What is the KYVE Network?

The KYVE network is a Cosmos-based layer 1 blockchain that provides tools for decentralized data validation, immutability, and retrieval. It allows developers, data engineers, and node runners to seamlessly access and retrieve on-chain and off-chain data.

As the blockchain and web3 ecosystem continues to grow, the number of data points created also grows. The problem, however, is that as this data point grows, it becomes increasingly difficult for users to access and use it.

Difficulty accessing and using data is not the only hurdle regarding the enormous amount of data created in the blockchain space; data validity and accuracy are also problems.

After weeks of searching and retrieving a particular data set, the retrieved data might not be 100% accurate or valid, making a project vulnerable to attacks or loss. The KYVE network solves this problem by providing a decentralized solution to data accessibility and validity.

History of the KYVE Network

The KYVE network is a small project that started by bridging Polkadot data to Arweave. Arweave is a decentralized network that offers permanent data storage and hosting services.

Before its final launch, the KYVE network ran several testnets before finally launching its mainnet on the 14 of March, 2023. Let’s briefly examine these historical milestones:

Korellia: KYVE’s First Testnet

Korellia was KYVE’s first incentivized testnet project. The KYVE development team used the Korellia testnet to practically test KYVE’s features and functionalities. Due to its huge success, the Korellia testnet project attracted 43,000 active users.

Since the Korellia testnet project reached many users, the KYVE team built an active and responsive community that constantly offered valuable feedback and suggestions. Subsequently, this helped the development team significantly upgrade the Korellia testnet, which led to the launch of the second testnet project.

Kaon: KYVE’s Second Testnet

Kaon was KYVE’s second testnet project, an upgraded version of the Korellia testnet. It was also KYVE’s mainnet testnet, which means that the Kaon testnet project allowed KYVE’s development team to perfectly stage the features they wanted in their mainnet.

The Kaon testnet replicated the mainnet project, which was still in development. Thus, it gave the development team a preview and insight into how the mainnet would eventually be.

KYVE’s Mainnet Launch

After successfully launching its testnet projects, Korellia and Kaon, the KYVE network launched its mainnet project on March 14, 2023. The mainnet comprises about 100 validators, making data access trustless and seamless.

In addition to attaining significant launching milestones, the KYVE network has attracted numerous venture capitalists (VCs) and top-tier blockchain companies, raising about $13 million in three funding rounds.

The first funding round was led by Permanent Ventures and comprised notable investors, including Hypersphere Ventures, 4SV, Compute Ventures, Arweave, Avalanche Foundation, Interchain Foundation, and NEAR Foundation.

Permanent Ventures and Hypersphere Ventures led the second funding round, which included other top crypto companies such as Volt Capital, Mechanism Capital, Coinbase Ventures, Distributed Global, 4SV, Compute Ventures, Zee Prime, and CMS Holding.

The third funding round was led by key players in the blockchain industry, including Distributed Global, Wicklow Capital, IOSG Ventures, Anagram, Cerulean Ventures, Huobi Incubator, and MEXC.

Due to its impressive efforts in revolutionizing data access and retrieval, the KYVE network has grown to attract several partners in the blockchain industry, including Solana, Cosmos, NEAR, Avalanche, Polkadot, Injective, Evmos, and Axelar.

The KYVE Network Team

KYVE network was founded in 2021 by software engineers Fabian Riewe and John Letey. After participating in a bounty that involved them bridging Polkadot data to Arweave, the duo devised the idea to create a more decentralized solution that could provide more accessibility to all and would work with other blockchains.

Over time, the KYVE network, which started as an impressive idea of just two people, has grown to have more than 20 team members, with its headquarters in Zug, Switzerland. According to Fabian Riewe, KYVE’s CEO and co-founder, the team’s goal is to ensure that no one working with data has to worry about data integrity or any roadblocks to data usage.

Components of the KYVE Network: Consensus Layer, Protocol Layer, Consensus Validators and Protocol Validators

Consensus Layer

The consensus layer is the main pillar of the KYVE network. It is an independent delegated proof of stake (DPOS) blockchain built on the Cosmos SDK and CometBFT.

The Cosmos SDK is an open-source toolkit for building multi-asset public proof-of-stake (PoS) blockchains. At the same time, CometBFT is an open-source software used to securely and consistently replicate applications on many machines.

The consensus layer’s main goal is to secure the protocol layer atop it. It is run by independent validators, which enables users to support and secure the KYVE blockchain through the KYVE token.

Protocol Layer

The protocol layer is built on top of the consensus layer. Like the consensus layer, it has validators responsible for collecting data from data sources, bundling it, and uploading it to decentralized storages, after which the data is validated.

The protocol layer allows the KYVE blockchain to store data permanently, decentralized, and trustless.

Consensus Validators

The consensus validators are nodes that add new blocks to the KYVE blockchain. They broadcast votes containing cryptographic signatures signed by a validator’s private key.

Protocol Validators

Source: Kyve.network

The protocol validators are nodes that validate and archive different data sources within the KYVE network. They collect data from different sources and submit it to a data pool, where other network participants can validate its accuracy and integrity.

The data becomes accurate only if all network participants of the pool agree to its accuracy, done through votes. After the data is validated, the participant who uploaded the data to the data pool is rewarded with some KYVE token.

How Does the KYVE Network Work? Proof-of-Stake (POS), Uploaders, Validators and Funders

Proof-of-Stake (POS)

Proof-of-stake (POS) is a consensus mechanism that involves network users staking a certain amount of their crypto to become network validators. Apart from helping to secure the KYVE chain, the KYVE network utilizes the POS consensus mechanism to provide a decentralized and trustless solution to the problems of data accessibility and validity.

Uploaders and Validators

Within the KYVE network are uploaders that collect data from data sources and store it in decentralized storage providers like Arweave. After the data is submitted to data pools, it is validated by a set of nodes known as validators.

Once validators validate the data, developers, engineers, and other data users can access and use it.

Funders

Source: Kyve.network

Funders are nodes within the KYVE network that provide the funds (KYVE tokens) used to incentivize validators. Their main goal is to ensure that data handled by a data pool is successfully archived in decentralized data storage centers like Arweave.

While the opportunity to become a funder is open to all interested network participants within the KYVE network, it is important to note that there are no actual token rewards for funders. Instead, funders are often required to spend KYVE tokens.

That is why the “funder” role suits those genuinely interested in growing the KYVE ecosystem and archiving data within the KYVE network.

To become a funder, an interested node or participant must have more than zero KYVE tokens. Since the funding slot is often limited, only about 50 slots per data pool, a network participant interested in becoming a funder where there are no more slots will have to outbid the lowest funder in a data pool to be given a funding slot.

If the outbidding is successful and funds remain from the outbidding process, these funds are automatically transferred back to the funder.

Features of the KYVE Network: KSYNC, Data or Storage Pools, Runtimes, Bundle Proposals, Uploader and Validator and Slashing

KSYNC

Source: Kyve.network

KSYNC is a feature for syncing blocks and state-sync snapshots from the KYVE data pool directly into the Cosmos blockchain nodes.

With KSYNC, Cosmos validators do not have to wait for peers to sync across KYVE blocks or search for trusted app hashes if they want to sync across each KYVE state.

Finding peers with historical blocks is often difficult since there are no incentives to keep historical blockchain data. KSYNC eliminates this waiting and dependence on peers with historical blocks, making syncing easy.

Unlike state-sync snapshots, which may often be incompatible with other nodes due to not having them enabled or P2P connections breaking, KSYNC works well with any kind of node, making block and state-sync snapshots possible.

Data or Storage Pools

Data or storage pools are discrete entities arranged around different data sources within the KYVE network. They are used to validate and archive data, allowing interested network participants who want to join the pool to validate data on-chain.

Before protocol validators can use a data pool, the data pool must fulfill the following requirements;

• It must have one or more data sources that the pool wants to validate and archive.
• It must have a runtime that defines how the data will be validated.
• There must be a decentralized storage provider like Arweave, where validated data can be stored.

Anyone within the KYVE network can create a data pool through governance. Since data pools are stored and operated on-chain, they are trustless.

Runtime

Image source: Kyve.network

A runtime is an implementation of the actual data retrieval and validation logic. Let’s explain what runtimes are in simple and understandable terms:

Let’s say a data pool chooses to run with a particular runtime. The data from such a pool will only be validated and archived if a runtime supports the data source. So, there will be no archiving and validation of data if there is no runtime in a data pool.

An example of a runtime is @kyvejs/bitcoin. This runtime only validates and retrieves Bitcoin data. It cannot validate and retrieve Ethereum data. The @kyvejs/evm runtime is needed to validate and retrieve Ethereum data.

Bundle Proposals

A bundle proposal is a feature in the KYVE network that allows data to be grouped into bundles. Since storing data from multiple data streams and sources can be complicated, a bundled proposal allows data to be stored more efficiently.

Here is a better understanding of how a bundled proposal works:

The first step in grouping data into bundles is randomly selecting a validator to collect the different data, turning it into a bundle, and then sending it into the network.

On getting to the network, other validators check the data to see if it’s accurate or valid, after which a vote of accuracy is cast. The votes from the validators are then taken. If the data bundle is voted valid or accurate, it is stored and added to the KYVE chain.

Uploader and Validator

Although the roles of the uploader and validator have been briefly discussed, we will still discuss them, as they are key features within the KYVE network. An uploader is a node that provides and stores data in the decentralized storage provider.

The uploader is also responsible for registering the data the validator nodes will eventually validate. The uploader also skips or closes a data bundle proposal round.

After a data bundle is uploaded, the validator plays a vital role in cross-checking its validity and accuracy. Hence, uploaders and validators are vital in decentralizing and validating data within the KYVE network.

Slashing

Slashing is a feature implemented by the KYVE development team to punish malicious protocol validators within the network. As part of the punishment, errant validators often lose part of their validation.

There are 3 types of slashing penalties that a malicious validator might get punished for:

• Timeout slash: This splashing penalty is applied if a node misses a certain amount of bundle proposals.
• Vote slash: This splashing penalty is applied if a node votes incorrectly. For example, a node votes a bundle correctly when it’s incorrect.
• Upload splash: This splashing penalty is applied if a node gets rejected by the validators as invalid.

Kyve Ecosystem

Since the launch of the KYVE mainnet in 2023, several blockchain protocols have partnered with the KYVE network. Let’s now discuss three of how these ecosystem partners have benefited from collaborating with KYVE:

Alexar

Alexar is a blockchain protocol that delivers cross-chain communication for Web3 users. It allows developers to build interchain decentralized applications (dApps) that allow users to interact with different chains.

KYVE has archived and validated Alexar’s historical chain data to its latest block. Hence, Alexar can leverage KYVE’s syncing tool, KSYNC, to quickly and freely SYNC all its blocks, even the genesis block.

Using KYVE’s syncing tool, Alexar saves resources and time, minimizing the time it would have spent on centralized and unreliable data sources.

Cronos

Cronos is a leading Ethereum-compatible layer 1 blockchain network whose goal is to make it easy for users to adopt Web3. KYVE has launched two data pools that have archived and validated Cronos historical chain data onto Arweave.

The benefit of this partnership is that KYVE provides a trustless backup for Cronos, allowing its vast ecosystem of runners, developers, data analysts, and other users of the Cronos network to freely access and implement its chain’s historical data in a decentralized and streamlined way.

Avalanche

Avalanche is a smart contract platform that scales infinitely and finalizes transactions in seconds. Since Avalanche constantly processes transactions at lightning speed, the data it produces will also grow.

That is why Avalanche partnered with KYVE to archive its chain trustlessly. KYVE’s Korellia testnet has validated and permanently archived blockchain data from all Avalanche 3 chains.

While the data validation and archiving on the Avalanche blockchain has only been done using the Korellia testnet, there is a possibility that KYVE’s mainnet will be used to validate and archive Avalanche blockchain data in the future. If this happens, Avalanche will benefit in the following ways;

• More straightforward computation of inter-chain data due to KYVE’s support of multiple blockchain architectures.
• Increased data protection due to Arweave decentralization.
• Increased availability and reliability of the uploaded data are due to the incentivization of uploaders and validators, an arrangement that keeps the network healthy.

What is the KYVE Token?

KYVE is the native token for the KYVE blockchain network. It is an essential component of the KYVE ecosystem, facilitating network decentralization, security, incentivization, and other on-chain activities.

To reduce the pressure on investors or holders of the KYVE tokens to sell their tokens, the KYVE network implemented a DEX-first approach, where decentralized exchanges are prioritized for listing and trading the tokens before centralized exchanges.

To further stabilize the blockchain network, KYVE implemented a token release schedule. This is how the schedule works:

The first round of participants or early investors of the KYVE token will not get their tokens released to them in full till after 4 years, while other latter investors or the third round of network participants will only get their tokens after 1 year.

By implementing this token release strategy, the KYVE network prevents the rapid sell-off of the token while encouraging community participation and strengthening the network through the locked tokens.

Uses of the KYVE Token

• On the consensus or chain level, the KYVE token is used for staking and delegating, which helps secure the network through proof-of-stake.
• On the protocol level, the KYVE token is used for funding, staking, and delegating, providing security to the data being uploaded to the data pools.
• On the governance level, holders of the KYVE token vote for proposals within the network, allowing holders to have a say in the network’s growth.

Is the KYVE Token a Good Investment?

Since the KYVE networks aim to solve the problems of data accessibility and validity, making data more available to all kinds of users, the ecosystem is marked for potential growth.

As the KYVE ecosystem grows, there will be a high demand for the native token. This allows users to carry out other desired activities within the network, and consequently, this demand for the token may increase its value.

While the KYVE project is exciting and revolutionary, users should also do their due diligence by researching and learning more about a project before deciding to invest.

Risk Analysis

Advantages

One major advantage of the KYVE network is the incentivization opportunities designed to reward network participants who upload data to the KYVE data pool. This incentivization tends to foster more community participation and interaction.

In addition to the network’s high-level security, the well-designed approach to data accessibility and validity makes the KYVE network a perfect hub for developers, engineers, and other data users.

The slashing security mechanisms designed by the KYVE team also enhance the network’s security, keeping in check the activities of malicious actors on-chain.

Disadvantages

Although the KYVE network is designed to foster more community interaction, funders who stake their tokens in it do not receive rewards. Thus, the earning potential for network participants is quite limited.

Competitive Analysis

Bitquery, Xircus Web3 Protocol, and Footprint Analytics are some of KYVE’s biggest competitors. While these companies tend to offer services similar to those of KYVE, the high level of decentralization and security are competitive advantages that the KYVE network has over its competitors.

Its ability to work with numerous blockchains, bridging data not just from Polkadot but other blockchains, and seamless access to valid data are features that make it a productive data hub for data engineers, developers, and other data users alike.

How Can You Own a KYVE Token?

To own KYVE tokens and become a part of the growing KYVE network ecosystem, you can follow the simple step-by-step process:

Set up a Wallet

To own a KYVE token, you need to purchase it from a cryptocurrency exchange. To do this, you must create a Gate.io account, complete the KYC process, and add funds to the account to purchase the token.

Use the KYVE Tokens

Once you have your token, you can explore the features and functionalities the KYVE network offers.

Spot Trading

The KYVE token is available on the Gate.io spot trading market. Users can purchase KYVE with USDT with minimal transaction fees.

Staking

KYVE can be staked on the Gate.io exchange. The minimum amount for staking is 1 KYVE, and the investment duration is 28 days. The interest rate is calculated based on the average quantity of KYVE tokens held within 7 days. Investors can unstake at any time.

Take action on the KYVE network

Users can sign up and purchase or trade KYVE tokens here.