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1Q 2021, Hot Issues of DeFi Market in Korea

oday, we gathered the issues that occurred in the Korean DeFi market in the first quarter of 2021.

Several Korean research institutes analyzed that the growth of decentralized finance (De-Fi) services, which have grown 75 times the market size over the past year, has been recognized by global regulators and governments as crypto assets.

It is interpreted that the DeFi market has been able to grow rapidly due to the global unity of the concept of crypto assets used in DeFi and the establishment of national crypto-asset regulations.

The Ministry of Science and ICT(MSIT) and the Korea Internet Security Agency (KISA) proposed 3steps of national support strategy for Korea to take the lead in the global DeFi market, predicting that Korea will become the world’s №1 DeFi country by 2027.

The contents are as below.

■ Stage 1: Defi ecosystem development (2021–2022)

■ Step 2: Technology enhancement and user base extension (2023–2024)

■ Step 3: Advanced convergence between products (2025–2026)

We gathered the results and expectations of the first quarter of the Korean DeFi market, which is becoming a trend around the worldwide.

1. If the Bank of Korea issues CBDC, the DeFi market is expected to grow from the perspective of technology utilization and decentralization.

The Central Bank Digital Currency (CBDC) is a digital currency issued in electronic form by the Central Bank of Korea responsible for the issuance and distribution. Given that 1:1 exchange with legal currency is guaranteed, it is distinguished from private cryptocurrencies which is difficult to define their intrinsic value, and is expected to be useful in the future.

Source = Blockchain-based Innovative Financial Ecosystem Research Report

(The blockchain-based innovative financial ecosystem research report is a research report released by the Korea Ministry of Science and ICT and the Korea Internet Security Agency in January.)

However, even though central banks in each country, including the Bank of Korea, are taking steps to issue CBDCs, experts said that establishing a stable and reliable CBDC currency operating system in the early stages is a huge challenge and there are too many difficulties to overcome.

2. Continuous expansion of the size of the Defi market

According to a ‘Capital Market Focus Study’ published in March, the size of the defi market continues to expand, especially in the past year, showing that the total amount of deposits has increased significantly, and is used in areas such as loans, decentralized exchanges, asset management, and derivatives.

According to DeFi Pulse, as of March 2021, the Total Value Locked (TVL) reached $41.8 billion, up about 75 times from $5.6 billion in March 2020.

Delio, a crypto finance company that began service in Korea in 2019, is the largest DeFi company with a total deposit amount of KRW 2 trillion (1.7 billion) as of April and provides loans and deposit services for crypto assets in partnership with Bithumb, a crypto asset exchange. It shows that big tech companies such as Kakao and Naver are also trying to expand into the DeFi business through subsidiaries in charge of the blockchain business.

Especially, Delio is leading the Crypto Finance market in Korea in terms of size and recognition. Recently, Delio and Galaxia Money Tree have partnered to launch a service that allows bitcoin payments through the Money Tree application.

Following the global trend, large companies and start-up fintech companies in Korea are expected to expand their services to lend and deposit cryptocurrency in the form of crypto assets in Korea.

3. Expansion of Centralized Channels which utilize DeFi

On exchanges such as Binance, a centralized exchange, most of the transactions are generated through derivatives and margin transactions, such as indefinite futures contracts. Centralized exchanges are developing services from spot trading to margin trading, and other centralized platforms are expected to expand their usage to other derivative or margin contracts.

In Korea, authentic defi is gaining popularity and has a high growth potential. However, due to the nature of Korea’s financial transactions, there is a big challenge of credibility. To reduce this credibility problem and encourage cryptocurrency financial activities, it would be faster and easier to use the DeFi service if it is derived using a centralized platform.

However, this is also a later challenge, as it is the opposite of complete decentralization.

The first quarter of 2021 passed, with many Korean platforms and products trying to preoccupy Defi in the growing and leading global DeFi market.

It is time to look forward to Korea’s DeFi market, with new technologies and various collaborations in 2021.



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Delio Digital Asset Finance Group, established in 2018, is №1 fintech company based in Seoul and acquired digital asset licenses from Korean and US governments.