Upbit, South Korea’s leading cryptocurrency exchange by trading volume, has officially unveiled plans to launch its own Ethereum Layer 2 network, named GIWA. This announcement comes just one month after trademark filings hinted at this new project. The confirmation was made on Tuesday during the Upbit Developer Conference, where Dunamu CEO Oh Kyung-seok highlighted the potential for South Korea to enhance its position in the global financial infrastructure landscape.
During his keynote speech, Oh emphasized the importance of digital assets, stating they represent not merely a speculative bubble, but a significant evolution within the financial sector. He cited recent milestones such as the U.S. approval of its first Bitcoin ETF and the enactment of stablecoin legislation as indicators of a maturing market. Despite advancements in blockchain technology in places like the U.S. and Singapore, a representative from the company pointed out that the Korean market has largely been left behind. Dunamu aims to reverse this trend by encouraging domestic developers to create innovative services on the GIWA network and to integrate into the Web3 ecosystem.
GIWA is designed with a phased decentralization approach in mind. Development of stablecoin capabilities will largely depend on impending regulatory frameworks in South Korea. The network aims to provide high scalability through Optimistic Rollups, alongside enhanced privacy features backed by verified liquidity derived from Upbit’s market data. A mobile wallet tailored for managing assets, NFTs, and decentralized applications (dApps) is also in the works.
The project’s initial announcement follows trademark filings by Dunamu Inc., the entity that operates Upbit, made on August 8. A testnet for the layer-2 infrastructure, dubbed Sepolia, has already gone live. According to Rei Nam, the chief technology officer at Lambda256—Dunamu’s blockchain technology arm—the development of GIWA is a crucial step for both Korean and global developers in fostering new services.
Analysts have raised concerns regarding the centralization aspect of GIWA. Built on Optimism’s OP Stack, it will initially operate with a single sequencer controlled by Upbit, similar to how Coinbase’s Base functions. This operational model allows exchanges considerable power over transaction processing and ordering, leading to potential issues related to maximal extractable value (MEV).
A recent regulatory report has posed questions regarding the implications of exchange-operated Layer 2 networks, suggesting they might operate more like trading venues and thus could be subject to heightened scrutiny in Asia. Jay Jo, a senior analyst from Seoul-based Tiger Research, reaffirmed this, noting that large exchanges like Upbit and Coinbase prioritize financial infrastructure innovations over decentralization.
Despite previous attempts at diversifying revenue streams—such as with Levvels, NFTs, and expansions into Southeast Asian markets like Thailand and Indonesia—many initiatives have not yielded expected results. Nonetheless, Upbit operates under stringent oversight from Korean authorities, which suggests that the exchange likely engaged in prior discussions with regulators prior to the GIWA rollout.
As domestic trading volumes have decreased since 2021, coupled with rising competition, Upbit is in need of new growth drivers. The creation of its own blockchain may provide a viable avenue for leveraging its established user base and liquidity, positioning GIWA as a key piece in the exchange’s diversification strategy.
