In the rampant bear market, the day when Bitcoin briefly fell to $30,000, the leading cryptocurrency has never soared like the South Korean exchange. So-called”Kimchi premiumAfterwards, the price of Bitcoin is still US$5,000 higher than the price of major US exchanges.
The main reason for the premium of kimchi is that South Korean exchanges have been combination The country’s strict capital control laws prohibit the outflow of funds, and tax laws and anti-money laundering (AML) regulations make it difficult for foreigners to use Korean exchanges without a local Korean bank account (even giants such as Bithumb and Upbit) .
The premium is not the only cryptocurrency industry that sets Korea apart from the rest of the world. Among other factors, the isolation of the market and the excellent stability of the Korean won have kept the usage rate of stablecoins at a low level, and the acceptance of decentralized finance (DeFi) has lagged far behind the rest of the world.
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South Korea’s Bitcoin boom
Despite this isolation, South Korea’s acceptance of Bitcoin in particular and cryptocurrencies in general is still very strong. According to reports, since the beginning of 2021, more than 5 million unique cryptocurrency users (approximately 10% of the country’s population) have bought or sold digital assets at least once.
According to data from CoinMarketCap, on May 19, on the day when the premium for kimchi hit US$5,000, only one Korean exchange, Upbit, had a 24-hour trading volume exceeding US$31.5 billion. Together with the remaining “big four” cryptocurrency exchanges in South Korea, Bithumb, Korbit, and Coinone, its trading volume is US$38.1 billion, which is much higher than the recent transactions on KRX, South Korea’s leading stock exchange.
An interesting aspect of the Korean cryptocurrency boom is its distribution across all age groups.January 2 Polls Research shows that nearly half of the users of Bithumb and Upbit, the leading exchanges in South Korea, are in their 40s or 50s-many of them are mothers. In other words, Wider investigation A study of South Korean cryptocurrency exchange apps in March showed that young people dominate the ranks of new cryptocurrency users in South Korea, among which young people aged 20 and 30 accounted for the number of new app users every month in the first three months of this year. Nearly two thirds. However, their investment amount is very small, usually less than $100.
All of this is clearly having an impact.South Korea’s Bithumb recently announced The first quarter of 2021 Net profit increased by 876% over the previous year.
Government roadblock
At the same time, the South Korean government and regulators are by no means champions of cryptocurrency. In February, Lee Jo Yeol, Governor of the Bank of Korea tell The National Assembly Committee heard that “crypto assets are assets with no intrinsic value.” He added: “It is difficult to understand why the price of Bitcoin is so high.”
South Korea’s encryption regulations also make it difficult for foreign competitors. In December 2020, Binance, the world’s largest exchange, closed its Binance Korea business within less than a year of its establishment, thanks in large part to a law that prohibits exchanges operating in the country Sharing the order book means that Binance Korea can no longer rely on Binance’s liquidity.
The law came into effect in March 2021. In the same month, another leading cryptocurrency exchange OKEx announced that due to New anti-money laundering regulations. It has also been suggested that these rules will make it difficult for the smaller South Korean exchange to compete with the Big Four.
Don’t like stablecoins?
Despite the booming cryptocurrency market, South Korea still lags far behind the rest of the world in adopting stablecoins. This is largely due to the fact that the Korean won is stable enough that the largely troubled cryptocurrency market is relatively stable. The demand for coins is not so strong. .
In addition, Oleg Smagin, head of global marketing for Delio, a leading cryptocurrency loan and mortgage company in South Korea, said that the South Korean government knows nothing about stablecoins. He added that this makes them skeptical of the deal.
In addition, exchange fees are also very low-transaction fees of the Big Four banks are mostly in the range of 0.15% to 0.25%. Although the withdrawal fee for the Korean won is very low and very low (about 1 USD), the fee for directly withdrawing from the cryptocurrency is very high. The withdrawal fees of the four major banks range from 0.0005 to 0.0015 BTC to directly withdraw bitcoins—one BTC is 40,000 US dollars, and the withdrawal price is 20 to 60 US dollars.
This can help explain why the won is Trading fourth Bitcoin’s national currency is second only to the Japanese Yen, the Euro and the main U.S. dollar.
CeFi-DeFi Hybrid Vehicle
Smagin said that South Korea’s closed crypto market and unfamiliarity with stablecoins are a victim, because the booming DeFi industry has not yet had a chance to gain a place here.
He said: “2019 became a turning point for DeFi’s widespread global adoption, but it was hardly recognized in South Korea. This is mainly because most local retail investors lack experience in using overseas encryption services, and the adoption rate of stablecoins is very low. .”
Delio’s solution is a hybrid centralized decentralized financial model that uses CeFi as a way to build an initial crypto lending ecosystem, which will become more and more decentralized over time. At the same time, the company realized that “the CeFi crypto-to-crypto lending service that can meet the needs of local traders has a huge niche.”
The company currently offers four CeFi loan products, as well as a new payment service that allows Delio wallet holders to make payments in Bitcoin through the payment application Money Tree in a network of more than 70 retail companies.In addition, this is Delio liquidity ARM provides digital asset loans between 800,000 and 45 million U.S. dollars to institutional clients.
Delio provides Bitcoin and Ethereum loans up to 90% of the borrower’s BTC or ETH collateral, and also provides the following services Bithumb customers, You can use BTC or ETH or Korean won as collateral. Stakeout and yield can also be carried out. The total value of Delio’s recent use is more than $2 billion.
Delio’s DeFi hybrid power plan revolves around Duchy, The Korean won-based stablecoin project planned to be launched in the third quarter of 2021. By collateralizing cryptocurrencies, KRWD stablecoins (fixed at one won) will be generated. Ducato is a DeFi protocol with its own token DUCATO, which is used for payment and governance. But the CeFi Delio platform provides a user-friendly interface for stablecoins.
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