Analysis of Kakao & Implications of the Relationship between Kakao and Cosmochain

News about Kakao Investment’s investment in Cosmochain on August 10th and the official announcement of a partnership between Cosmochain and Ground X on September 4th triggered holders’ expectancy and curiosity about Cosmochain. According to experts, a partnership between Ground X and Cosmochain is a signal of Kakao’s entrance into blockchain-related business. It is meaningful because Cosmochain’s service is highly likely to be inserted into Kakao’s platform, as ‘Kakao Beauty.’

The Most Popular Korean SNS Platform, Kakao

Kakao, the most popular Korean social network service, started to evolve along with the spread of the smartphone in 2010. It expanded its service to the lifestyle area and firmly solidified its own revenue model. Recently, Kakao is expanding its border even to blockchain area. Kakao’s new journey to blockchain business is accompanying with Cosmochain.

Kakao’s history

2006: Kakao’s forerunner, IWILAB Corp. was established.

2010: Kakao 1.0 — It changed its name to Kakao Inc. On March, it launched Kakao Talk and started to spread widely as a mobile SNS in Korea.

May 2014: It merged with Daum, a popular Korean Internet portal company. Afterwards, it established a joint corporation, Daum Kakao.

September 2015: After it changed its name to Kakao again, it expanded the platform in order to create a profitable revenue model by combining contents and commerce together.

March 2018: Kakao 3.0 — Kakao clarified its plan to target the global market through contents and blockchain business.

August 2018: Kakao Investment executed investment in Cosmochain for the first time among ICO projects.

September 2018: Ground X, a subsidiary of Kakao G (Kakao’s blockchain holding company) announced its plan to launch blockchain platform ‘Klaytn’ and a partnership with Cosmochain as the first service provider.

Background for Kakao’s business expansion — the limitation of Kakao 1.0

Although it has a high presence as the most popular Korean mobile SNS, there was no comparative advantage in the global market. There was an assessment that it is hard to generate revenue with a single SNS platform. Kakao Talk has 90% of the market share among Korean messenger applications. The number of users in Korea is more than 50 million. Therefore, the potential expansion is restricted domestically. On the other hand, the number of foreign users is around 48 million. However, the global expansion reached the level of stagnation. That means, it is difficult to exceed the influential power of WeChat in China, and Naver’s LINE in Japan, which are the major mobile social network services specialized for each country.

Background of Kakao’s business expansion: Kakao 2.0

Maximizing profit within a limited pool of users and transferring various services to the platform, Kakao is making achievements to become a popular lifestyle platform.

Started as an SNS, Kakao has constructed a platform ecosystem which is so closely related to every-day life that can cover daily life by linking contents(game, webtoon, emoji, and music), commerce(gift), mobility(Kakao Taxi, Kakao Driver), and fintech(Kakao Pay) within a platform.

The CEO Jihoon Lim mentioned, “Kakao will evolve into a platform that connects not only a person to a person but also contents and business” and “We are trying to intensify Kakao Talk to the point that having only Kakao Talk enables a convenient life for users.”

Kakao will put effort continuously into the expansion of a commerce ecosystem that accounts for the majority of the total revenue. Since there is nothing confirmed for Kakao Beauty category, there will be many opportunities to beauty platform business owners. In this point, establishing a close, cooperative relationship with Kakao can lead Cosmochain to the advantageous position for that chance.

While texting on Kakao Talk, users can be naturally exposed to Cosmochain’s app ‘COSMEE’ in daily life. In the future, it is likely to become a must-have app in Korea.

The direction of Kakao’s business: Kakao 3.0

Kakao is trying to expand its opportunities and target the global market through synergy from future core technologies.

The synergy from the Fourth Industrial Revolution-related technologies, such as IoT, AI, and cloud-based system, will increase Kakao’s opportunities for growth and global business.

Kakao will maximize the synergy by associating the Fourth Industrial Revolution related technologies with the existing platform. For example, combined with an existing music service Melon, ‘Kakao Mini,’ an AI speaker released on November 2017, increases user convenience. Kakao’s AI platform ‘Kakao I’ is open to external partners for the purpose of MOUs with major Korean companies in order to let the public access to Kakao everywhere and every moment in daily life.

Furthermore, the development of blockchain platform will contribute to the construction of healthy blockchain ecosystem and secure momentum for global expansion. For this, a blockchain subsidiary ‘Ground X’ was founded recently. The former CTO of Future Play, Dr. Jaeson Han, was appointed as the CEO.

If AI, robot, and IoT are combined with original services of Kakao Talk, user convenience will be improved greatly and Kakao’s influence will also be magnified.

Kakao and Cosmochain

The meaning of Cosmochain to Kakao

As mentioned above, in terms of constructing a lifestyle platform (Kakao 2.0) and expanding globally through the technological convergence (Kakao 3.0), Cosmochain is the strategic partner for the future business expansion. Kakao Investment executed investment in Cosmochain with billions of won for the first time among ICO projects. Kakao Investment has a characteristic different from Kakao Ventures.

Utilizing both Kakao’s resources and outer resources(LP), ‘Kakao Ventures’ focuses on developing various start-up companies related to advanced technologies, game, and services in the ICT and SW area. On the other hand, Kakao Investment only utilizes Kakao’s resources and proceeds investments in real-life services and basic technologies for innovation. It also focuses on investment in projects that are related to the expansion of Kakao’s platform ecosystem.

Another reason that Kakao Investment’s investment increases the possibility of transferring Cosmochain’s service to the ecosystem of Kakao’s platform is the governing structure of Kakao. Jihwan Park, the CEO of Kakao Investment, is also leading Kakao G, the holding company of blockchain-related subsidiaries. Kakao G is the holding company specialized in investment to promote global blockchain business. It aims to find various services that can operate on a blockchain platform. As a focal point for blockchain business, Ground X focuses on developing a blockchain platform. Recently, it announced its plan to launch a blockchain platform ‘Klaytn’ and signed the first partnership with Cosmochain.

Given that it is possible to predict the direction of the investment company that is run by the CEO of blockchain subsidiary, the investment of Kakao Investment implies that Cosmochain is the main partner for expanding its blockchain business.

Kakao’s Ground X & Blockchain “Klaytn”

Kakao revealed ‘Klaytn,’ the main net platform as the first project for the blockchain business. After testing for 6 months, it will be officially launched in the first half of next year.

Ground X, Kakao’s blockchain subsidiary, developed the Service Oriented Enterprise Grade Public Blockchain Platform. As a result, Klaytn, the main net like Ethereum or EOS, will be launched officially to the public and open to DApps in the first quarter of next year.

In short, ‘main net(platform)’ is a ground where new blockchain services can be developed on. For example, Ethereum and EOS are the main nets. On the contrary, ‘DApp’ is a blockchain service built on blockchain platform. Users can use DApps such as Cosmochain in their daily routine.

Klaytn, running through a test net currently, is looking for partners for ten different categories for testing for the sake of platform optimization through adding DApps later. Kakao is currently in the process of signing partnerships with potential service providers for each category. Cosmochain is the first service provider under the beauty category.

Based on this partnership, Cosmochain will plan to develop its service on Ground X’s test net which will be launched soon. The partnership is currently underway for the purpose of reflecting the actual needs of potential service providers into platform development process and constructing a pre-emptive platform ecosystem with competent business owners.

There is much attention towards how Cosmochain’s service will perform in a blockchain ecosystem that Kakao will build through this partnership.

Naver vs. Kakao

Naver, another popular Korean messenger platform, is also in preparation to expand its business to the blockchain. Establishment of exchange, issue of cryptocurrency, and development of the main net platform back up the fact. Naver entered into blockchain business by launching ‘BITBOX,’ a cryptocurrency exchange, via Japanese affiliated company LINE on July. Moreover, it also presented its main net platform ‘Link Chain’ and a compensatory coin LINK, which will be given out for participation according to the level of contribution in services that will be open through ‘Link Chain.’

Although there is a difference in areas that each platform has advantages, both Kakao and Naver show a similar pattern and they are underway at the same speed. Ultimately, it depends on how each company can activate a platform in connection with contents and DApp services.

Naver(LINE) has a strong network effect due to a wide range of market with multinational users from Japan and Southeast Asia. On the other hand, the advantage of Kakao is the firm base centered on Kakao Talk. This base is for services which can work on cryptocurrency-based blockchain platforms, such as mobility, stock finance, and UPbit. Both platforms are expected to be stronger than any other main net such as Ethereum and EOS. The key point of a match between two is depending on who can have a DApp with more users in reality. LINE will launch two DApps in near future and even plan to launch more than 10 DApps within the first quarter of next year. Therefore, it is likely to have a partnership with Cosmochain.

Cosmochain is an ICO project that got investment from Kakao for the first time and the first partner of Klaytn, Kakao’s blockchain project. Please support Cosmochain, which has a big potential for growth.

For more details about Cosmochain and COSMEE, please visit the websites below.


※ The contents above contain information subject to change or yet to confirm under the contract. Also, It serves no purpose of recommending or attracting investment in Cosmochain project and is exclusively for sharing information. Accordingly, any results from making a decision based on the contents as a reference are the responsibility of the decision makers themselves. In other words, the Cosmochain Team holds no legal responsibility for any damages, losses or other results.

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