Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Naver and Kakao mark first major merger in crypto sector
A promotional image for the merger of Klaytn and Finschia / Courtesy of Klaytn
By Lee Yeon-woo
The launch of a new coin, based on the merger of coins from domestic IT giants Naver and Kakao, was confirmed, Thursday. Recognized as the cryptocurrency market's first merger, the new coin raises anticipation about its impact on the market.
According to LINE Blockchain Scan, a blockchain network, the proposal to integrate Naver's Finschia and Kakao's Klaytn has received approval from their members, with a 95 percent rate.
The new token, provisionally named Project Dragon Token (PDT), will be available for Finschia and Klaytn coin holders to claim. It will be usable on both LINE and Kakao messengers.
This integration has led to the creation of a domestic virtual asset project with a market capitalization valued at 1.4 trillion won ($1.05 billion). The industry is closely monitoring the potential ramifications of this unprecedented large-scale integration. The project is also expected to breathe new life into the stagnant domestic coin industry.
In January, Klaytn, a blockchain platform developed by Kakao, and Finschia, created by Naver affiliate LINE Tech Plus, announced the integration of their blockchain ecosystems. This integration indicates a complete merger of the two respective blockchain ecosystems into a single entity.
"Even though the Asian market drives 34 percent of global GDP and 77 percent of cryptocurrency trading volume, the market capitalization of Asian blockchains is only at 5 percent, indicating a fragmented and underutilized sector," Klaytn explained to its users. "By merging Finschia and Klaytn, we can combine Asia’s largest product and infrastructure assets, to establish the leading blockchain ecosystem in Asia."
However, the integration process encountered challenges in the early stage. Finschia investors, surprised by the sudden news of the merger, opposed the creation of PDT. They also disagreed on the token exchange ratios, 148 Finschia for 1 Klaytn. Yet, through the determined efforts of both companies to persuade their investors, the successful integration was achieved.
Klaytn is planning to form a unified task force and outline a roadmap for the merger. The process is expected to be intensively undertaken between the second and third quarters of this year.