

And then.... we realized.... we could do this, not just for us, but we could this for the 99% of other consumer services who need another way as well.

— Ted Livingston

Conclusion

Livingston seems to be singularly focused on mainstream users. It's about time. That he has a couple of very clever insights which he might be able to combine into a success is even better. The crypto-establishment appears to have a large blindspot here and it will be interesting to see what he and his team can do.

Because Mr. Livingston is able to clearly articulate his vision, speedy execution is becoming more imperative. A year ago, he had the luxury of everyone just not getting it, that period is coming to a close now—thanks in no small part to his succinct articulations.

4/17/2018


$0.000253 (USD)
Ξ0.00000036 (Ethereum)
Strong Buy