Upbit's Full-Scale Entry... Will the Domestic Staking Market Grow?

Upbit to Launch 2nd Round of 'Ethereum 2.0 Staking Service' from 2 PM on the 17th
Operating Overseas Exchange Staking Services for Business Diversification
Staking Still Unfamiliar to Investors... "May Pursue Higher Risk and Higher Returns"

Domestic cryptocurrency exchange Upbit has officially entered the staking market. Staking refers to entrusting cryptocurrency to a specific company, similar to a bank's savings or fixed deposits, and receiving interest in return.

Upbit plans to start the second round of its "Ethereum 2.0 Staking Service" from 2 PM on the 17th. It aims to recruit a total of 1,280 Ethereum, valued at approximately 5.1 billion KRW. The annual interest rate is up to 5.1%, and earnings generated daily can be received every day. However, the interest is calculated on a simple interest basis, and principal is not guaranteed in case of losses due to Ethereum price declines.

On the 14th, Upbit already launched the first round of the Ethereum 2.0 Staking Service. At that time, 640 Ethereum were recruited on a first-come, first-served basis, and it is reported that all were filled in less than five minutes. An Upbit official explained, "Due to the positive response to the staking beta service conducted by Upbit in September 2020, we decided to officially start the staking business."

Although Upbit's entry into the staking market is relatively late compared to the other four major exchanges, there is an opinion that the market landscape could change. Coinone launched the service in December 2019, followed by Bithumb in April 2020, and Korbit introduced Ethereum staking services in April last year. However, since Upbit accounts for nearly 90% of domestic cryptocurrency trading volume, the market size could expand further if it officially starts staking services.

Overseas cryptocurrency exchanges are already operating staking services as part of business diversification. Binance, the world's largest cryptocurrency exchange, offers staking for 82 types of cryptocurrencies. The blockchain rewards revenue generated from staking on the U.S. cryptocurrency exchange Coinbase increased by 109% quarter-over-quarter to $81.5 million. Although still high, the fee ratio of total revenue decreased by 6 percentage points from 94% in Q2 to 88% in Q3.

However, doubts have been raised about the success potential of staking businesses at domestic cryptocurrency exchanges. It is still unfamiliar to domestic investors and the interest rates are not as high as expected. An industry insider said, "Decentralized exchanges have no intermediaries, so fees are low and many offer annual interest rates exceeding 10%. If the principal is not guaranteed, investors who know how to stake will pursue higher risk and higher returns."