[GP-9] Proposal for Chainalysis Full Integration

Governance Proposal (GP)
1

Chainalysis has proposed a new agenda through Kommune DAO.

This proposal seeks to fully integrate Chainalysis into the Kaia ecosystem to enhance transparency, security, and regulatory compliance for all validators and network participants. The proposal has progressed through the following steps within the Kommune DAO. Two rounds of voting were held to assess the proposal’s validity for forum registration, with the results detailed below. A range of opinions has been shared, and we encourage you to visit the Kommune Forum to explore these diverse perspectives.

*A vote will be conducted within KommuneDAO to determine whether the proposal will be submitted to the KAIA Forum.

Process Overview

The proposal has progressed through the following steps within Kommune DAO:

  1. Propose New Agenda(Nov 29 - Dec 6, 2024)
    •The initial proposal was submitted and made available for community review.
    •View Proposal

  2. Discussion and Voting(Dec 6 - Dec 25, 2024)
    •Community members engaged in discussions and deliberation on the agenda.
    •View Forum Discussion

    1st Vote for Agenda Selection
    •Outcome: Approved
    •Voting Results: Yes - 59.8%, No - 40.2%

    2nd Vote for GC Submission
    •Outcome: Approved
    •Voting Results: Yes - 79.6%, No - 20.4%

  3. Agenda Submission to Governance Committee (GC)(Dec 27, 2024)

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Here is the full text of the approved Chainalysis proposal:

Chainalysis Full Integration

Context & Proposal

1. Summary
Chainalysis proposes a full integration of KAIA and all other tokens on the Kaia blockchain with our platform. This integration aims to enhance security, transparency, and regulatory compliance, crucial for Kaia’s sustainable growth and global credibility. The proposal requests USD 330,000 to implement this integration, which will benefit the Kaia ecosystem through improved risk management, increased global credibility, greater interest from exchanges and institutional investors, and overall ecosystem growth.

2. Proposal Background and Overview
As the world’s most trusted blockchain data platform provider, Chainalysis operates globally, supporting over 1,300 customers across 75 countries and offers tools to analyze and identify blockchain transaction data to ensure compliance, enhance security, and optimize risk management.

KAIA is the native token of the Kaia Foundation and plays a pivotal role in the Kaia blockchain ecosystem. Security, transparency, and regulatory compliance are essential to ensure sustainable growth and credibility in the global market beyond Asia’s No. 1 blockchain. To achieve this, we propose the full integration of KAIA and all other tokens on the Kaia blockchain with Chainalysis. This integration will strengthen the ecosystem’s global trust, support long-term growth, and enhance global competitiveness.

Clarification on Previous Integration in November 2023:
The proposal was passed to allocate $35,000 for AWS costs to archive block data from the Klaytn network. The ingestion of this data is expected to conclude by December 2024. This earlier effort laid the groundwork for the current proposal, which aims to achieve “Full Integration” with the Chainalysis blockchain data platform.

What This Proposal Entails:
Connecting the ingested data to Chainalysis’ blockchain dataset.
Enabling clustering and labeling of KAIA and all other tokens on the Kaia network.
Elevating KAIA and all other tokens on the Kaia network to a top-tier asset supported by the Chainalysis blockchain data platform

3. Benefits to the Kaia ecosystem
(1) Enhanced Security and Transparency
- Advanced Risk Management Tools: Chainalysis analytics can detect and block malicious activities early, protecting user assets and the network.
- Monitoring System:
Early detection and blocking of potentially illegal activities and malicious transactions in KAIA transactions. This plays a key role in enhancing the security of the Kaia ecosystem and protecting user assets and networks
- On-chain Asset Tracking:
By providing traceability of KAIA transactions, it enables exchanges and financial institutions to efficiently communicate with regulators. This increases the likelihood of KAIA’s broader adoption and utilization within regulatory frameworks. Law enforcement agencies can quickly trace hacks or illegal transactions, maintaining the Kaia ecosystem’s credibility

(2) Increased Global Credibility and and Investment Attraction
- Boosted Market Confidence:
This integration will elevate KAIA’s global credibility, attracting new investors and key market participants
- Regulatory Compliance:
Enhanced AML (Anti-Money Laundering) tools ensure compliance with global regulations, maximizing investment opportunities.
In Korea, due to the Virtual Asset User Protection Act, regulatory requirements from entities such as the Financial Supervisory Service are being enforced more stringently. Therefore, this integration is a critical step to garner trust from global investors and communities. This will enhance its global competitiveness. Furthermore, this initiative could position KAIA as a reliable asset, potentially driving increased global liquidity into the Kaia ecosystem.

(3) Greater Interest from Exchanges and Institutional Investors
- Facilitated Listings and Partnerships:
Full integration with Chainalysis provides the trust required for exchanges to list KAIA and institutional investors include KAIA in their portfolios
- Global Expansion:
Enhanced trust and transparency drive participation from global users and institutions

(4) Ecosystem Growth and Community Activation
- Increased Participation:
Enhanced security and transparency will attract new users to the ecosystem, fostering a more vibrant and active community
- Long-term Value Growth:
A stable and credible ecosystem enhances KAIA’s long-term asset value and broadens opportunities for activities within the ecosystem

4. Proposal Amount
USD 330,000

The full integration with Chainalysis is a pivotal step in building a globally trusted blockchain ecosystem. It strengthens security, transparency, and regulatory compliance, paving the way for KAIA’s sustainable growth and global success. We hope the Kaia community will join us in shaping the future of the ecosystem. Thank you for your continued participation

[Appendix]
Korean law enforcement authorities are currently encountering difficulties in investigating virtual asset crimes involving KAIA as Chainalysis tracing tools do not yet support KAIA. Given the requests from Korean law enforcement authorities below, we propose a full integration with Chainalysis to strengthen the security of the Kaia ecosystem

1 Like
2

We agree that working with a data analysis company is necessary to improve the security and transparency of KAIA.

However, we know of cases where blockchain data analysis companies support a chain network, and in most cases they pay for their own data support. We don’t think it makes sense to charge GC a huge amount of money for data support. Therefore, we need to check for what purpose Chainalysis is charging these fees.

However, considering the current situation with the request from the Korean investigating authorities, if GC has to pay for some of the costs, we think it is necessary to negotiate at a level that is acceptable to all parties. USD 330,000 is an unreasonable amount of money in any case.

1 Like
4

We agree with the question raised by CertiK that the cost of USD 330K is unreasonable. We hope a more acceptable grant size should be suggested by @Kommune_DAO or Chainanalysis to get the endorsement from our GC members.

5

Since the proposal was submitted through two rounds of voting in Kommune DAO, it would be difficult to adjust the amount again. We kindly request proceeding with the GC voting process as per the current proposal.

6

As decided by @Kommune_DAO , the agenda will be posted to the Square by next Monday.

7

We understand - but we would like KAIA GC members to vote based on other past examples of Chainalysis integration (USD 35K: about a tenth of the current proposal)

We hope to have the opportunity to discuss this again through KAIA GC governance.

[KGP 18-4] November KCF Payment Proposal - Chainalysis Integration
8

The agenda was moved to the Governance Proposal category as @Kommune_DAO decided to start voting as initially proposed.

9

As the number of Upvotes was less than the sum of downvotes and abstention, the voting was concluded with “Undecided.” If @Kommune_DAO decides to bring the agenda to the voting again, the voting will be restarted.