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By Lee Min-hyung
Dunamu and Bithumb, the two largest cryptocurrency exchange operators here, are increasing competition in the non-fungible token (NFT) market, identifying the area as their next growth engine amid the lukewarm crypto sentiment here and abroad.
Both firms understand the urgent need to expand their revenue streams preemptively due to the inherent volatility in the crypto market. Their earnings skyrocketed last year on soaring commissions for crypto trading.
However, soaring commissions are not the case this year, so they are going all-out to find new revenue sources in nascent yet promising growth areas. The NFT is a kind of digital asset that is unique and non-replicable. NFT art drew particularly huge interest here and abroad last year when the global asset market overheated on mass liquidity into the market.
As NFTs are based on blockchain technology just like cryptocurrencies, both exchange operators are also seeking to take advantage of their tech expertise by launching their own NFT marketplace sometime in the third quarter of this year.
Lambda 256, the blockchain research subsidiary of Dunamu, plans to launch CYPHRLY sometime in the fall. The company recently expressed its strong confidence in its growth potential and shared plans to tap deeper into not just Korea, but also the United States, amid the growing popularity of NFTs.
The company has attracted investments worth more than 100 billion won in less than two years since its establishment.
The Dunamu subsidiary recently unveiled its plan to put its focus on launching premium NFTs under partnerships with globally-renowned companies in sports, entertainment and art ― all of which have huge numbers of fans.
Bithumb Meta, launched in February of this year as the metaverse subsidiary of Bithumb, is also scheduled to launch its NFT marketplace, Naemo World, next month. Bithumb invested 17 billion won in the launch of the subsidiary.
Bithumb is expanding tech partnerships with big companies here. The key blockchain technology underpinning Naemo World is Monachain, which was developed by LG CNS. Monachain is a corporate-level blockchain widely used by clients in the financial circle. NongHyup Bank also used the blockchain when testing a pilot system for central bank digital currencies.
It remains to be seen how much revenue they can generate after tapping into the emerging growth area, but industry officials say that crypto exchanges have to keep searching for new business areas due to growing crypto uncertainties.
Dunamu's operating profit came in at 287.8 billion won in the first quarter of this year, down 47 percent from the previous year, as revenues from Upbit, the nation's dominant crypto exchange operated by Dunamu, steeply declined due to frozen market sentiment here and abroad.
"All the exchanges should brace for the worst-case scenario in their crypto trading business, as revenues from the trading commission can plunge in such a short period of time," an industry source said. "Launching NFTs and other forms of blockchain-powered businesses are inevitable for exchanges to achieve sustainable growth during this period of global monetary tightening."
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