Dunamu bets big on US fandom market with NFT trading platform

Dunamu CEO Lee Sirgoo poses in front of an electronic board set up at the company's head office in Seoul, before an interview with The Korea Times, Feb. 15. Korea Times photo by Choi Won-suk

By Lee Min-hyung

• Published Mar 2, 2022 1:01 PM KST
• Updated Mar 3, 2022 9:05 AM KST

Finding balance between security and efficiency key to blockchain growth

By Lee Min-hyung

Dunamu seeks to rise to global fame by making a big splash in the nascent digital fandom market with HYBE's star-studded roster of artists, CEO Lee Sirgoo said in an interview with The Korea Times.

The operator of Korea's top cryptocurrency trading platform Upbit plans to establish a joint venture in the United States with HYBE, one of Korea's leading entertainment companies, sometime in the first half of 2022. Although a specific timeline has not been confirmed, both companies are in talks to launch a non-fungible token (NFT) marketplace there.

“Our first and foremost goal is to produce decent digital products targeting the fandoms of HYBE's artists ― including BTS ― and we are going to focus on the entertainment sector while operating the NFT trading platform,” Lee said during the interview at the company's head office in Seoul.

Globalization

Given Dunamu's huge reliance on the domestic market, the company hopes to utilize the opportunity as the first step for its globalization. Dunamu generated an operating profit of 2.59 trillion won ($2.17 billion) during the first three quarters of last year combined, a 28-fold jump from that of 2020, on commission profit growth from its cryptocurrency trading platform. Of particular note was that Dunamu achieved an unmatched operating profit margin of 92 percent during the same period.

Despite the surprising earnings growth, the Dunamu leader underscored the importance of preemptively bracing for the uncertain and unpredictable nature of the industry.

“We never expected such huge earnings even a couple of years ago,” Lee said. “This means that we have to keep making fresh attempts to catch up with the rapidly changing market environment. We cannot settle for the status quo due to the inherent volatility of the market. This is why we have decided to tap into the U.S. market under the partnership with HYBE.”

Lee also said that there is “no specific roadmap” for the firm's long-term management strategy due to the unpredictability of the market.

“We do not map out any conventional five-year or 10-year plans, as no one can exactly predict how and when market trends will change,” he said. “The only thing I can say for sure is that we will have to keep taking risks and try something new to find the next cash cow and catch up with the agile nature of the market.”

Dunamu was able to achieve the earnings surprise last year on booming cryptocurrency investment. But as the revenue from trading commissions is subject to plunge in line with market circumstances, Dunamu and other crypto asset platform operators are seeking to diversify their revenue areas.

Lee picked the metaverse and NFTs as the firm's two major investment areas for the time being.

“We have launched a series of services ― such as an investment platform for unlisted stocks and a metaverse platform ― as part of efforts to diversify our revenue areas,” Lee said. “We closed down some of the services that gained little attention from the market. But this is the only thing we can do to alleviate risks and find the next growth engines.”

Listing plans

With Upbit expanding its influence in the local crypto market last year, Dunamu was mired in a series of rumors on its listing plans. Upbit accounts for an 80 percent market share for crypto exchanges in terms of transaction volume here.

But Lee denied the rumors, saying nothing specific has been confirmed over the timeline of its possible initial public offering (IPO).

“For now, Dunamu is not considering going public,” he said. “Companies go public when they want to raise funds from investors. But we do not have any specific action plans after possibly raising capital following the IPO. Dunamu leaves open all possibilities for the IPO, but now is not the right time.”

Given the size of the market, the U.S. is an attractive venue for the firm's IPO, but the decision cannot be made overnight and the company will take comprehensive factors into account after its planned launch of the NFT trading platform in the U.S. this year, according to Lee.

Outlook for blockchain, CBDC

The Dunamu leader has decades of experiences in the digital industry, having served previously as co-CEO of Kakao, the nation's dominant mobile messenger app before moving to Dunamu. He also worked as president of NHN's U.S. branch.

Regarding the future of blockchain technology, he predicted it would take more time to penetrate into people's daily lives.

“The World Wide Web was invented back in the 1960s and it took about three decades until its commercialization,” he said.

Lee compared the internet to blockchain technology.

“Just like the World Wide Web, it will take much more time before we can handle versatile transactions with blockchain. But the day will definitely come when people do so in their daily lives,” he said.

“It has been only 13 years since the invention of bitcoin. Even if blockchain is developing at a rapid pace, efficiency has an inverse relationship with security. When we enhance security, efficiency of a service decreases. But my view is that we are in the middle of finding a balance between the two when using blockchain.”

He also remained optimistic that a growing number of central banks around the world are engaging in more aggressive research on offering a central bank digital currency (CBDC).

“About four years ago, the Bank of Korea (BOK) and the Ministry of Justice were two authorities that remained most negative towards the cryptocurrency market,” he said. “But the BOK is doing research on CBDC and launching a series of pilot tests for its issuance.”

Unlike existing cryptocurrencies, CBDC is an authorized digital currency, but this does not mean that the cryptocurrency market will collapse after central banks around the world start issuing their own CBDCs, Lee expects.

“This is because each country has different approaches toward CBDC. In particular, China closed down all of its cryptocurrency exchanges and is issuing a CBDC, in what appears to be a move to enhance the global presence of China's CBDC. But the U.S. appears to take a different approach by watching carefully how China's CBDC develops and is expected to take measures against the move.”