Friday, February 3, 2023

One Crypto, Two Blockchains: Kin Will Run On Stellar and Ethereum Indefinitely Says Dev Team

One Crypto, Two Blockchains: Kin Will Run On Stellar and Ethereum Indefinitely Says Dev Team

The team behind chat app Kik’s native cryptocurrency “Kin” announced recently it would transition away from Ethereum and onto Stellar. It appears that the Stellar network component of the ecosystem is now live. However, instead of completely switching over to Stellar, the company has decided to pursue a dual blockchain model that will continue to use Ethereum. We spoke with one of the devs for the Kin ecosystem about this development, so read on as we go into what’s going there.

Also see: Number of Lightning Network Nodes Overtakes Bitcoin Cash Nodes

Join the Bitsonline Telegram channel to get the latest Bitcoin, cryptocurrency, and tech news updates:

Refresher – What’s Going on With Kin?

Kin is the cryptocurrency project created by the company responsible for the popular mobile messaging app, Kik. A few months ago, the Kin Ecosystem Foundation made a surprising announcement: after holding a successful ICO for an ERC-20 token, they would look at moving onto the Stellar blockchain.

Their reasoning was that Ethereum was not fast enough, and also too expensive to operate on in terms of transaction fees. Stellar, on the other hand, they claimed was both fast and lower-cost.

Kin ecosystem foundation

This led many to suspect a swap would occur, and all ERC-20 tokens would eventually be replaced with Stellar ones. However, according to a few recent blog posts and our comments from the dev team, it now appears that Kin will not be doing away with Ethereum entirely. Instead, they will make use of a system that uses both blockchains. And each one will be used for a different purpose.

With this information in mind, we wanted to know if this dual blockchain arrangement would be permanent, or if it is a temporary arrangement that will at one point end. Our source on the Kin dev team told us:

“Stellar and Ethereum will operate side-by-side indefinitely. Ethereum is essential for asset management and liquidity, while Stellar resolves digital services’ basic needs for scale, faster confirmation times, and lower transaction times.”

This raises the questions: what will each individual blockchain be used for? Will one take precedence over the other, and will there be any interoperability between the two?

One Currency, Two Blockchains

For this we had to look into the official blog posts released on the team’s Medium page.

First, it appears that the tokens will exist in two separate forms, and will not simply be mirrored on both blockchains. Instead, the tokens are being referred to as Kin1 and Kin2. Kin1 assets are the original ERC-20 tokens. Kin2 will be on the Stellar blockchain.

During what the company calls phase 1, which is on now, the Kin2 tokens will act as a “unit of account” for Kin1 tokens. The Stellar tokens will be created to the tune of around 900 billion in total. The company says that they will not “affect the value of Kin1 tokens”.

Kik logo

Next, the Kin2 tokens will “only be awarded by the Kin foundation for use in ‘earn’ or ‘spend’ experiences on the Stellar network”. It is only in phase 2, which will occur sometime between the second and third quarter of this year, that the tokens will be “unified” over both networks.

We asked the devs if end-users would notice anything during the transition. They told us no, and:

“Since you can leave your tokens on Ethereum, nothing will change for users as the process happens.”

Can Kin1 and Kin2 Ever Be Exchanged for Each Other?

This situation is undoubtedly quite confusing, especially for those of us that perhaps don’t fully understand the goals of the Kin project to begin with. We certainly found ourselves in that camp. So we asked the developers, will it ever be possible for those who hold the Ethereum tokens to exchange them for the Stellar tokens? This is what the dev team told us:

“The swap mechanism will be complex to develop and likely require at least a few months of development work. That means the “hybridized,” swap-able Kin1/Kin2 tokens will not exist until Q3 2018 at the earliest.”

This transition for the team to use the Stellar blockchain is still quite revolutionary. So far, the majority of new projects that exist as a token on another network have done so by and large on Ethereum, and to a lesser extent on other blockchains like NEO and Ethereum Classic.

This announcement was a major source of excitement for Stellar, and may have been responsible in part for increases in price that Stellar tokens saw on open trading in recent months.

If Ethereum transaction fees continue their general upward trend, we may see more projects looking for alternatives in an effort to provide lower-cost transactions. For now though, this dual blockchain experiment will certainly prove to be an enlightening one that can perhaps offer guidance to other Ethereum projects considering jumping ship.

Is a “dual blockchain” actually practical for the purpose? Let’s hear your thoughts.

Images via Kik

Bitsonline Email Newsletter