After the merge and transition of Ethereum to the proof-of-stake (PoS) consensus mechanism last year, the market is not optimistic about the future of proof-of-work (PoW) coins. It is generally believed that the PoW mechanism has severely limited scalability on the chain even with icon projects like Bitcoin. As the Bitcoin Ordinals protocol gained popularity earlier this year, many developers have turned back to PoW to develop smart contracts. Meanwhile, the market began to take notice of Kaspa, the fastest and most scalable Layer1 project built on the PoW consensus mechanism.

About Kaspa

Kaspa aims to solve the blockchain trilemma by balancing decentralization, scalability and high performance. The Kaspa community prioritizes decentralization most, which is fundamental to the crypto community and blockchain technology. Therefore, the community is also devoted to building itself into a decentralized autonomous organization (DAO) which adheres to the PoW consensus mechanism.

Technically, Kaspa was founded by Yonatan Sompolinsky, an early developer and key contributor to Ethereum. Kaspa also implements the GhostDAG protocol (enhanced version of the PHANTOM protocol) designed by Yonatan, and follows Nakamoto Consensus. This enables Kaspa to achieve a higher transaction per second (TPS) without compromising security.

The current Kaspa mainnet generates one block per second, with each block able to contain more than 400 transaction records. The current goal is to realize 32 blocks per second (BPS), with an ultimate goal of 100 BPS. Kaspa can process up to 18 blocks in parallel. While enabling parallel blocks, it also connects honest nodes through sorting by greedy algorithms, ensuring instant confirmation and network security.

Economic Model of Kaspa

Similarly, Kaspa’s economic model is designed to be decentralized. Therefore, Kaspa is issued in a similar way to Bitcoin. Without any pre-mining or pre-sale campaigns, all tokens can only be obtained through mining. In November 2021, the Kaspa mainnet was officially launched. Kaspa boasts a 100% fair distribution of tokens. The maximum supply of Kaspa is capped at 28.7 billion, which is expected to be mined out within 186 months. In other words, the circulating supply will be released around April 2037.

In the spirit of Nakamoto Consensus, the Kaspa community has adopted a deflationary monetary policy. During the first six months after the mainnet launch, Kaspa will generate 500 KAS per second, with 1,314,900,000 KAS to be issued each month.

Source: Official website of Kaspa

By the seventh month, the monthly supply of KAS will be cut by 12%. Moreover, the monthly issuance of each subsequent month will be the KAS issuance of the previous month*(1/2)^(1/12), thereby enabling the stable halving of the total supply every year.

Formula of monthly issuance of KAS

Source: Official website of Kaspa

With a circulating supply of more than 18 billion KAS as of April 21, 37% of KAS still remains to be mined, leaving much room for miners.

Market Data of KAS

Currently, KAS has a market cap of nearly $460 million, ranking tenth among all PoW coins. But in the eyes of miners, KAS is worth much more.

As a popular crypto for GPU mining, the KAS network has a hashrate exceeding 1.14PH/s. By contrast, ETC, which ranks fifth by market cap, currently has a hashrate of 115TH/s. In other words, the network hashrate of KAS is nearly 10 times that of ETC. As shown in the figure above, KAS’s current market cap is only 16% of that of ETC.As most miners recognize the future value of KAS, many GPU miners are willing to transfer their hashrate to KAS.

Source: minerstat

According to CoinEx, the KAS price soared by 554.1% in the last six months and 293.74% in the last three months, making it one of the stablest coins in the past six months.

Source: CoinEx

Overall, Kaspa is a public chain with a solid technical foundation and also inherits the spirit of Bitcoin. Besides leveraging the decentralized, secure architecture of Bitcoin, it makes better technological innovation in terms of scalability. Recently, Rusty Kaspa Alpha has been released. The Rust rewrite could not only improve Kaspa’s performance but also enable the development of Layer2, smart contracts, and DeFi. In addition, the community is diversifying the daily application scenarios of KAS.

All these efforts have paid off as Kaspa has won high recognition from the market and numerous miners. But will it emerge as a new PoW leader as expected by most miners? Still, it needs to be put to the test of the market and applications.

Users could log in CoinEx to trade KAS tokens: https://www.coinex.com/info/KAS

Disclaimer: This article is for reference only and offers no financial advice.

A New PoW Leader? Guide to KAS Economic Model and Market Data