Kadena — generational wealth building opportunity

13 min readJun 10, 2020

Kadena is a live, full-service smart contract platform and the world’s first scalable, sharded, layer-1 Proof of Work public blockchain.

There is not much logic in crypto. You can have a great technology but it can stay undiscovered by the market for months while people keep buying extremely overvalued projects that are just empty shells, essentially scams. In the end they may lose their investment because the team and big players will unload their massive token allocation on them.

You have to think for a moment, is it possible that in the current crypto market there is a mispriced project that you can ride as a wealth transfer vehicle? Literally invest a moderate amount of money now and wake up in a few months on a completely different level? Where you won’t be able to recognise your portfolio anymore?

Some of the usual reasons for crypto projects to remain mispriced and undervalued for long periods of time are listed below:

They are listed on less reputable exchanges while the team is working on official listing with a top tier exchange but it takes time to integrate new tech
Team is not allowed to actively promote themselves mostly due to legislation and regulatory compliance (e.g. SEC) so project is forced to grow organically without any marketing benefits
A sufficient number of investors and communities must get to know the project for it to gain network effect, thereby reaching an inflection point where new communities, investors, partners, integrations, exchanges and other entities are enticed to interact with and ultimately accept the project as valuable

Does Kadena match these points? Let’s see.

Was it unexpectedly listed on a less reputable exchange without any consent from or consultation with the team? YES.

It’s listed on Hotbit: https://www.hotbit.io/exchange?symbol=KDA_USDT

Currently trading at 60% discount versus the ICO price.

Is Kadena very serious about laws and compliance with SEC? The CEO is a former SEC employee! YES.

Are there countless crypto twitter paid accounts promoting it? NO. Is it listed on any Tier 1/reputable exchange yet? NO. Did it reach it’s inflection point yet? Definitely NOT. Is it fair to assume that not enough people know about Kadena yet and there is an ever growing pool of investors out there waiting to jump on board? Definitely YES.

People often ask me, if Kadena is so good and their tech is as groundbreaking as it sounds, then why is it only listed on a low tier exchange and barely anyone knows or tweets about it?”.

What is my answer to them?

When Kadena gets listed on a few top tier exchanges and many big crypto twitter influencers and and paid groups discover it, we will emerge from the shadows on an entirely different price level. Thats’s Repricing in a nutshell! Would you rather buy Neo now or Antshares before it became Neo? Would you rather buy ETH pre ETC fork or now? Being an early adopter pays off, it does require vision and hard work. It’s not easy to see value where others see red flags that simply do not exist. Many also spread misinformation based on a lack of due diligence and proper research principles

Why is Kadena tech mostly undiscovered and flying under the radar for 99.9% of the crypto communities as well as the wider investor circles?

When you have 99.9% of the market unaware about an investment and potentially waiting to join it means that your investemnt reached only 0.1% of it’s potential. I know many scam Uniswap projects that got more recognition and are trading at higher market caps than Kadena.

Liquidity in crypto is abysmal beyond the top 30 cryptoassets. The median sized fund can’t build a position without moving prices significantly on exchange. This means there’s less sophisticated price discovery the further you go down the market cap list.

This paves the way for rapid re-rating when liquidity does pick up. Retails or small funds can front-run big institutions in buying cheap assets. Compare this to VC, where access is difficult and deal flow is edge, and retails can’t buy till the company goes public.

The common lifecycle:

A strong project is mispriced

> Asset is thinly traded

> Catalyst for re-rating

> Retails get in and price goes up

> Volume + liquidity

> Larger traders and funds get in

> Price goes up again

> Price corrects to re-rated level

Inefficiency = mispricing = alpha in crypto

Signs:

Strong fundamentals
Vocal community
Measurable traction
Low liquidity + VC ownership Bonus: Private round valuation set in bear market, or by traditional VCs (lower appetite for token valuations due to anchoring to equity valuations)

Kadena LITERALLY matched ALL of the above.

Identifying what is mispriced is difficult as there is no agreed upon way to ascertain fair value.

Important to note that illiquid doesn’t mean mispriced, and mispriced doesn’t mean undervalued. It simply means fewer parties are participating in price discovery, making it less efficient. It can work both ways.

Funds or whales don’t want to get involved with thinly traded tokens on exchange because of slippage, and if liquidity doesn’t pick up they’re stuck. That’s partly why projects with strong fundamentals re-rate quickly to the upside once volumes become sufficient.

All in all, I think there’s massive inefficiency in the way KDA is priced. This could lead to rapid re-rating as liquidity picks up (from listings) and larger players come in, which fuels price growth that draws in more speculators.

Kadena circulating and total supply

When people talk about the disproportionate circulating versus total supply of Kadena, I like to compare these with Algorand, Hashgraph or Handshake.

Let’s look at their circulating supply:

HNS — 277 million coins circulating out of 2.04 billion total!

ALGO — 771 million circulating out of 3.3 billion!

HBAR — 4.48 BILLION circulating out of 50 billion!

Given this, concerns and criticism over the fact that KDA has 1 billion total circulating supply is mostly unfounded in my opinion. Furthermore, KDA’s total supply will only be reached in the year 2120!

Kadena currently has 2% circulating supply, 20 million coins. You can check it here: https://explorer.chainweb.com

So let’s break it down:

10% of supply is pre-sale investors, team incentive, future token sales, advisors, community support etc.

20% is platform reserve.

70% is mining!

Kadena is a PoW coins with a smooth inflation curve over 100 years.

By 2024, the total supply of KDA will be around 350 million, and from that point, new coins will only be issued via mining.

If you look closely at the graph above you will see that Kadena will match CURRENT Algorand circulating supply in the year… 2050! ALGO market cap is $180 million, Kadena only $7 million. 25x to go.

I asked Will Marino (Kadena’s CEO) about the supply concern and he kindly replied:

Private sale investors of Kadena by Crunchbase:

https://www.crunchbase.com/organization/kadena-llc

These early investors bought tokens at $0.5 and $0.75 over 2 years ago and they will be fully unlocked in December 2020.”

Presales: To date, Kadena has completed a SAFT Round 1 and Round 2. The SAFT Round 1 sold 4.5 million coins at $0.50 per coin in Q4 2017 and the SAFT Round 2 sold 17.2 million coins at $0.75 per coin in Q1 and Q2 2018.

Technology and fundamentals

Main-net launched January 15: https://www.coindesk.com/jpmorgan-spinoff-kadena-launches-public-blockchain-integrates-wallet-to-cosmos-network

Kadena’s Chainweb solution, as suggested by the name, is a previously unexplored scaling concept that enables parallel block processing across multiple PoW chains that are braided together into what is a web of chains.

Chainweb value add to the scalability debate is not merely the increase in block processing but rather its ability to do so whilst retaining all aspects of Satoshi Nakamoto’s vision of security and trustlessness, altering only the architecture in so far as braiding multiple chains together.

PoW has presented the most viable case for achieving security and trustlessness in the current landscape but its technical implementations concede compromises to scalability.

This bottleneck is best defined by the trilemma, the inability of any current solution to address all three elements; scalability, security and decentralisation.

Chainweb’s parallelisation and ability to scale a PoW chain, whilst preserving the other two tenets of the trilemma, achieves a previously untapped set of scalable outcomes. Chainweb’s unique parallel chain binding architecture provides a fundamental advantage over classic PoW chains —making scalability a powerful characteristic instead of an issue

Adding chains will be driven by demand for tx load. Having more chains is a way to shard tx processing. It allows to scale block rate linearly while adding only logarithmic latency overhead for consensus. As far as I know, the ability to scale out horizontally to accommodate more tx throughput is unique to chainweb in the blockchain world. But each chains comes at a cost (linear in the number of chains), so scaling out must be justified economically.

8000 tps was with Kadena Kuro (our private chain) which hit that number with 500 nodes. HOWEVER, that was a private cluster on top of the line hardware, which is what Kuro was built for, and Kuro is a deterministic BFT. For Kadena (chainweb) we hit ~25 TPS per chain and have run testnets of 50–100 chain graphs + simulations of +10k chain graphs.

I believe per-chain we can hit 50 TPS per chain on devnet and as you know, POW is unbounded in node count so there is zero impact on performance as nodes are added VS all deterministic BFTs whose performance degrades with consensus node count (this is a fundamental aspect of dbft and thus all “fast finality” POS”). I highly doubt we’ll ever see a +200 node POS network with high utilization… because I can get kadena kuro to maintain consensus with 5k+ nodes but not executed transactions at anywhere near the same throughput. POW being probabilistic consensus is a feature that allows for globe spanning trustlessness.

With single chain POW systems the number of nodes doesn’t increase throughput. Those systems can’t really scale out, only up. Scaling up is always bounded. With chainweb not all nodes need to serve all chains. So, with chainweb, unbounded horizontal scaling is possible by increasing the number of chains.

The unique design which is able to braid hundreds of individually mineable chains into its network not only immediately elevates block production through parallel processing but also further lends itself to two major efficiencies:

- More efficient usage of global hashrate
-Maintaining confirmation latency despite the added complexity of Chainweb architecture

Kadena is the first network to crack layer 1 scaling and bring it to market.

Kadena is the first network to bring smart contract interop to the masses.

Kadena is the first network to bring contract formal verification to the masses.

Kadena has a publicly traded company (USCF) aimed at launching a next-gen ETF on our platform in 2020.

Kadena has real non-crypto user facing app that runs on a blockchain (Rymedi) set to launch in a month.

Kadena got picked by Blend (bay area fintech unicorn) in a platform bakeoff because Pact is really just that good.

Kadena isn’t owned in the shadows by some large VC that’s looking to make a 10x, bail, and leave all investors high and dry.

Kadena foundation tokens vest over 5 years and are locked for the first year.

Kadena is set to become a parachain of Polkadot! Parachains allow us to buidl a more robust service like we did with kadenamint. Instead of Pact living as a smart contract, we can build an integration with the existing Pact Service architecture modified for use with Polkadot’s minting and consensus mechanisms

Kadena is also integrated with the COSMOS ecosystem, Tendermint.

Kadena vs other scaling protocols

I’m not even really sure what other pure layer 1 scaling solutions are tractable: — POS + chainweb-like sharding magnifies the security problems that are inherent to POS, and this magnification increase as the number of shards/chains increases (smaller stakes/fewer stakers on a per-newblock-per-shard basis). Near is probably doing the best to attempt to solve this problem, and yet I’m pretty sure it’s not a solvable problem. Chainweb sharding requires POW to function. — All DAGs I’ve seen (Solana, Zilliqa, Hashgraph) are 1-time performance buffs the diminish in performance as adoption/usage increases (ie they get slower the more people use them). To my knowledge, chainweb is unique in allowing arbitrary post-launch scaling. — everything else is layer 2 scaling in my book (hub and spoke, parachains, state channels) and all layer 2 scaling solutions are compatible with any POW (and most POS) layer 1 protocols.

https://multicoin.capital/2018/02/23/models-scaling-trustless-computation/

ETF on blockchain! Yes we will have it!

USCF is a major funder/user of Kadena and they’ve actually made a direct comment on this Chainlink integration. I am very interested in this. Look at this:

https://en.m.wikipedia.org/wiki/United_States_Commodity_Funds

Dependable and instantaneous market data will also be a requirement for launching many decentralized and traditional finance applications, such as with Kadena’s ongoing collaboration with $3 billion asset manager USCF.

USCF is known as an early pioneer of ETPs, bringing previously difficult to access asset classes to all investors. The firm broke new ground with the launch of the first oil ETP, the United States Oil Fund, LP (USO), in 2006. Over the next decade, USCF designed and issued fifteen more ETPs and ETFs, across commodity and equity asset classes.

”We see the potential to leverage blockchain in the investment space and identify new opportunities for innovation in asset management,” said John Love, President and CEO of USCF.

USCF on Chainlink:
Terminals provide an essential service in asset management with real-time market data. As USCF works with Kadena to identify opportunities to leverage blockchain for investments, we see merit in having credible oracles provide consolidated data feeds on-chain. Kadena’s latest news is another step forward in showing the full value of hybrid blockchain,” said Nicholas Gerber, CEO of Concierge, USCF’s parent company.

Here is the proof of Kadena x USCF partnership on the USCF website:

http://www.uscfinvestments.com/documents/uscfinvestments-en-20190513.pdf

Kadena CEO comment on USCF:

USCF figured out the OIL ETF back in the early 2000’s. Stuart and I have a heavy Fintech and Reg background, so USCF proper likes working with us. Nick, USCF’s founder/CEO, and I get along because we like to hack on reg/legal + tech, so things work out really well. Plus, we’re all in it for the long-game, which makes waiting on the right approvals easy. Once we get them, it;ll be off to the races. Imagine if MakerDAO was run by a $3B AUM, 20-year old fund, and traded on retail securities markets as well as crypto markets. That’s closer to what we’re after here, but you need the right team t design and build + navigate the existing reg landscape.

USCF will blow the doors of the entire industry once we get past the current blocker (which I can’t discuss) — circle back in Sept. We’re talking about a next-gen ETF that is crypto native and could easily trade on etrade and coinbase and on-chain seamlessly.