In the midst of the intensifying global competition for cryptocurrency infrastructure, South Korea's leading cryptocurrency exchange Upbit has officially launched a major plan - the introduction of its self-developed Ethereum Layer 2 'GIWA'. This move not only marks the entry of this highest-volume Korean exchange into the underlying technology track but also reflects the urgent mindset of Asian cryptocurrency institutions seeking breakthroughs in the global blockchain infrastructure competition.
As early as a month ago, the outline of the GIWA project began to take shape. Upbit's parent company, Dunamu Inc., submitted a trademark application on August 8, which sparked industry speculation about its technological layout; and with the Upbit Developer Conference held in early September, this plan has finally been settled. In the keynote speech at the conference, Dunamu's CEO Oh Kyung-seok clearly articulated the strategic significance of GIWA, mentioning in his speech: 'The current global financial infrastructure is at a critical reconstruction stage, and Korea has the potential to actively compete in this field, while GIWA is our core lever to break through the boundaries of the Asian market and participate in global competition.'
To support the view that “digital assets are not a bubble,” Wu Jingshi specifically cited two milestone events in the U.S. crypto regulatory space: the 2023 approval of the first spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC), and the enactment of a groundbreaking stablecoin regulatory bill in the same year. “These developments are not coincidental but are the inevitable result of the evolution of the digital financial system,” he emphasized, “If Korea wants to avoid being marginalized in this evolution, it must proactively break through at the infrastructure level.”
This concern is not unfounded. A representative from Dunamu, who wished to remain anonymous, admitted in an interview with Decrypt that, although markets in the United States and Singapore have made significant progress in building blockchain infrastructure—such as the Base network by Coinbase in the U.S. and the Arbitrum ecological partnership by Bybit in Singapore—“the South Korean crypto market is still on the edge of the global mainstream infrastructure system, and local developers lack the foundational carriers to deeply participate in the Web3 ecosystem, which will lead to missing core industry opportunities in the long run.” The core goal of GIWA is to build an innovative platform for local South Korean developers, “so that more South Korean teams can build blockchain services based on GIWA, avoiding being excluded from the global Web3 wave.”
From a technical architecture and development planning perspective, GIWA has a clear layered design. According to Dunamu, GIWA is built on Ethereum Optimism using the OP Stack and employs Optimistic Rollups technology to address the scalability bottlenecks of the Ethereum mainnet—this technical route is consistent with Layer 2 networks of exchanges like Coinbase Base and Binance OpBNB, which can accommodate a massive array of applications in the Ethereum ecosystem while reducing transaction costs by over 90%, all while ensuring asset security. In terms of performance, the core goal of GIWA's public testnet is to achieve a 1-second block time, a metric that far exceeds the approximately 12-second block speed of the Ethereum mainnet, making it sufficient to support high-frequency trading and real-time payment scenarios.
In terms of functional layout, GIWA not only includes basic on-chain trading functions but also focuses on three core modules: the first is a liquidity verification privacy function based on Upbit market data, linking on-chain data with real-time liquidity data from exchanges to address asset pricing discrepancies in decentralized finance (DeFi) scenarios while ensuring user transaction privacy; the second is a mobile wallet designed specifically for assets, NFTs (non-fungible tokens), and dApps (decentralized applications), planning to support multi-chain asset management, NFT minting and trading, and one-click access to dApps, targeting ease of use for ordinary users; the third is a stablecoin ecosystem, but Dunamu clearly states that the launch of stablecoins will completely depend on the upcoming cryptocurrency regulatory framework in South Korea, “We will not rashly advance related businesses before the regulatory framework is clarified.”
It is worth noting that GIWA follows a roadmap of “phased decentralization.” Currently, in the testnet phase, the network is still controlled by a single sequencer—this design is similar to the initial architecture of Coinbase Base. In the Ethereum Layer 2 ecosystem, sequencers perform the core functions of transaction ordering, packaging, and submitting to the Ethereum mainnet for settlement. While a single sequencer model can ensure stability and transaction efficiency in the early stages of the network, it has also raised concerns about “centralization risks”: exchanges may influence transaction priority by controlling the sequencer and there may even be potential for censoring specific transactions or capturing maximum extractable value (MEV).
Regarding this controversy, Jay Jo, a senior analyst at Seoul Tiger Research, bluntly stated in an interview with Decrypt: “Layer 2 networks dominated by large exchanges like Coinbase and Upbit essentially focus more on the innovative practicality of financial infrastructure rather than purely decentralization. Based on Base's operational practice, Upbit is likely to adopt a similar centralized operational strategy on issues such as sequencer management and MEV distribution for GIWA in the future—this is an inevitable choice for exchanges to balance compliance, user experience, and decentralization.”
Jay Jo further pointed out that Upbit's launch of GIWA is a key measure for addressing business difficulties and seeking diverse breakthroughs. “After the crypto bull market in 2021, the trading volume of crypto in South Korea has continued to decline, while competition among local exchanges has intensified—platforms like Bithumb and KakaoTalk’s Klip continue to squeeze market share, putting increasing revenue pressure on Upbit. Previously, it tried various diversification directions, such as launching the DeFi platform Levvels and venturing into the NFT business, and even established overseas exchanges in Thailand and Indonesia, but most ended in failure, and its fee model has obvious limitations.”
In his view, GIWA may be Upbit's most realistic path to break through: “Upbit's greatest advantage lies in its large user base—by 2024, its registered users in South Korea will exceed 10 million, accounting for over 60% of South Korea's total crypto users—and deep market liquidity, which is difficult for other local competitors to match. Through GIWA, Upbit can funnel its existing users and liquidity into its own Layer 2 ecosystem, creating a closed loop of ‘exchange + public chain,’ which can enhance user stickiness and open up new revenue growth points in DeFi, NFT, and Web3 applications.”
However, regulatory risk remains the biggest uncertainty GIWA faces. Earlier this month, a U.S. crypto regulatory report pointed out that “Layer 2 networks operated by exchanges essentially have the attributes of trading venues and should fall under the securities regulatory framework.” This viewpoint has raised concerns within the industry about the regulatory attitudes in Asia—if South Korean regulators adopt similar logic, GIWA may face stricter compliance requirements. However, Jay Jo believes that Upbit has likely communicated with regulatory bodies such as the Financial Supervisory Service (FSS) before advancing GIWA, stating, “Upbit has always been under direct supervision by South Korean authorities, and as a leading local platform, it would not rashly launch such an important infrastructure project without regulatory approval.”
Currently, the GIWA testnet has officially launched, with Lambda256, the blockchain technology department under Dunamu, responsible for core technology development. Rei Nam, the chief technology officer of Lambda256, stated: “Although GIWA is still in the testnet phase, it has already opened up new opportunities for developers in South Korea and globally. From the early stages of the project, we have invested significant resources to optimize the technical architecture, aiming to allow more innovative services and ideas to take root in the GIWA ecosystem—such as NFT applications based on South Korean local culture and on-chain payment solutions targeting small and medium enterprises.”
For ordinary users, the progress of GIWA is worth ongoing attention: its dedicated mobile wallet application is currently in development, with specific functional details to be gradually disclosed through official documents; in the future, with the mainnet launch, Upbit is likely to introduce incentives such as cross-chain migration of user assets and transaction fee reductions to attract existing users to experience the GIWA ecosystem. For the industry, whether the launch of GIWA will trigger a new round of competition among “exchange-based Layer 2” networks and whether Asian crypto infrastructure can break the dominance of Europe and the U.S. still remains to be seen.
