Gm, web3 fam!

If you’ve been watching global crypto markets, you know Korea is where the action’s at. We’re seeing trading volumes rivaling the big leagues and a community as passionate as they come. But you must have the right game plan to play in this market.

In this first part of our two-part series, we’ll break all you need to know about the Korean crypto market, from the dominance of altcoins to the challenges of decentralized finance (DeFi) and why understanding the language and cultural nuances can make or break your entry.

Read on for the first part, and if you can't wait for part two, you can access the entire report with a link below. ;)

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Why South Korea?

When you think about major crypto markets, the US or China might first to come to mind. But South Korea is a powerhouse. In the first quarter of 2024, the Korean Won (KRW) outperformed the US Dollar (USD) in crypto trading volume—$456 billion in KRW compared to $445 billion in USD. That’s massive, considering Korea’s relatively small population.

So, why is Korea a big deal?

Koreans are tech-savvy, early adopters with a strong appetite for speculative investments. This has created a fertile ground for cryptocurrency. While it’s ultimately about the numbers, it has more to do with influence.

Korean traders are market-shakers, often setting trends that ripple globally. If you’re serious about scaling your web3 project, cracking the Korean market should be a top priority.

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The Altcoin Obsession

In most markets, Bitcoin and Ethereum dominate the trading volume. Not so in Korea. Sure, BTC and ETH are still significant, but they don’t hold the same dominance here. Instead, the Korean market has a bit of an altcoin obsession. As the chart below shows, the BTC and ETH combined rarely reach 20% of the total trading volume on Korean exchanges.

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Why are Koreans so into altcoins? It boils down to:

1. The desire for high returns

2. The thrill of speculative trading

3. A community-driven market that loves promising projects

What does this mean for you? If you’re entering the Korean market focusing on Bitcoin or Ethereum, you might want to rethink your strategy. The Korean crypto community loves their altcoins, and they trade them with a passion that’s hard to match anywhere else.

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The Korean Exchange Scene

Like in other countries, in Korea, most trading happens on centralized exchanges (CEXs). But here’s where it gets interesting—Korea’s CEX market is incredibly concentrated. Upbit, the largest exchange, commands over 80% of the market share. Along with Bithumb, the second largest, they control 98% of the market activity. It’s a duopoly, plain and simple.

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Moreover, corporations can’t open trading accounts for investment purposes, meaning all Upbit transactions are from individual traders. This creates a very different market environment than you might be used to in the US or Europe.

To operate in Korea, you’ll need a Virtual Asset Service Provider (VASP) license, but don’t be fooled into thinking that getting one guarantees success. The real challenge is competing with these giants.

So, what’s the play here? First, understand the power dynamics. Upbit, for example, is the fifth-largest exchange globally in spot trading volume, but it only serves Korean users. This means their user base is highly localized and loyal.

To break in, you’ll need to partner with these exchanges or find a niche they haven’t fully capitalized on yet. The key is to bring something unique that complements rather than competes directly with these established players.

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The DeFi Struggle

Let’s shift gears a bit and talk about DeFi. It just isn’t that big in Korea. Of the total KRW 649 trillion domestic virtual asset trading volume, only KRW 1.6 trillion was transferred to personal wallets. That’s about 0.25% of the total trading volume. The rest? It’s all happening on CEXs.

Compare that to other regions where DeFi is booming, and you’ll see that Korea is tough for decentralized platforms. This isn’t because Koreans aren’t interested in crypto—far from it. But the complex, decentralized nature of DeFi doesn’t resonate as strongly there.

There are a few reasons for this:

• First, Koreans have an aggressive investment style in both crypto and stocks. They’re all about quick gains, and locking up assets in a DeFi protocol for long-term rewards isn’t as appealing.

• Second, the regulatory environment in Korea makes it challenging to move assets in and out of DeFi. The process is complicated, and most people don’t see the point when they can trade on a CEX with far less hassle.

So, web3 projects focusing on DeFi must address these pain points head-on. Simplifying the user experience, providing clear value propositions, and perhaps even integrating with popular CEXs could overcome adoption barriers.

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Building a Community in Korea

Community is everything in web3, and Korea is no different. But building a community requires a localized approach—it takes time, patience, and a deep understanding of local dynamics.

One of the first things you might be tempted to do when entering the Korean market is to start building your presence on Telegram and Discord. But Koreans don’t use these platforms like in the West.

• Telegram, for instance, has a somewhat shady reputation in Korea due to its association with illegal activities. While it’s still a key platform, you must carefully manage your channels and engage with users.

• Discord, on the other hand, is more popular with the web3 native crowd—those who are already deep into the crypto scene. But it’s still not as widely used as you might expect.

Most Koreans prefer local platforms like Naver Blog or KakaoTalk. If you’re not on these, you’re missing out on a massive chunk of the market.

Additionally, while global crypto influencers might have some impact, local influencers have the real power to drive engagement and adoption. Partnering with local influencers on these platforms can help you reach a broader audience and build credibility. Also, participating in local events, both online and offline, can help you connect with the community and establish your brand in the market.

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The Language Barrier

Finally, let’s talk about one of the biggest challenges you’ll face in Korea—the language barrier. English might be web3’s default language, but in Korea, you have to use Korean. Most natives are uncomfortable using English, and if your product or service doesn’t support Korean, you will struggle to gain traction.

This goes beyond just translating your website or app. You’ll need to provide support in Korean, engage with the community in Korean, and understand the language nuances that matter for your marketing.

The Korean government has even restricted foreign exchanges from supporting the Korean language to maintain control over the market. This means that localization is non-negotiable if you want to succeed in Korea.

Everything from your platform’s user interface to customer support must be in Korean. It’s a challenge, you bet, but it’s also an opportunity to connect with a market buzzing with crypto excitement—if you speak its language.

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Itching to Take on Korea?

So, thanks for reading some of our reflections on entering the Korean crypto market. It’s a unique and challenging environment, full of opportunities if you do the work.

In the next part of this series, we’ll explore specific strategies for expanding your presence in Korea, including how to cut through the complex regulatory landscape, build a strong local team, and use partnerships.

Ready to make your mark in Korea?

Let’s chat about how to help you tailor a strategy that hits the mark. From ideation to execution, we’ll assemble the perfect team to realize your vision.

And also, if you can't wait for Part 2, click HERE for the full report in Docsend!