This article is about the currency for the chat app Kik, a mobile messaging app from the Canadian company ‘Kik Interactive’. Kik has been an innovator in the chat space since the first million people signed up for the chat application in 2010. It was the first chat app to become a platform in 2011, and the first Western chat platform to integrate bots in 2014. (1) It has been experimenting with forms of in-app currency since 2014, when it launched Kik Points. The company wanted to see if users of its chat app would be eager to earn and spend a centralized digital currency.
The project was sunsetted at the end of 2016 to prepare for a more advanced solution that would extend beyond a purely advertising-based use case. However, Kik was able to measure demand and gain valuable insights into user behavior with transactions in a messenger context. During a 2.5 year period from 2014 through 2016, Kik users completed 253 million offers and spent the points earned on 74 million purchases. (2)
Kik will build fundamental value for the new currency by integrating Kin into its chat app. Kin will be Kik’s primary transaction currency, and Kik will be the first service to join the Kin Ecosystem. In the future, users will be able to earn Kin by providing value to other members of the Kik digital community through curation, content creation, and commerce. Kik users will be able to spend Kin on products, services, and other valuable assets offered by merchants, developers, influencers, and other participants. A few features of the ecosystem are explained below.
Kin reward engine
The Kin Rewards Engine will use economic incentives to bring other digital services and applications into the decentralized Kin Ecosystem. The ecosystem will not impose any unnecessary restrictions on monetization strategies, beyond ensuring common ethics and legality of content and transactions.
User identity becomes an important issue in a decentralized ecosystem of digital services. For instance, users should be able to transact without friction across multiple digital services. Such participation requires users to establish and communicate consistent identity across services, to maintain a single, robust wallet, and to own an ongoing reputation in the digital environment. A consistent and easy-to use identity service will be maintained by the Kin Foundation and will provide participants with the code and API necessary to integrate it. Third-party identity services, such as BlockStack’s OneName (3), uPort (4), or Keybase (5), may also be integrated as part of the identity solution.
The primary feature required to enable a digital community to use cryptocurrency is a wallet. As a first step, Kik will integrate wallets for each Kik user account. The associated user interface will allow for the most common wallet interactions.
Kik economy and prospective use cases
Kik will introduce a number of marketplace use cases that will prompt consumers and brands to transact with Kin. Through experimentation, Kik plans to iterate on the product with applications that create unique two-sided marketplaces for users. On the supply side, both bots or content creators will create unique experiences. On the demand side, users will consume these products or services. In the near future, Kik’s bots will have the ability to structure their own business models. A few examples of services are: Paid groups, Tipping, Bots and Brand missions; Taking advantage of cryptocurrency, brands will be able to reward users with small amounts of Kin for completing simple tasks. This can include answering questions in a survey, creating themed content, or curating content. Bots can perform services, order food for delivery, or operate games that offer in-game purchases such as creative assets, gameplays, or other media.
Hybrid on/off-chain transaction service
In 2016, the Kik Points program saw nearly 109 million total transactions. On average, 1.7 million users engaged the product to earn Kik Points on a monthly basis. Based on Kik’s experience with Kik Points, the expected daily transaction rate could potentially surpass Ethereum’s throughput capability and presents a risk of congesting the network.
There are two other issues that suggest that a purely on-chain architecture may not be optimal at the outset. The first issue is that Ethereum transaction confirmation times result in significantly delayed responsiveness than users typically expect from consumer applications. The second issue is that the Ethereum blockchain requires fees to be paid for every transaction. Fees are paid in Ether cryptocurrency, creating an adoption barrier for the average user.
Given these barriers, Kik will initially implement a semi-centralized hybrid on-chain and off-chain transaction service for scalable interactions with the Kin cryptocurrency. At the core, the transactions in Kin will be settled on the Ethereum blockchain. However, the Kin Foundation will develop and host a centralized off-chain ledger with an API available to all digital service partners. This will improve user experience due to latency, avoid network fees when transacting between users, and avoid stress on the public network due to large transaction volumes.
Use of Kin token (KIN)
Kin will be the unit of account for all economic transactions within the Kin Ecosystem, and it will serve as the basis of interoperability with other digital services. However, as described below, only a small portion of the Kin supply will become liquid in the near future, as most of the Kin supply is reserved for the Kin Rewards Engine.
60%: Kin rewards engine; 30%: Preallocated to Kik as the founding member of the Kin Foundation and subject to a long-term vesting schedule. In exchange, Kik will provide startup resources, technology, and a covenant to integrate with the Kin cryptocurrency and brand; 10%: Token sale.
Kik’s 30 percent pre-allocation will be unlocked and distributed to Kik at 10 percent per quarter, for 10 quarters. The Kin Rewards Engine is scheduled to release 60 percent of the supply over time at a rate of 20 percent of the remainder per annum and eternally.
Company and team
Kik will work to structure and form the Kin Foundation, a nonprofit organization to oversee the fair and productive growth of the Kin Ecosystem. The Kin Foundation will administer the Kin supply and the Kin Rewards Engine. It will also provide support and tools for digital services to operate more easily within the ecosystem.
The Kin Foundation’s mandate is to grow an open ecosystem of digital services that consumers can easily explore and find value in, while giving developers an open and sustainable platform to develop, deliver, and enhance those services and attract users. As time goes by it is likely that the foundation will be replaced by other, more innovative governance methods such as a decentralized autonomous organization (DAO). However, creating a formal legal body is an important first step in this process.
The Kik team consists of around 200 professionals of different disciplines, 60 of these members work full-time on Kin. 3 important members are explained below. (6)
CEO: Ted Livingston, Founder and CEO of Kik and leads the vision for Kin. Ted maintains an active interest in the University of Waterloo’s Velocity Fund, a startup accelerator he conceived of and first funded. He was also named one of Fast Company’s Most Creative People In Business in 2017. (7)
CFO/COO: Peter Heinke, Chief financial officer and chief operating officer at Kik. Before joining Kik, Peter spent more than 20 years leading finance, operations, and strategy for both established and startup companies in the media, technology and transportation sectors; CEO CorCare, CEO iPlay Media, CFO: e-tv interactive, SportHawk International and Simmonds Communications Corp. (8)
CPO: Eran Ben-Ari, Chief product officer at Kik and is leading how Kin will be integrated into the Kik community. Prior to joining Kik, he was the vice president of products at Rounds, an Israeli-based communications company that joined with Kik in the beginning of 2017. Eran brings startup and academic research experience to Kik, where he oversees product process, lifecycle, and strategy. Eran is in the final stages of completing his Ph.D. from the Hebrew University’s School of Business Administration. (9)
‘18 Q1: Kik team expands and restructures to fully emphasize Kin development. Load testing of Stellar blockchain for future migration. Beta testing the first version of Kinit, the standalone wallet app. (iOS/Android). Simple integration of Kin SDK into Kik app (iOS/Android). Announcement of the first 3 to 5 digital services/app partners joining the Kin Ecosystem.
‘18 Q2: Kin token swap opens between Stellar and Ethereum (dual blockchain). Kin SDK first public release. Kinit first public release. Native integration of Kin SDK into Kik app and Ecosystem partner apps.
‘18 Q3: Launch of the Kin Rewards Engine, Daily payouts to Ecosystem services begin.