Klaytn KLAY -4.16% , a Layer 1 blockchain network backed by South Korean internet giant Kakao, and Finschia, a major blockchain in Japan developed by messaging conglomerate LINE, have proposed merging the two blockchains — a move claimed to potentially create Asia’s largest web3 ecosystem.

Klaytn Foundation and Finschia Foundation said in a joint statement today that they intend to form a new blockchain supporting both EVM and CosmWasm frameworks. The two foundations will also merge into one organization — if the proposal is approved.

The pair noted that the new mainnet will inherit Klaytn’s integration with KakaoTalk and Finschia’s integration with LINE — serving a user base of over 250 million digital wallets with more than 420 decentralized apps, according to the statement. Kakao and LINE are both prominent messaging platforms across Asia.

“With access to every Kakaotalk and LINE user, the new public blockchain will also act as a springboard for Asia's IT and entertainment enterprises,” the companies said.

The voting of the potential merger is set to take place from Jan. 26 to Feb. 2.

The potential for a new token 

The companies also proposed a new token to replace the existing KLAY and FNSA -3.87% , the native coins of the combined blockchains. Holders of both coins will be able to swap for the new coin upon issuance, according to the statement.

Following the announcement of the potential merger, the price of KLAY jumped 31.8% over the past 24 hours to $0.25 at 2:20 p.m. Hong Kong time, according to The Block’s price page. FNSA climbed 22.6% to trade at $34.74, the data showed.

“Drawing on the combined experience of both foundations, the proposed tokenomics for this new native coin will focus heavily on delivering sustainable value creation,” the companies said. “This will be achieved via a lower base inflation rate and a 3-layer burning model designed to drive the coin towards deflation as network activity increases.” 

The foundations explained that they plan to burn 24% of the new coins issued to “implement Zero Reserve Tokenomics.”

“We are excited to be taking the first step toward unlocking the enormous synergy of merging the public blockchains started by Kakao and LINE, which are both leading IT companies in Asia,” the foundations said.