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Understanding Kima Network: Bridging TradFi and DeFi with Blockchain | BSCN (fka BSC News)
Financial systems face ongoing challenges from fragmentation, where Decentralized Finance (DeFi) operates separately from Traditional Finance (TradFi), limiting efficient asset movement. This has increased risks, such as bridge hacks, which have resulted in billions of dollars in losses over recent years. Kima Network addresses these issues as a decentralized settlement protocol that connects Traditional systems with DeFi using blockchain technology
The protocol enables users to transfer money across ecosystems, such as from crypto wallets to bank accounts or between blockchains, without depending on smart contracts, wrapped tokens, or synthetic assets. This method reduces exposure to vulnerabilities common in other interoperability solutions, where smart contract exploits have been a frequent problem. Kima's relevance stems from its support for real-time payments in a sector handling a $225 billion stablecoin market and facilitating settlements for tokenized real-world assets in a potential $280 trillion space
The protocol's adoption is evident in its network of over 100 partners, including wallets and AI infrastructure providers, reflecting its role in advancing secure cross-system transactions amid growing demand for integrated financial tools.
What Is Kima Network?
Kima Network operates as a blockchain-based system designed to facilitate money transfers between cryptocurrency wallets and bank accounts, as well as across multiple blockchains. The protocol addresses issues of fragmentation in financial systems by providing a method for secure transactions that span both blockchain and non-blockchain environments. It supports real-time payments and aims to integrate with a range of financial tools, including stablecoins and tokenized assets.
The platform maintains partnerships with over 100 entities, such as wallets, protocols, and developers in the artificial intelligence and infrastructure sectors. Kima positions itself as an infrastructure-agnostic tool, meaning it operates independently of specific blockchain networks, which allows it to facilitate transfers without the need for intermediaries that hold funds.
In practice, it enables users to send funds from one system to another, such as from a cryptocurrency wallet to a traditional bank account, by using cryptographic methods and compliance checks. This approach avoids common risks associated with other bridging solutions, like vulnerabilities in smart contracts. The protocol handles various asset types, including fiat currencies and digital tokens, and incorporates features for liquidity management to ensure smooth operations.
Where Did Kima Network Originate?
Kima Network was founded in response to the challenges of connecting isolated financial systems in the Web3 space and traditional banking. The project was co-founded by a group of Web3 developers, including CEO Eitan Katz, Co-Founder Tzahi Kanza, who also serves as Head of Syndicate at Syndika, CTO Guy Vider, and CMO Tomer Warschauer Nuni, an early contributor who holds positions as Investment Director at PRIME VC and Chain GPT. The company is headquartered in Israel and began development within Mastercard's FinSec Innovation Lab, an incubator program designed to advance financial security and integration.
The origins can be traced back to practical needs in payments, stablecoin usage, and the handling of tokenized assets. Early efforts focused on developing a system that circumvents typical blockchain issues, such as smart contract exploits. Partnerships with entities like Chain GPT and Mastercard provided initial support, emphasizing secure and compliant movement of assets across systems. This foundation allowed Kima to evolve into a protocol that prioritizes direct settlements over custodial models.
The team's background in Web3 development influenced the protocol's design, drawing from experiences in syndicate management, venture capital, and technical infrastructure. This expertise helped shape Kima into a tool that integrates with both emerging blockchain technologies and established financial rails.
How Does Kima Network Work?
Kima Network operates through a settlement layer that is not tied to any single blockchain, using cryptographic techniques and built-in compliance rules to link different financial ecosystems. It avoids holding user funds or using smart contracts, which reduces exposure to hacks and other security threats.
The process begins when a user initiates a transaction by approving and depositing funds into a Kima-managed vault on the originating side, such as a crypto wallet or bank account. A network of validators then checks the deposit, achieves consensus, and authorizes the corresponding release on the destination side. Funds are disbursed directly from the vault at the receiving end to the intended wallet or account, without creating wrapped versions or involving third-party custodians.
Here is how the whole process works:
Settlement Layer Operation: Kima Network utilizes a blockchain-agnostic settlement layer that employs cryptographic techniques and built-in compliance rules to connect various financial ecosystems, thereby avoiding the need to hold user funds or rely on smart contracts to minimize risks associated with hacks and other security issues.
Transaction Initiation: Users start a transaction by approving and depositing funds into a Kima-managed vault on the source side, such as a crypto wallet or bank account.
Validation and Consensus: A network of validators verifies the deposit, reaches consensus, and approves the matching transaction on the destination side.
Fund Release: Funds are released directly from the Kima vault at the destination to the recipient's wallet or account, without the use of wrapped assets or third-party custodians.
Liquidity Management: An AI system, including the Lima tool, manages liquidity by continuously monitoring and balancing funds across vaults in real-time to prevent imbalances.
Asset and Integration Support: The protocol enables transfers of diverse assets and connects with multiple blockchains, banks, and non-blockchain systems; it also plans to add support for Bitcoin and wrapped Bitcoin transactions.
Security Measures:
Settlement Speed: This configuration supports sub-second settlements, making it suitable for payments and DeFi applications.
Update Tools: Tools like CosmoVisor provide automatic updates for blockchain integrations, ensuring ongoing compatibility as networks evolve.
Overall Functionality: The system serves as a rail for value transfer across ecosystems, facilitating conversions from cryptocurrency to fiat and cross-chain token swaps.
What Are the Key Features of Kima Network?
Kima Network features several key components centered on security, compatibility, and efficiency. One key aspect is its avoidance of smart contracts for interoperability, which minimizes risks associated with code vulnerabilities while still connecting traditional and decentralized finance.
It supports transfers across blockchains, fiat systems, and other non-crypto environments without using synthetic assets. This enables real-time payments, where merchants can receive crypto and automatically convert it to preferred treasury holdings, with fiat capabilities in progress. Here’s the breakdown:
Focus on Security, Compatibility, and Efficiency: Kima Network's features are primarily designed to enhance security, protect user assets, ensure broad compatibility across various financial systems, and improve operational efficiency for smoother transactions.
Avoidance of Smart Contracts for Interoperability: A central feature of the protocol is its deliberate avoidance of smart contracts when enabling interoperability, which helps minimize potential risks associated with coding errors or vulnerabilities in smart contract logic, while allowing seamless connections between traditional finance (TradFi) and decentralized finance (DeFi).
Support for Cross-System Transfers: The network facilitates transfers between various blockchains, traditional fiat systems (like bank accounts), and other non-cryptocurrency environments, without relying on synthetic or wrapped assets to represent value during the process.
Real-Time Payments Capability: This transfer support enables real-time payment processing, where, for example, merchants can accept cryptocurrency payments that are automatically converted into their preferred treasury assets (such as stablecoins or fiat equivalents), with full fiat integration still under development.
Stablecoin Gateway Functionality: Kima serves as a dedicated gateway for stablecoins, streamlining the transfer of these assets across various blockchains and currencies within the global stablecoin market, currently valued at $269 billion.
Settlement Management for Tokenized Assets: The protocol facilitates secure and rapid settlements for tokenized real-world assets (RWAs), including examples such as real estate properties or stock shares, by providing a structured process for their transfer and verification.
AI Components for Optimization: Artificial intelligence elements, such as the Lima tool, are integrated to monitor and analyze liquidity levels and market dynamics in real time, helping to optimize overall network operations and prevent issues like liquidity shortages.
Comprehensive Security Features:
Support for Diverse Applications: These combined features make the network suitable for various practical uses, such as enabling in-game transactions within gaming platforms, facilitating data monetization where users can sell or trade data assets, and supporting everyday cryptocurrency payments for general transactions.
Emphasis on Direct, Non-Custodial Design: The overall platform architecture prioritizes the direct handling of transactions without intermediaries holding funds (non-custodial), ensuring that users maintain full control over their assets throughout the process and reducing reliance on third parties and associated risks.
What Backs Kima Network and How Is It Funded?
Kima Network receives support from institutional investors and has secured funding through multiple rounds of investment. In June 2024, it raised $5 million in a pre-seed round led by Blockchange Ventures and Mastercard's FinSec Innovation Lab, with additional input from angel investors.
Cumulative funding reaches approximately $13.7 million, involving participants such as Big Brain Holdings, Outlier Ventures, MH Ventures, Chain GPT Labs, Castrum Capital, Dutch Crypto Investors, and Founderheads. These resources fund protocol development, partnership expansions, and ecosystem growth.
Initial DEX offerings occurred on platforms like Polkastarter and ChainGPT Launchpad in late 2024. The backing from established players in finance and blockchain indicates confidence in Kima's approach to interoperability.
What Major Updates Shaped Kima Network in 2025?
In 2025, Kima Network experienced several developments that influenced its progress in the blockchain industry:
January 2025: In January, Kima Network laid out its strategic direction for the year through key announcements focused on expansion and partnerships.
February 2025: The month involved addressing security concerns and forming new alliances to enhance functionality in AI and cross-chain operations.
March 2025: March emphasized ongoing updates and new tools, with a focus on payment innovations and security improvements through partnerships.
April 2025: April showcased growth metrics and integrations that demonstrated increasing adoption in specific sectors, such as gaming and DeFi.
May 2025: May brought announcements related to core financial integrations and governance-focused partnerships.
July to August Developments: From July to August, the focus shifted to ecosystem expansion, community incentives, and educational initiatives, marking a period of rapid growth.
These developments collectively drove increased adoption in areas such as tokenized real-world assets (RWAs) through secure settlements, AI applications via tools like Lima and partnerships like Axone, and enhanced security practices amid a broader recovery in the cryptocurrency market, positioning Kima for sustained growth.
Kima Network Roadmap for 2025 and Current Status
The 2025 roadmap for Kima Network, as released in January 2025, outlines quarterly milestones across transaction types, core capabilities, chain support, asset support, and ecosystem development. Below is a detailed breakdown based on official announcements. As of August 8, 2025 (mid-Q3), the current status reflects progress from technical updates, partnerships, and key achievements, including the ECB pilot in July 2025
These focus on expanding the types of transactions supported by the protocol for broader interoperability.
Phase 1 of fiat transactions introduces basic support for fiat settlements. BTC transactions enable direct Bitcoin transfers without the need for wrapped assets.
Status**:** Completed. BTC support was rolled out early, and Fiat Phase 1 testing began by April 2025, aligning with broader Fiat developments.
Phase 2 enhances fiat transactions with advanced features like automation. The AI Agents Solution integrates AI for tasks such as liquidity monitoring.
Status**:** Completed. Fiat Phase 2 testing commenced in April 2025, and AI tools, such as Lima (for liquidity tracking), were launched in March 2025, with further expansions ongoing.
DvP ensures simultaneous asset delivery and payment to reduce settlement risks. PvP handles simultaneous payments in different currencies. Multi-Chain Token Phase 1 supports tokens across multiple chains.
Status**:** In progress/completed for key elements. The July 2025 ECB pilot demonstrated DvP through blockchain-powered escrow for milestone-based disbursements using Digital Euro, with real-time settlements and no intermediaries. This advances PvP and multi-chain aspects via API integrations.
Messaging enables cross-system communication for non-financial data. Multi-Chain Token Phase 2 optimizes token handling for efficiency.
Status**:** Not started. No updates indicate progress yet, as focus remains on Q3 integrations.
New Core Capabilities
These enhance the protocol's efficiency, security, and usability.
Fee Optimization reduces transaction costs. Kima-in-a-Box Phase 1 provides a packaged solution for easy deployment.
Status**:** Completed. Early 2025 updates included gas calculation services, aligning with fee optimizations.
Optimizes liquidity allocation. Self-Managed Liquidity enables users to manage their own pools. Web2 API Connector Phase 1 links to traditional systems.
Status**:** Completed. Liquidity tools, such as Lima, were introduced in March 2025, and API connectors were tested in the ECB pilot for milestone verification.
FX supports currency exchanges. Dynamic Liquidity Provision uses LiMa AI for real-time balancing. TSS (Threshold Signature Scheme) in TEE (Trusted Execution Environment) Phase 1 enhances security.
Status: In progress. LiMa expansions occurred earlier, and the ECB pilot utilized TEE-like security for encrypted key shards in validators, advancing TSS.
Phase 2 builds on TEE for hardware-level security enhancements.
Status**:** Not started. The security series and education in July 2025 lay the groundwork, but there is no specific Phase 2 progress.
New Chains Support
Expanding compatibility with additional blockchains for wider interoperability.
Adds Bitcoin and Base (Ethereum Layer 2) support.
Status**:** Completed. Bitcoin integration was prioritized early, with transactions enabled.
Integrates non-EVM chains, such as Aptos, Sui, and Ton.
Status**:** Completed/in progress. Partnerships (e.g., with Massa in earlier updates) and general blockchain improvements in April 2025 suggest advancements.
Adds enterprise-focused Besu (Ethereum for private networks) and Berachain.
Status**:** In progress. Ecosystem growth to over 100 partners by July 2025 is likely to include these, although not explicitly confirmed.
Supports permissioned ledger R3 Corda, and Layer 2s Scroll and StarkNet.
Status**:** Not started. No updates yet.
New Assets Support
Broadening asset types for transfers, including fiat and stablecoins.
Adds Bitcoin, PayPal USD (PYUSD), and USDG stablecoins.
Status**:** Completed. BTC and stablecoin gateways were active early.
Introduces Euro and USD fiat, plus Circle's EURC stablecoin.
Status**:** Completed. Fiat testing in April 2025, with USD/EUR handling in pilots.
Expands to more stablecoins in Euro and Hong Kong Dollar.
Status**:** In progress. The ECB pilot utilized the Digital Euro (EUR, a fiat/stablecoin equivalent), advancing this initiative.
Adds Japanese Yen stablecoins.
Status**:** Not started. No mentions.
Ecosystem Development
Ongoing efforts to grow the network through validators and liquidity providers.
Onboards new groups of validators for decentralization.
Status**:** Completed. External validators were targeted early.
Allows open liquidity provider participation.
Status**:** Completed. Airdrops and staking (over $2M in $KIMA staked by July) support this.
Additional validator groups.
Status**:** In progress. Validator networks played a crucial role in the ECB pilot, enhancing consensus and security.
Further expansions.
Status**:** Not started.
Challenges Kima Might Face in the Blockchain Industry?
Kima faces multifaceted challenges in the blockchain industry. Technically, its smart contract-free design, which relies on validators and TEE/TSS, requires ongoing expansions to support diverse chains like Bitcoin and R3 Corda, potentially leading to compatibility issues and resource strain as networks evolve
Liquidity management through AI tools like Lima requires precise, real-time balancing to prevent imbalances during market volatility. Coordinating validators for consensus poses scalability challenges as transaction volumes increase into the millions. Security remains a critical concern, with risks shifting to potential validator compromises or TEE vulnerabilities, echoing the industry-wide bridge exploits that have resulted in losses exceeding $2 billion since 2022
Despite features like MPC wallets and scam detection, proving resilience against sophisticated threats is essential, particularly for handling tokenized real-world assets (RWAs) in a $280 trillion market.
Regulatory and compliance issues further complicate Kima's operations, as integrating fiat-crypto gateways exposes it to global KYC and anti-money laundering (AML) requirements. This can potentially delay bank partnerships and increase costs. Adapting built-in compliance logic to evolving standards from bodies like the European Central Bank (ECB), as demonstrated in its Digital Euro pilot, must balance privacy via TEE with transparency demands across jurisdictions
Economically, with $13.7 million in funding, Kima must efficiently allocate resources to meet roadmap milestones, such as hardware-based security, amid rising operational costs for validator expansions and AI optimizations, particularly in fluctuating markets. These challenges reflect broader industry dynamics, necessitating continuous innovation to ensure sustainability.
What's Next For Kima Network?
Kima Network's 2025 roadmap focuses on expanding capabilities and integrations. In the first and second quarters, it added support for more blockchains, incorporated external validators, and implemented Bitcoin/wrapped Bitcoin transactions on Ethereum.
The second and third quarters will involve developing CosmoVisor for automated chain updates and enhancing AI tools for liquidity management and scam detection.
In the third and fourth quarters, full fiat integration is targeted, along with increased handling of tokenized assets and ecosystem expansion, including merchant payment rails and stablecoin gateways.
Ongoing efforts include community airdrops, targeting over 150 partnerships, and enhancements in compliance to facilitate broader global use. The protocol also plans to address the $280 trillion market in real-world assets through settlements and conduct educational campaigns on Web3 technologies.
Frequently Asked Questions and Answers
What is Kima Network used for?
Kima Network is a protocol for facilitating transactions between traditional finance and decentralized finance, enabling transfers from cryptocurrency wallets to bank accounts and across blockchains without the need for smart contracts.
How does Kima Network ensure security?
It utilizes multi-party computation wallets, a validator network for consensus, and avoids the use of smart contracts to reduce vulnerabilities, while incorporating compliance logic and AI for scam detection.
Who founded Kima Network?
The protocol was co-founded by Eitan Katz (CEO), Tzahi Kanza, Guy Vider (CTO), and Tomer Warschauer Nuni (CMO), with origins in Mastercard's FinSec Innovation Lab in Israel.
Sources:
Final Thoughts
Kima Network stands as a functional settlement protocol that facilitates interoperability between traditional and decentralized finance systems through blockchain technology. It enables secure, non-custodial transfers across ecosystems without smart contracts, supporting real-time payments, stablecoin gateways, and tokenized asset settlements, potentially tapping into a $280 trillion real-world assets space
Backed by $13.7 million in funding and over 100 partnerships, the protocol has processed millions of transactions, integrated AI tools like Lima for liquidity management, and completed milestones such as the ECB pilot for programmable Digital Euro payments in July 2025
However, the platform faces potential challenges, including technical demands for chain expansions, security risks in validator networks despite the use of TEE implementations, regulatory hurdles for fiat integrations, and competition in adoption from established bridges. With its roadmap progressing, the protocol demonstrates practical utility in payments and DeFi, though sustained innovation is required to address fragmentation and volatility in the sector.