[LD Research Report]Kaspa: A POW Public Chain Based on the GHOSTDAG Protocol

LD Capital
9 min readJul 31, 2023


Author: duoduo, LD Capital

Kaspa is a POW public chain developed using the GHOSTDAG protocol. Compared to Bitcoin, the main difference in Kaspa lies in its structural pattern. While Bitcoin uses a singular chain structure, GHOSTDAG employs a Directed Acyclic Graph (DAG) where a block can point to multiple other blocks.

The Kaspa token, KAS, was launched in November 2021, with a total supply of 28.7 billion, a current circulation of 19.8 billion, accounting for 69% of the total, a market value of $750 million, and an FDV of $1.08 billion. Since its launch, the token has increased in value by a hundredfold.

I. Team

Kaspa’s team has some renown, with its founder Yonatan Sompolinsky being a postdoctoral researcher at Harvard University specializing in transaction ordering and MEV. He conceptualized the GHOST protocol as early as 2013, and related papers were cited in Ethereum’s whitepaper.

Source: Kaspa

The following is a part of the content quoted from the: Ethereum white paper

Source:Ethereum White Paper

Besides the founder, there are five core developers, including Michael Sutton, who researches parallel algorithms and distributed systems; Shai Wyborski, one of the authors of the GHOSTDAG paper, specializing in classical and quantum cryptography; Mike Zak and Ori Newman, who focus on distributed systems development; and Elichai Turkel, an applied cryptographer and high-performance blockchain developer.


II. Technical Principles

Kaspa’s technical principles are mainly elaborated in its 2021 paper, “PHANTOM GHOSTDAG: A Scalable Generalization of Nakamoto Consensus.”

Bitcoin essentially operates as an open and anonymous network of nodes, maintaining a public transaction ledger following the “longest chain” principle. This design limits the network’s throughput, resulting in low scalability. Currently, Bitcoin produces one block every 10 minutes, with 3–7 transactions per second.

Structural Model: Directed Acyclic Graph.

Kaspa introduces the PHANTOM protocol, a proof-of-work unpermissioned ledger protocol that generalizes Satoshi Nakamoto’s blockchain concept to a Directed Acyclic Graph (blockDAG). PHANTOM can reference multiple preceding blocks, providing a total ordering of all blocks and transactions, and outputting a consistent set of accepted transactions.

The PHANTOM protocol contains a parameter ‘k’, used to control the tolerance for simultaneously created blocks, allowing adjustments for higher throughput. When k=0, it means no forks, similar to Bitcoin’s single chain and longest chain structure.

Source:《PHANTOM GHOSTDAG:A Scalable Generalization of Nakamoto Consensus》

First, let’s understand different types of blocks in the DAG; these concepts will be applied in the examples below. Taking block H as an example:

past(H)={Genesis, C, D, E} — Blocks that pointed directly or indirectly to H before H’s creation.

future(H)={J,K,M} — Blocks that point directly or indirectly to H after H’s creation.

anticone(H)={B,F,I,L} — Blocks unrelated to H directly or indirectly, other than H’s past and future.

tips(G)={J,L,M} — Leaf or terminal blocks, which will be referenced by new block headers.

Identifying Honest and Malicious Blocks

PHANTOM solves the identification problem between honest and malicious blocks. Malicious attacks feature a lower connectivity between blocks generated by malicious nodes and those by honest nodes, whereas honest blocks tend to have higher connectivity.

The judgement is based on the parameter ‘k’ mentioned earlier. For a specific block X, if the intersection of anticone(X) with honest blocks is greater than ‘k’, X is considered to have lower connectivity with honest blocks and will be deemed an attack block; otherwise, it is considered an honest block.

A diagram below illustrates the judgement of honest and attack blocks, where k=3. After inspection, the blue part is identified as honest blocks, and the red part as attack blocks.

Source:《PHANTOM GHOSTDAG:A Scalable Generalization of Nakamoto Consensus》

Linear Ordering

To address the double-spending problem, the project team implemented the GHOSTDAG protocol. The principle is to score each block based on its connectivity (the number of elements in the past block set), selecting the block with the highest total score to form the main chain. The main chain becomes the initial subset, and other blocks vote according to the main chain’s order. The entire network will vote following a trend from higher to lower connectivity.

A diagram below illustrates how GHOSTDAG completes the ordering process with k=3. Small circles next to each block X represent its score, which corresponds to the number of blue blocks in the past DAG.

- Step 1: Start with block M with the highest score, sequentially selecting K, H, D, and Genesis block, marking with blue shading and black border, forming the initial subset. Block D’s past only includes the Genesis block.

- Step 2: Visit block H, identifying C, D, E as honest blocks in its past and adding them to the subset, marked with a blue border.

- Step 3: Visit block K, identifying H, I as honest blocks in its past, marked with a blue border.

- Step 4: Visit block M, including K, F in its past; K is an honest block and added to the subset, marked with a blue border.

- Step 5: Block V is a virtual block, representing the entire current DAG as its past.

- This provides a step-by-step visualization of how the PHANTOM protocol identifies honest blocks and orders them, enhancing the integrity and security of the Kaspa network.

Source:《PHANTOM GHOSTDAG:A Scalable Generalization of Nakamoto Consensus》

Thus far, Kaspa has completed the discussion of its new consensus architecture and put it into practical use. The official website displays the visualization of the DAG production process:

Source:Kaspa Official Website

III. Hashrate Situation

KAS mining algorithm is kHeavyHash, supporting GPU solo mining or dual mining with ETHW, ETC, and is compatible with some FPGA and ASIC mining machines. According to the official blockchain explorer, Kaspa’s hashrate is around 2.6–2.7 PH/s. Based on Mining Pool’s data, Kaspa’s hashrate ranking is around 30th, following BCH, BSV, DASH, and ahead of DOGE, LTC.

Kaspa’s hashrate shows a continuous growth trend. It experienced four significant increases in hashrate in October 2022, December 2022, February 2023, and July 2023. In March this year, a mining machine manufacturer launched a specialized mining machine to enhance miners’ efficiency.


From the perspective of hashrate distribution, the concentration of hashrate is not too high. In the latest 999 blocks, the top five mining pools account for 37.1%; over 56.7% of the blockchain was produced by unmarked addresses.


IV. Token Economic Model

Token Distribution

KAS was launched in November 2021, with no pre-mining, zero pre-sale, and no token distribution. The total supply is 28.7 billion, with a current circulation of 19.8 billion, constituting 69% of the total, a market capitalization of $750 million, and an FDV (Fully Diluted Valuation) of $1.08 billion.

Token Release

According to the emission schedule, KAS reduces production in a given way every month, thereby reducing production by half each year. The diagram below illustrates the release plan, showing a higher release rate in the early stages, with early miners accumulating a significant number of chips. Specific release dates can be found on the official website (KASPA EMISSION SCHEDULE PDF).

According to the token emission chart, the monthly emission and release value of KAS tokens from July 2023 to June 2024 have been calculated, as shown in the table. If calculated at a price of 0.037, in July 2023, KAS will emit tokens valued at $19 million, gradually decreasing thereafter to approximately $10 million by June 2024.

Source: Kaspa Official Website, LD Capital

Based on data from f2pool, Kaspa’s 24-hour output value currently ranks fourth, following only Bitcoin, Dogecoin, and Litecoin, and surpassing ETC and BCH.

Source: f2pool

Holding Situation

There are 267,000 addresses holding one or more KAS. The concentration of tokens is relatively high; the top 10 addresses hold 17.299%, mainly in exchange wallets; the top 100 hold 26.13%; the top 1000 hold 61.35%.

Regarding token liquidity, in the last 30 days, addresses holding 100–10K tokens are in a position of reduction and outflow, while addresses holding 0–100 tokens and 10k or more are in inflow. In the last 7 days, addresses holding 100–10K tokens and those holding 100m to 1b Humpback tokens are in reduction and outflow, while other addresses are in inflow.

Source:Kaspa Block Explorer

V. Current Progress & Development Plan

The official website has disclosed some important progress and recent development plans since 2023.


In February 2023, core developer Michael Sutton published a paper on DagKnight Consensus, an evolution of GHOSTDAG, theoretically laying the foundation for faster transactions and confirmation times.

Under Testing

• Rewriting code using the Rust programming language to enhance Kaspa’s performance and transaction speed.

• Mobile wallet development, with an estimated development time of 3–4 months.

• Integration of Kaspa with Ledger for sending and receiving KAS.

Under Research and Development

• Upgrading the consensus mechanism in accordance with DagKnight Consensus.

• Increasing the blocks per second and transactions per second. The goal is to produce 32 blocks per second, up from the current 1 block per second, with 10 blocks per second achievable on the testnet.

• Releasing the official white paper, currently in preparation.

• Improving archival nodes to access more historical data, beyond the current 3-day limit.

Under Research and Development

• Upgrade Consensus Mechanism According to DagKnight Consensus

• Further Increase the Number of Blocks and Transactions Per Second

• Currently, Kaspa produces 1 block per second, and the goal is to increase it to 32 blocks per second. On the current test network, it can achieve 10 blocks per second.

• Release the Project White Paper

• There are several research papers surrounding Kaspa’s technology, but the official project white paper has not yet been released and is being organized.

• Improve Archive Nodes

• Currently, Kaspa’s standard nodes can only access transactions from three days ago. By improving archive nodes, more historical data can be retrieved.

Development Planning

• Implementing Smart Contracts, Building the Ecosystem

Kaspa aims to implement smart contracts, Defi, and Layer 2 applications on its public chain, establishing a corresponding ecosystem.

The development and deployment of smart contracts are the most crucial factors for its further growth. If smart contracts can be deployed smoothly and on time, and an ecosystem with a certain level of activity is established, Kaspa’s market value still has room for further growth. However, if the deployment of smart contracts does not go smoothly, or if the ecosystem fails to develop, there may be significant bottlenecks in future development.

VI. Summary

• The project team has strong technical capabilities and a solid development foundation, introducing a new blockchain model and pursuing new development directions.

• With a market value of $750 million and ranking around 60, the market has already fairly valued its technical team and mining power growth. Future growth requires more substantial support.

  • Potential selling pressure is significant. Early miners hold a large number of low-cost tokens, and the daily ongoing output could cause significant price impacts if sold.

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