Korea Local Node - Regional Evaluation

[Pagoda]

1. Key Takeaways: South Korea’s Crypto Landscape

1. Why Korea Matters
   South Korea’s high retail engagement, scattered yet active Web3 builders and communities make it a critical testing ground for foundations like Scroll, Solana, Base, Sui and many more. If community-driven efforts and regulatory clarity align, Korea could lead Asia’s decentralized future, leveraging its 6.5 million-strong user base.

2. A Regulation-Heavy Environment Overshadowing Builders
   Korea’s crypto industry is heavily shaped by unclear and rigid regulations. As a result, exchange-centered infrastructure with strong KYC and fiat on/off ramp surveillance has flourished disproportionately, while builder-driven innovation remains stifled.

3. Exceptionally High Retail Participation in Crypto
   With 6.45 million active exchange users (12.5% of the population) trading ₩5.9 trillion (~$4.2B) daily, South Korea boasts one of the highest per-capita crypto participation rates globally, surpassing many traditional markets and neighboring East Asian countries. This retail enthusiasm is a powerful foundation for Web3 growth.

4. Heavy Dependence on Centralized Platforms
   The market is heavily reliant on CEXs, with Upbit ($2.81B in 24-hour volume, #2 globally) and Bithumb ($1.41B) handling over 90% of trades. The Kimchi Premium (2–3% Bitcoin price premium) persists due to capital controls, while DEXs and DeFi protocols struggle to gain traction, reflecting a centralized trading culture.

5. An Urgent Need for Ethereum-Aligned, Crypto-Native Culture
   To shift from speculative trading to decentralized innovation, South Korea urgently needs a community-led, Ethereum-aligned culture. Events like ETH Seoul (April 2025) and hackathons (e.g., Solana, Monad) are fostering this shift, with 30+ DeFi and NFT projects launched in Q1 2025, but broader adoption requires overcoming regulatory barriers.

6. Web3 Adoption Gaining Momentum
   Korea’s Web3 market is maturing, driven by retail enthusiasm and growing institutional interest (e.g., proposed bank and pension fund investments in May 2025). Conglomerates like Hyundai Card (NFT concert tickets with Polygon) and developer communities (e.g., 0xBlob, university clubs) signal potential, but decentralized applications remain nascent.

(source: 2024 South Korean Crypto Report)

2. Korea’s Web3 Market:

South Korea’s crypto market operates in a highly restrictive regulatory environment that prioritizes investor protection and financial stability but creates significant challenges for builders and decentralized innovation.

Therefore, Korea’s Web3 environment remains off-chain and centralized among major CEXs Fiat on-ramps are exclusively through licensed CEX with bank-linked accounts, and AML/KYC rules plus Travel-Rule wallet whitelisting enforce strict surveillance. Previously, the travel rule did not apply to withdrawals under 1mil KRW. But now it applies to all withdrawals regardless of the amount. CEXs are often under regulatory scrutiny, like tax investigations, primarily due to political uncertainty.

Legacy trauma from the 1997 IMF Forex Crisis drives regulators to prevent capital flight, giving rise to the “Kimchi Premium” and keeping most Koreans’ crypto activity inside CEX walls—both an obstacle and opportunity for DeFi growth.

The upcoming presidential election may change the landscape. The KRW stablecoin is one of the hot topics among the candidates.

Challenges and Opportunities:

1. Regulatory Hurdle: Token re-evaluations threaten delistings, eroding retail confidence.

2. Terra&Luna Collapse and the Impact on the Builder Ecosystem: The incident was a national catastrophe, leaving a scar on both the general reputation and the builder ecosystem.

3. Global Influence: The Trump administration’s pro-crypto policies (e.g., favorable SEC guidelines and potential ETF approvals in 2025) are creating a positive global sentiment, encouraging South Korean regulators to explore more crypto-friendly policies to stay competitive.

4. Domestic Shift: The 2025 South Korean presidential election has elevated KRW stablecoins as a hot issue, with candidates advocating for their adoption to boost DeFi and cross-border payments. A clearer stablecoin framework could unlock on-chain activity and attract builders.

5. Institutional and CBDC Progress: The proposed entry of institutional investors and the Bank of Korea’s CBDC pilot signal a gradual integration of crypto into mainstream finance, potentially creating infrastructure that DeFi projects could leverage.

Centralized Exchanges:

South Korea’s crypto market remains heavily reliant on centralized exchanges. As of May 2025:

• Upbit: ~$2.81B in 24h volume (Top pair: BTC/KRW ~$445M)

• Bithumb: ~$1.41B in 24h volume (Top pair: BTC/KRW ~$183M)
  (Source: CoinGecko)

Upbit is now the #2 spot exchange globally, second only to Binance, highlighting its outsized role in both the Korean and global markets. This may the biggest opportunity lying inside a highly concentrated, homogeneous nation. Once DeFi adoption reach the tipping point, it will open up a huge opportunity for those who have the mindshare of Koreans ready to move onchain.

This dominance of CEXs underscores Korea’s centralized trading culture—and the urgent need to shift toward Ethereum-native, on-chain activity.

2. Korea’s Web3Ecosystem and Communities:

Ecosystem Landscape:

Builders:

The Korean Web3 builder ecosystem is active in various fields such as blockchain infrastructure, validators, and wallets. Notably, there has been a significant rise in activities focused on integrating gaming and K-content with Web3 to create “consumer-oriented” services.

• Layerbank
• Toast
• Eisen
• Clober
• WePin
• ABC Wallet

Enterprises (Crypto-Friendly Businesses)

Conglomerates largely drive the Korean economy. They have explored with NFTs due to relative regulatory flexibility during the last NFT bull cycle. Now the interest has winded down, except a few conglomerates like SK and Hyundai Card where the ‘chaebol’ owners themselves have personal interest in the industry.

SK has its own mainnet, wallet, and NFT marketplace, but no meaningful traction. Hyundai Card partnered with Polygon to mint concert tickets as NFTs, which, if successful, can instantly onboard hundreds of thousands of concert participants onchain. (news in Korean)

Existing Communities:

• KOL Channels on Telegram
  • There are 100+ telegram channels run by both individuals and/or marketing agencies focusing on the following topics:
    • Airdrop hunting
    • Trading
    • Overall market opportunities like LP incentives
• Research and Marketing Agencies
  • Research and marketing agencies are seeing increased business and activity, driven by demand from retail traders and foreign projects seeking support for their Korea go-to-market strategies
    • Xangle
    • Four Pillars
    • Despread
    • Undefined Labs
    • 071Labs
• Dev / Educational Community
  • 0xBlob
  • B-harvest
• University Clubs
  • There are more than 13 active university clubs in Korea. Under grads and graduates are actively often the main target for the recruiters of o web3 companies.And they are the main participants to major hackathons

Events & Hackathons:

Key gatherings include Korea Blockchain Week (Early September), ETH Seoul (Mid April), EthCon Korea (Early September) in the order of participant count. There are frequent accelerator demo days, dev bootcamp, and university hackathons hosted by diverse ecosystems like Solana, Monad, Sui, and XRPL.

4. Proposed Initiatives & Support Needed:

See below for the full proposal

5. Why Korea?

South Korea is a paradox in crypto: retail participation is among the highest globally, yet activity remains heavily concentrated on centralized exchanges. Adoption of decentralized tools like DEXs and DeFi is still minimal—reflecting a regulation-first environment that has favored exchange growth over crypto-native development.

If Ethereum is to thrive as a decentralized ecosystem in Asia, Korea must not be left behind. Only a community-driven, Ethereum-aligned initiative can spark the cultural shift needed to move from exchange-centric speculation to crypto-native participation. Korea doesn’t need more trading apps—it needs permissionless infrastructure, governance participation, and on-chain builder education.

No one but the Ethereum community can lead this shift.

Plus, Korea’s high per-capita crypto engagement, world-class dev talent, and regulatory tailwind create an ideal testing ground for Scroll’s Local Node. Anchoring here unlocks a 6.5 million-strong user base and positions Scroll to lead Asia’s next Web3 wave.