Kinto - a meaningfully differentiated rollup?
The Rollup-centric Ethereum roadmap has ushered in what I refer to as the the “era of hyper-rollupification” whereby we see an expanding landscape of L2s each with their own approach on the technical, usecase and incentivisation axes. While innovations on the technical front are interesting, it is not clear whether the end user cares about whether their execution environment of choice settles using a zero-knowledge or an optimistic verification method or whether it uses Celestia or Avail for Data Availability...
With many L2s indexing heavily on their tech stack as their key differentiator while opting to maintain a generalised usecase, building an ecosystem appears to be a particular difficulty. To counter this, some rollups like Blast have focussed heavily on incentivisation - gamifying the developer experience and heavily leaning into the airdrop/points meta to attract users. We have also seen rollups leaning into specific usecases, IMX being a prominent example focussed on gaming or the upcoming Plume Network, focussed on RWAs. From my perspective, the most successful rollups will be those which optimise across all 3 pillars:
Tech - striking a balance between cost and security to lower tx fees for end users while guaranteeing long term economic sustainability for the rollup in question
Usecase - giving the rollup an identity and building custom functionality to facilitate certain use cases allowing an ecosystem to develop and enabling apps to truly benefit from interoperability
Incentivisation - “playing the game”, in Crypto you can have a better product which fails to achieve traction because a competitor simply played the game better with respect to Crypto economic incentive mechanisms. Points, airdrops and token rewards are all tools which need to be used strategically
One rollup which seems to be doing well in all 3 of these pillars is Kinto. Having raised $5m in 2023, Kinto are building a safety-first L2 which seeks to solve 2 of Crypto’s most pertinent issues: safety and user experience. With their mainnet launch earmarked for May, things are beginning to ramp up...
Kinto require all users to perform mandatory KYC during the onboarding process which effectively builds native sybil resistance into the chain. This also serves the purpose of increasing the safety of the chain as all users are identified and can be held accountable. By creating an environment where all users are identified, Kinto create an onchain surface area where regulated financial institutions can transact without risking OFAC compliance as they would if transacting in permissionless environments like Ethereum mainnet where counterparties are not known. Equally, with obligatory account abstraction, Kinto go some way in improving Crypto user experience as users are not required to have a browser wallet installed or to sign/approve/pay for transactions.
With their mainnet launch earmarked for May, Kinto are embarking on an incentivised onboarding program called Engen whereby users go through a mandatory KYC process and non-custodial Mamori wallet creation. In the latest phase of Engen, Kinto allow deposits of USDC, DAI, ETH, GHO, stETH or wstETH to be locked for 60 days with earlier commitments receiving extra credits. Users can elect to direct their commitments into 4 yield-bearing tokens during the lock up period:
With Kinto’s mandatory KYC, Engen is actually the first launch program to be 100% sybil resistant! So far, over $2m has flowed into Kinto’s bridge contracts to participate in Engen:
Clearly, Kinto are doing very well across the 3 pillars mentioned above (tech, usecase and incentivisation). From a tech perspective, Kinto’s use of Celestia, Arbitrum Orbit and account abstraction keeps operating costs low and means that users don’t have to worry about gas fees. With mandatory KYC, the usecase for onchain identity, institutional defi and sybil-resistant applications is clear. Equally, with Engen as the first sybil-resistant launch program with time-weighted credits-based incentivisation, Kinto are doing very well across the spectrum.
Track Engen flows on the Parsec Explorer at these addresses:
0x0f1b7bd7762662B23486320AA91F30312184f70C
0x859a53Fe2C8DA961387030E7CB498D6D20d0B2DB
Explore Engen for yourself here...
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