Insights on Korean cryptocurrency: a feast seeking to exit liquidity

Author: Deep Tide TechFlow

Soju mixed with beer turns into "honey water," and the crowd on the dance floor sways with the DJ's rhythm, while the Korean beef on the grill sizzles at nearly medium rare, with over 300 side events… The Korean Blockchain Week is bustling.

However, beneath the music and the clamor of alcohol lies deep anxiety.

The project teams are anxious. Market liquidity is insufficient, new narratives are lacking, retail investors are not buying in, and the requirements for listing on top exchanges are becoming increasingly stringent. Investors keep asking, "WHEN LISTING?"

The VCs are anxious. Many projects they invested in are currently in a "half-dead" state; projects that have already issued tokens are still locked up, with market values continuously declining; the fund's lifespan is short, and fundraising is becoming more difficult.

The entrepreneurs are anxious. The primary market is cooling down, many VCs are only observing and not investing, and after months of discussions, they still haven't completed a new round of financing. Even if a VC shows interest, they indicate they can only co-invest after confirming a strong lead investor.

The media and communities are anxious. Positioned in the middle to lower end of the industry food chain, they need the landlords to have surplus grain to survive.

The exchanges are also anxious. Trading volumes are continuously shrinking, competition is intensifying, and they can only comfort themselves that their situation is still better than that of the project teams.

How to relieve the worries? Only a bull market can help.

Everyone is looking forward to a vigorous altcoin bull market, and many project teams are pinning their hopes on Q4, planning to issue tokens in that quarter.

However, "waiting for the bull market" is equivalent to waiting for death, so everyone is starting to focus on the Korean market to achieve liquidity exit.

Whether it's project teams or VCs, most come to Korea with the same task and purpose: to find Korean exchanges to list their tokens; to find Korean KOLs and communities for promotion.

At various event venues, the most heard phrases are, "Do you know anyone at Upbit or Bithumb? Can you introduce me?" or curious inquiries like, "How did XXXX and XXXXXX get listed on Upbit?"

People are increasingly realizing that Korean exchanges, especially Upbit, are the world's leading altcoin trading markets (liquidity exit venues). Compared to on-chain trading, Korean investors prefer trading on centralized exchanges. Korea has four major exchanges: Upbit, Bithumb, Coinone, and Korbit, with Upbit being the absolute leader, holding a market share of 70%-80%. In 2023, Upbit is the second-largest cryptocurrency spot market globally, second only to Binance. Bithumb has long maintained the second position in the market, accounting for 15% to 20% of the total trading volume among the four major exchanges, while Coinone's market share is between 3% and 5%, and Korbit's market share is less than 1%. Therefore, getting listed on Upbit has become one of the long-term goals pursued by various project teams. However, getting listed on Upbit is not easy; Korean exchanges do not launch tokens first, and Upbit's listing standards have two requirements regarding the liquidity of tokens and the exchanges they are listed on:

Market Demand:

Evaluate the trading liquidity and commercial viability of the proposed digital asset. Review its known market capitalization, the concentration of the digital asset, the number of wallets, or trading volume on other exchanges.

Listing Status:

Review the current listing status of the proposed digital asset, including listings on other exchanges. Assess the reputation, jurisdiction, and AML/CFT practices of other exchanges. A relatively open secret is that to get listed on Upbit, you must first get listed on Binance/OKX, at least Bybit. The relatively closed Korean crypto market has also led to many intermediaries or brokers profiting from information asymmetry. Some help overseas projects with GTM in Korea, such as SEI and SAGA, which are executed by individuals rather than institutions in the Korean market; others do KOL recommendations and management; and some provide guidance for listing on Korean exchanges… With many intermediaries, the quality varies. A member of a local Korean institution told Deep Tide TechFlow, the Upbit listing process is very standard; if someone tells you they can guarantee a listing on Upbit, they are most likely a scammer. To achieve liquidity exit, not only is it necessary to list on exchanges, but also to have retail investors buy in, finding Korean communities and KOLs for promotion has become a necessity. A local Korean marketing consulting agency stated that their business volume this year is several times that of last year. In the past, many people recognized that Korean cryptocurrency investors concentrated on the local chat app Kakao, but the reality is that most crypto investors, especially young people, now gather on Telegram. Statistics from 2023 show the top 10 most forwarded Telegram channels in the Korean crypto market among the top 110 channels. The most forwarded channel is "코인같이투자 (WeCryptoTogether)," with 168,765 forwards, about 34% higher than the second place "취미생활방 (EnjoyMyHobby)" with 125,919 forwards. The third to tenth places are @kkeongsmemo, @emperorcoin, @centurywhale, @mujammin123, @masrshallog, @airdropAScenter, @seaotterbtc, and @kookookoob. What information do Korean investors pay the most attention to? We can still explore this through the viewing and forwarding data from the 110 Telegram channels. In 2023, three themes stand out in the most viewed information in the Korean cryptocurrency community. First, legal and regulatory issues in the Korean cryptocurrency industry, and content related to negative industry issues, such as privacy breaches, money laundering, and financial crimes, rank highest; second, new token investment opportunities, such as information about Sui token sales, rank fourth, indicating that Korean investors are very sensitive to new projects and profit opportunities; finally, the third place is content related to macroeconomic indicators (such as CPI), as this year's Bitcoin price trends are mainly influenced by macro data. Looking at the ranking of the most forwarded information in the Korean crypto community in 2023, we find that everyone is focused on the same topic------airdrop hunting. The most forwarded information is the "Airdrop Workflow Summary" published on March 20 in the "Coinmap Hack" channel, which details how to participate in airdrops for major projects like Starknet, zkSync, and LayerZero, and has been forwarded over 2,600 times, ranking first. Most of the messages from second to tenth place are also about zero-cost airdrops, such as how to obtain airdrops and free NFTs from projects like zkSync and Starknet. It seems that airdrop hunting is a consensus familiar and recognized by all cryptocurrency investors, transcending nationality and culture. As more and more projects flood into the Korean market, Korean KOLs/community leaders are becoming increasingly cautious about projects. Local community leaders in Korea indicate that they prefer to collaborate with projects backed by well-known investment institutions, especially those with investments from Binance Labs. Another difficult-to-verify piece of information is that Korean investors currently do not favor local founders and investment institutions; if this is true, it bears a striking resemblance to the Chinese market. When leaving Seoul, I asked several VCs and project personnel, "What did you gain from your trip to Korea?" Most replied, "Not much, mostly just for fun/medical beauty," and some even felt they were wasting the company's money, feeling quite embarrassed. This may also reflect the current state of the Korean market, it looks beautiful, but achieving liquidity exit in the Korean market is not easy.