Upbit's GIWA: A Strategic Layer 2 Play in South Korea's Web3 Ecosystem

In 2025, South Korea's crypto landscape is undergoing a seismic shift as Upbit, the nation's largest cryptocurrency exchange, deploys GIWA, an Ethereum Layer 2 blockchain designed to redefine scalability, security, and revenue diversification in the Web3 space. Built on Optimism's OP Stack, GIWA targets one-second block times while inheriting Ethereum's robust security, positioning itself as a direct competitor to global Layer 2 solutions like Coinbase's Base and Binance's BNB Chain . This move marks a strategic pivot for Upbit, which has long dominated South Korea's trading market but now seeks to cement its infrastructure leadership in a rapidly evolving ecosystem.

Technical Foundations and Competitive Positioning

GIWA's architecture is engineered to address Ethereum's scalability limitations while maintaining EVM compatibility, enabling seamless deployment of smart contracts and decentralized applications (dApps). By leveraging the OP Stack—a modular framework for Optimistic Rollups—GIWA reduces transaction costs and latency, critical for mass adoption in a market where 8 million users already transact on Upbit's platform . The testnet, Giwa Sepolia, has already processed over 4 million blocks, demonstrating the project's technical maturity and developer readiness .

This infrastructure is further bolstered by GIWA Wallet, a multi-chain tool supporting Ethereum, Arbitrum, and Polygon, which simplifies cross-chain interactions for users and developers. Such features align with South Korea's broader Web3 ambitions, where the government's Digital Assets Basic Law (2025–2026) and regulatory support for KRW-pegged stablecoins create a fertile ground for innovation .

Revenue Diversification: Beyond Trading Fees

Upbit's traditional revenue model, reliant on trading fees, faces diminishing margins as global competition intensifies. GIWA's introduction signals a deliberate shift toward infrastructure-based monetization. By offering staking pools, tokenized real-world assets (RWA), and developer toolkits, Upbit can generate recurring revenue from transaction fees, subscription models, and ecosystem growth.

A key example is Upbit's collaboration with Naver Pay to promote a KRW stablecoin initiative. This partnership aims to reduce the “kimchi premium” (the price gap between Korean and global crypto markets) by enabling seamless on-chain swaps between USDT/USDC and KRW-pegged stablecoins . Such use cases not only enhance liquidity but also position GIWA as a backbone for South Korea's burgeoning stablecoin economy, where banks, tech giants, and Web3 firms are locked in a fierce race to dominate the KRW-pegged market .

Strategic Partnerships and Market Adoption

GIWA's success hinges on its ability to attract developers and enterprises. Dunamu, Upbit's parent company, has prioritized Southeast Asian expansion through subsidiaries, circumventing South Korea's stringent regulatory environment while tapping into growth markets . Meanwhile, the platform's GIWA ID—a soulbound token (SBT)-based identity system—enhances compliance and security, critical for institutional adoption .

South Korea's crypto market, with $1 trillion in on-ramp volume between July 2024 and June 2025 (second only to the U.S.), provides a strong foundation for GIWA's adoption . However, competition is fierce: Kakao Pay, Kaia, and Nexus are advancing KRW stablecoin projects, while Samsung SDS and LG CNS offer blockchain infrastructure for private stablecoins . Upbit's edge lies in its existing user base, liquidity, and strategic alignment with regulatory trends.

Regulatory Tailwinds and Risks

South Korea's regulatory environment is evolving rapidly. The Bank of Korea's revised stance on stablecoins and the National Assembly's push to legalize private KRW stablecoins reduce uncertainty for projects like GIWA . However, regulatory shifts could also introduce compliance challenges, particularly as global standards for tokenized assets and cross-border transactions solidify.

Conclusion: A Web3 Infrastructure Powerhouse

GIWA represents more than a technical upgrade—it is a calculated move to reposition Upbit as a Web3 infrastructure leader. By combining Ethereum's security with Layer 2 scalability, fostering real-world use cases, and leveraging South Korea's crypto-savvy market, Upbit is poised to diversify its revenue streams and challenge global players. For investors, GIWA's success will depend on its ability to attract developers, integrate with emerging stablecoin ecosystems, and navigate regulatory dynamics—a test of innovation in one of the world's most competitive crypto markets.

Source:
[1] South Korea's Dunamu Reveals GIWA to Rival Global
https://coinlaw.io/upbit-dunamu-launches-giwa-blockchain/
[2] South Korean crypto exchange Upbit launches Ethereum L2
https://cointelegraph.com/news/south-korea-crypto-exchange-ubit-launches-ethereum-l2
[3] Upbit introduces GIWA as an Ethereum Layer 2 to lower
https://www.mitrade.com/insights/news/live-news/article-3-1106786-20250909
[4] Crypto for Advisors: Asian Stablecoin Adoption
https://www.coindesk.com/coindesk-indices/2025/08/14/crypto-for-advisors-asian-stablecoin-adoption
[5] South Korean Exchange Upbit to Work on KRW Stablecoin
https://www.coindesk.com/business/2025/07/01/south-korean-exchange-upbit-to-work-on-won-stablecoin-with-naver-pay-report
[6] The Korean won stablecoin competition has started in full
https://www.panewslab.com/en/articles/a6pye563