Kin & The Ethos of Decentralization
Exploring the Path to a Strong and Engaged Community Around Kin
The ethos of decentralization is intertwined with the philosophy underpinning cryptocurrency. At its core, decentralization refers to the distribution of authority, control, and decision-making power across a network, rather than in the hands of a central authority or entity.
Decentralized cryptocurrencies, such as Kin, enable direct peer-to-peer transactions without the need for intermediaries like banks. This decentralization of financial transactions empowers individuals to transact directly with one another, without relying on centralized institutions. To do this, Kin utilizes blockchain technology, a decentralized and transparent ledger that records and verify all transactions. This transparency ensures that anyone can inspect the transaction history, promoting accountability. Cryptocurrencies also rely on decentralized consensus mechanisms, such as Proof-of-Stake (PoS), to validate transactions and maintain the integrity of the network. These mechanisms allow participants to reach a consensus without relying on a central authority, enhancing transparency and reducing the need for trust.
However, despite the alignment with decentralization, aspects of cryptocurrency can contradict this ethos. For example, cryptocurrency trading often occurs on centralized exchanges, like Coinbase or Binance, that act as intermediaries between buyers and sellers. These exchanges, although facilitating the trading of decentralized assets, require users to trust a central authority to hold and manage their funds, contradicting the decentralized ideal. This can have devastating consequences.
On the other hand, a decentralized exchange (DEX) is designed to align more closely with the true ethos of cryptocurrency and decentralization when compared to centralized exchanges. DEXs eliminate the need for intermediaries, such as centralized exchanges, to facilitate transactions. Instead, they leverage smart contracts and blockchain technology to enable peer-to-peer trading directly between users. This removes the reliance on a central authority, empowering individuals to have full control over their funds and trades. In a DEX, users retain control of their private keys and funds. They connect their own cryptocurrency wallets to the DEX platform, ensuring that they maintain ownership and custody of their assets throughout the trading process. This eliminates the risk associated with trusting a centralized exchange to hold users’ funds. Additionally, DEXs employ decentralized order book systems, where buy and sell orders are stored on the blockchain and can be accessed by anyone. This open and transparent order book allows participants to view and execute trades directly with each other, without relying on a central authority to match orders. Kin is actively traded on decentralized exchanges such as Jupiter, Raydium, and Orca.
The existence of foundations or organizations that drive the development and promotion of a particular cryptocurrency can introduce elements of centralization that contradict the ethos of decentralization. Foundations often have significant influence over the development of a cryptocurrency. They may control the codebase, make decisions regarding software upgrades, and determine the direction of the project. This centralized decision-making power can undermine the decentralized nature of the cryptocurrency. Foundations and their associated teams often engage in marketing, partnerships, and public relations efforts to promote the cryptocurrency and shape its image in the market. These efforts can significantly impact the perception and reputation of the cryptocurrency, affecting its value. However, this centralized influence can be seen as contrary to the decentralized principle of a community-driven, market-based ecosystem. In many cases, this can create a dynamic where market participants expect the foundation to drive development, market adoption, and overall value, resembling more of a traditional company-customer relationship than a decentralized cryptocurrency.
Until recently, the Kin cryptocurrency relied on a centralized entity, The Kin Foundation, to oversee development of the Kin Ecosystem. In 2017, during the initial distribution of Kin, a large portion of the total supply was allocated to the Kin Foundation. The Kin Foundation was given 6 trillion Kin tokens which were used to provide developer grants, administer a Kin Rewards Engine, marketing initiatives, and for operational expenses. By 2023, the Kin Foundation had distributed over 1 trillion Kin tokens, expanding the circulating supply to roughly 2.2 trillion Kin.
At the start of 2023, an internal dispute among Kin Foundation board members erupted over inflation, the viability and sustainability of the Kin Rewards Engine (KRE), and whether or not the operating budget of the Kin Foundation should be expanded beyond the parameters initially established in the Kin whitepaper. As a result, the Kin Foundation board fractured and eventually two of three members had resigned after terminating all staff. This left the Kin Ecosystem in a state of limbo, as the KRE had come to a halt due to the lack of employees to administer rewards payments to developers. This scenario demonstrates the clear dangers of the reliance on a centralized entity for a cryptocurrency like Kin. While the tokenomics and viability of a KRE can be debated, its clear that relying on a centralized entity to administer this component of the Kin Ecosystem was a major flaw.
In the ensuing months, stakeholders in the Kin community discussed launching a new Kin Rewards Engine that was truly decentralized and built using permission-less smart contracts on the Solana blockchain. However, these discussions led to a general consensus that that the model, even if decentralized, had too many flaws from inflationary pressures and the model’s inability to produce and track buy demand.
Subsequently, discussions began over the fate of the roughly 5 trillion Kin held in reserves, previously managed by the Kin Foundation. Ultimately, a proposal to burn the entire reserve supply was created and the community held a vote to decide whether to approve the supply burn or not. Voting for this proposal concluded on July 27th and the community had approved the burn. As a result, the total supply was reduced by 70%. The Kin Foundation burned all 4.96 trillion from its Kin reserves, and Kik Inc burned another 2.1 trillion afterward. As a result, the Kin Foundation had begun a process that would result in it being shut down, in order to decentralize the Kin cryptocurrency further. Additionally, Kin now has zero inflation.
Its important to emphasize how the existence of centralized entities like the Kin Foundation contributed to a sense of expectation from stakeholders and a culture of reliance on the Foundation’s work to give value to the Kin cryptocurrency. To some degree, this dynamic inadvertently led to the lack of individual stakeholders taking action to grow the community and the adoption of Kin. The reliance on the Kin Foundation resulted in a passive culture where stakeholders looked solely to the Foundation to take action to grow the Kin cryptocurrency, rather than taking individual initiative, as they perceived their role as secondary to the Foundation’s efforts. This reality created a scenario in which stakeholders developed a reduced sense of responsibility to actively participate and contribute to the growth and development of the ecosystem. Moving forward, this must change if Kin is to reach its true potential.
Its all in our name: Kin. We are all Kin. We must all work together to achieve the goals that we have for the Kin cryptocurrency. We can all foster a sense of community by encouraging stakeholders to participate in discussions and promotional activity on forums and social media, the creation of educational media like podcasts and videos, writing blogs, hosting community events, organizing meetups, actively seeking collaborations and partnerships with other projects or organizations, developing applications and services that utilize the Kin cryptocurrency, and crowd funding to accomplish various goals. These are just a few examples of how Kin stakeholders can contribute to create a vibrant and engaged community around Kin. By taking an active role and leveraging our individual skills, knowledge, and enthusiasm, our community members can play a vital role in driving adoption of Kin.
In conclusion, we must acknowledge that decentralization is the foundation of cryptocurrency. Recent events in the Kin ecosystem highlighted the risks of centralization. To foster a vibrant community, all Kin stakeholders must actively contribute. Together, we can achieve Kin’s true potential and create a strong and engaged community around Kin.
This article was updated to include information on the outcome of the supply burn which was approved by a community vote in July 2023.
