[ADOPTION] Application - NEXPACE, SK Planet

1. Introduction

2. Web3 Needs Killer App for Mass Adoption
2.1 Why Web2 Corporations' Web3 Initiatives Deserve Attention

3. Web3 Adoption Checkmate: NEXPACE's Strategic Move to Maximize IP
3.1 Company overview
3.2 Nexon’s growth fueled by insight and innovation
3.3 Nexon's innovation DNA points to Web3
3.4 The path forward: NEXPACE’s vision in 2024

4. SK Planet: Pioneering the Future of Web3 with UPTN
4.1 Company overview
4.2 Achieved industry-leading success based on universality, but current challenges calls for a framework that ensures long-term profitability
4.3 SK Planet attempts secure new growth momentum with UPTN
4.4 UPTN’s progress in 2024 and future roadmap

5. Closing Thoughts

 

 

1. Introduction

The Xangle Adoption 2024 conference will take place on July 8,9 in Japan and July 11,12 in Korea. As the third iteration since its inception in 2022, this conference will explore the infrastructure, applications, and Layer 1 aspects of Web3 adoption. Xangle Adoption 2024 will feature insights from leading companies across various industries, including gaming, entertainment, and finance.

This article introduces the major companies participating in the Xangle conference, with a focus on NEXPACE and SK Planet —two prominent Korean companies advancing Web3 mass adoption. Whether you plan to attend the Xangle conference or not, this article provides valuable insights into the Web3 transition efforts of these significant Korean enterprises.

 

2. Web3 Needs Killer App for Mass Adoption

Throughout IT history, infrastructure development and the emergence of new applications have been closely intertwined. The introduction of email in the early 1970s spurred the development of internet protocols like Ethernet and TCP/IP, paving the way for online services such as Amazon and eBay. The success of these online services subsequently fueled the rise of cloud services, leading to the creation of innovative web and mobile platforms like Facebook, Uber, and Instagram. Similarly, in blockchain technology, early infrastructures like Bitcoin and Ethereum facilitated the rise of decentralized applications like CryptoKitty, whose scalability challenges led to the development of faster and more efficient blockchain platforms like Solana and Avalanche.

However, by 2024, this interaction has stagnated. The DeFi and NFT boom of 2021 has waned, and the applications that once captivated public attention have yet to emerge. Web3 remains a niche domain for a small group of early adopters known as 'DEGEN.' Despite ongoing infrastructure advancements, innovative applications are crucial to propel Web3 to the next level. The industry is akin to having an eight-lane highway with overpasses and tunnels, yet only a few cars are on the road. Thus, the Web3 sector urgently needs groundbreaking applications for mass adoption.

2.1 Why Web2 Corporations' Web3 Initiatives Deserve Attention

Web3 technology adoption can be broadly categorized into two approaches: 1) Web3 adoption by large enterprises and 2) Web3 native startups. This discussion will emphasize the former.

First, the complexity and high barrier to entry in Web3 significantly hinder mass adoption. In the Web2 world, investing in a token involves relatively simple steps: opening an account on a cryptocurrency exchange, verifying one's identity to comply with regulatory requirements, and then purchasing tokens. In contrast, Web3 demands additional, more complicated steps: creating a wallet, transferring tokens to the wallet, connecting the wallet to a decentralized exchange (DEX), and swapping tokens. This streamlined explanation still omits processes like wallet registration and transaction signing. These extra steps, combined with unfamiliar terms like "AMM DEX" and "token swap," can overwhelm newcomers, making Web3 less accessible and restricting its user base to a niche group of enthusiasts, often referred to as “DEGEN.”

In contrast, Web2 giants are seamlessly integrating blockchain technology into their existing platforms to enhance user experience without imposing the burdensome complexities of Web3. For instance, in 2022, Starbucks launched Starbucks Odyssey, a blockchain-based rewards program. This initiative mirrored traditional rewards systems but incorporated blockchain elements like NFTs to elevate user engagement. Crucially, Starbucks Odyssey eliminated the need for wallets, facilitated NFT transactions in dollars, and minimized blockchain-specific terminology within the application. Although the program, launched in beta in 2022 and discontinued in March 2024, did not achieve significant user acquisition or revenue growth, it was a pivotal step in demonstrating how a seamless Web3 application could operate within a familiar Web2 framework.

Source: Nifty Gateway

The second reason for focusing on large enterprise Web3 adoption is the proven quality of service these applications offer. Web3-native applications often struggle to acquire users initially due to their unproven services and lack of an established user base. To attract new users, they typically resort to token incentives. However, if the quality of service is inadequate, this can lead to a rapid decline in user engagement once the incentives are distributed. In contrast, applications from Web2 giants are built on services that have already been validated by the market, making it easier to acquire users during the early stages and resulting in higher user retention rates even after incentivization. A prime example is KAIKAI, a dApp from Nearprotocol. Originally a Web2-based shopping app in Singapore, KAIKAI made a bold transition to Web3. As of June 21st, it ranks #1 among all dApps with 11.34 million 30D active user wallets (UAW) according to DAppRadar. KAIKAI successfully integrated its established shopping app with blockchain technology, leveraging its proven service quality to thrive in the Web3 space.

Source: KAIKAI

For these reasons, the transition of Web2 companies to Web3 is expected to play a significant role in driving mass adoption of Web3. Meanwhile, there are also noteworthy efforts at Web3 adoption in Korea. Notable examples include NEXPACE, a subsidiary of Nexon and SK Planet, a subsidiary of SK Group. Let's explore their initiatives and visions for mass Web3 adoption.

 

3. Web3 Adoption Checkmate: NEXPACE's Strategic Move to Maximize IP

3.1 Company overview

NEXPACE, a legal entity established by Nexon in the UAE, is spearheading Nexon's blockchain-based game initiatives. Nexon, a leading game company in Korea, is renowned for its popular titles like MapleStory, Sudden Attack, and Dungeon & Fighter. Since its inception in 1994, Nexon has exhibited sustained growth driven by its exceptional intellectual property (IP) and robust development capabilities.

Currently, NEXPACE is preparing to launch MapleStory Universe, Nexon's debut blockchain service. Let's explore the motivations behind NEXPACE's blockchain integration with MapleStory and its overarching vision.

3.2 Nexon’s growth fueled by insight and innovation

Nexon, one of Korea's premier game companies, has demonstrated consistent growth. From 2012 to 2023, Nexon's revenue surged from 940 billion KRW to 3.7 trillion KRW, achieving an impressive average annual growth rate of 13.19%. Over this 11-year period, there were only three instances where revenue experienced a YoY decline. In 2023, Nexon's revenue outpaced its competitors, with Netmarble earning 2.5 trillion KRW, Krafton 1.9 trillion KRW, and NCSoft 1.8 trillion KRW, positioning Nexon's earnings about 50% higher than Netmarble and roughly double that of NCSoft.

Source: Nexon

Nexon's enduring growth is attributed to its acute industry foresight. The company ignited Korea's gaming revolution by releasing the first massively multiplayer online role-playing game (MMORPG) in 1996, "The Kingdom of the Winds”. Prior to this, the Korean gaming market was predominantly focused on arcade, console, and CD games. This groundbreaking MMORPG introduced a novel gaming experience, allowing multiple users to interact in a market previously dominated by solo and two-player games.

Nexon also revolutionized the gaming industry with the introduction of the free-to-play (F2P) model. Previously, games were subscription-based, requiring users to pay either a home subscription fee or hourly rates at PC cafes. This model limited sales volume (Q) growth and capped price (P) increases. In response, Nexon introduced the F2P policy, revolutionizing the revenue model for the domestic online game market. Successful freemium games like ‘Crazy Arcade’ and ‘KartRider’ further propelled Nexon's growth.

As the 2010s saw the rise of smartphones and internet evolution, Nexon adeptly transitioned into the mobile game market by acquiring valuable IPs. Today, Nexon's mobile game offerings include ‘FC Online Mobile’, ‘MapleStory M’, ‘HIT2’, ‘Dungeon & Fighter M’, ‘Blue Archive’ and ‘Nexus: The Kingdom of the Winds’. By 2023, mobile games are expected to contribute 28% of Nexon's revenue, underscoring the company's continued innovation and growth.

3.3 Nexon's innovation DNA points to Web3

Despite Nexon's historical growth and strategic insights, long-term sustainability remains a concern. Challenges include the difficulty of matching content development speed with consumption, diminishing spending power of long-term users, and limited user experience due to opaque operations. When content fails to keep pace with consumption, user interest wanes. Furthermore, a game’s lifespan is closely tied to the user's spending power peak, which typically spans 20-30 years. Sustained growth requires a continuous influx of new content to attract and retain users. Moreover, opaque operations, such as manipulated probabilities for randomized items, can erode trust and lead to user attrition.

Nexon aims to address these issues and enhance sustainability through blockchain technology. The MapleStory Universe will integrate Nexon's premier IP, MapleStory, with blockchain, offering several key benefits:

• Infinite content ecosystem: MapleStory Universe will enable anyone to create content using existing IP without copyright concerns, ensuring fair revenue distribution. Even Nexon will operate on an equal footing with the community, sharing rewards based on contributions, thereby generating an endless supply of content to meet user demand.
• Enhanced trust and user experience via data transparency: Goods and items within MapleStory Universe will be issued as blockchain-based FTs and NFTs. Users can access real-time on-chain data, from in-game transactions to item distribution and revenue allocation. This transparency addresses concerns about probability manipulation and enhances user experience by fostering trust.

Additionally, MapleStory Universe will significantly bolster Reward Experience and control in-game goods inflation through its blockchain token system.

What is MapleStory Universe?

The MapleStory Universe is a comprehensive ecosystem consisting of four key components:

• MapleStory N: This is a blockchain-based PC MMORPG rooted in the original MapleStory IP. It will serve as the cornerstone content for users at the outset of the service. Over time, as the volume of user-generated content (UGC) and modifications (MODs) increases, the prominence and contribution of MapleStory N will gradually diminish.
• MapleStory N Mobile: A mobile adaptation of MapleStory N, designed to provide a similar experience on handheld devices.
• MapleStory N World: This blockchain-based user-generated content (UGC) game platform features a user-friendly interface. It facilitates the creation of content (NFTs and DApps) with relative ease, making it highly accessible. However, it offers less versatility compared to the SDK due to its limited tools and development flexibility.
• MapleStory N SDK: A development toolkit provided by the API team for developers. The SDK allows creators to build a diverse range of innovative dApps and community activities within the MapleStory Universe.

In a strategic move, Nexon recently promoted Dae-hyun Kang, who has successfully managed major Nexon titles like MapleStory and Dungeons & Fighters, to CEO. Kang is now overseeing all of Nexon's core businesses, including the MapleStory Universe. Additionally, Nexon has bolstered NEXPACE with a KRW 125 billion capital increase. These actions underscore Nexon's deep commitment to maximizing the potential of its IP and providing full support to the MapleStory Universe initiative.

3.4 The path forward: NEXPACE’s vision in 2024

Leveraging Avalanche Subnets for optimal network performance and flexibility in creating custom blockchain networks

In March 2023, Nexon announced its intention to leverage Polygon's supernet for the MapleStory Universe. However, limited technical support from Polygon hindered development progress, prompting Nexon to seek a new partner.

By March 2024, Nexon transitioned to Avalanche, selecting its Subnet technology to power MapleStory Universe. The Avalanche Subnet, known for its high flexibility and customizable features, employs the Snowman consensus algorithm to ensure robust performance. Its dedicated data sets guarantee 100% resource availability without contention, making it ideal for Nexon's extensive user base.

Moreover, the Avalanche Subnet allows platforms to use their own tokens for gas payments with instead of the native $AVAX, and its flexible development environment seamlessly integrates with existing Web2 applications. This makes the Avalanche Subnet particularly suitable for enterprise customers in the financial and gaming industries. By leveraging the Avalanche Subnet, MapleStory Universe aims to provide low latency and accommodate a large number of users efficiently. For more insights, refer to Xangle's report on why global organizations choose Avalanche.

Revolutionizing the Web3 gaming market with seamless UX

In February, NEXPACE released in-game footage of MapleStory N via the official MapleStory Universe X account. The gameplay, including hunting and quests, remains true to the classic MapleStory experience, with the key difference being that items are issued as NFTs. Players must mint these items to obtain and use those dropped by monsters. This minting process is straightforward, as demonstrated in the linked video. As highlighted earlier, high entry barriers in Web3 have hindered user adoption. A seamless user experience is crucial for the adoption of web applications, and Nexon has evidently prioritized this aspect.

Source: X(@MaplestoryU)

Cultivating a nascent Ecosystem rooted in “contribution and reward”

NEXPACE is committed to establishing an ecosystem grounded in the principle of “contribution and reward.” Various events and systems have been introduced to encourage community participation and reward contributions. 

On June 17, 2024, NEXPACE launched the official MapleStory Universe Discord server and hosted an event to reward Discord roles. Shortly after, on June 24, MapleStory Universe: Genesis was introduced—a comprehensive platform for news, content, and events.

Currently, MapleStory Universe: Genesis hosts two major events for early ecosystem contributors:

• MSU Quest: Users can engage in community-building activities and earn rewards by completing quests updated biweekly. This encourages active participation in the ecosystem.
• MSU Dressroom: Users can personalize their characters with MapleStory items before the game's official launch, offering a preview of the game's fun elements.

Backed by significant funding from Nexon, NEXPACE is well-positioned to provide substantial rewards to early contributors, crucial for attracting initial users and energizing the ecosystem. However, it is important to note that the service is not yet available in South Korea, designated as a restricted service area.

For more details on MapleStory Universe, refer to Xangle's article, "MapleStory Universe: Reawakening Nexon's Innovative DNA.”

 

4. SK Planet: Pioneering the Future of Web3 with UPTN

4.1 Company overview

SK Planet, the IT services and digital platform subsidiary of SK Group, was established in October 2011 following the spin-off of SK Telecom's platform business. The company operates through three main divisions: the Business Solution division, offering innovative solutions across IoT, Media, and AI; the Marketing Platform division, which includes prominent services like OK Cashbag and Syrup Wallet; and the Blockchain Platform division, which oversees the UPTN blockchain platform. This report delves into the Blockchain Platform division's UPTN project.

4.2 Achieved industry-leading success based on universality, but current challenges calls for a framework that ensures long-term profitability

To comprehend the rationale behind SK Planet's launch of UPTN, it's essential to examine the foundational services of the Marketing Platform division, specifically OK Cashbag and Syrup Wallet. OK Cashbag is a comprehensive mileage-based marketing solution enabling users to earn points and enjoy various benefits by participating in events and making purchases. With over 93,000 affiliated stores spanning diverse sectors such as food and beverage, cosmetics, fashion, stationery, and entertainment, OK Cashbag is the largest integrated rewards service in South Korea, boasting 21 million total users, with approximately 7 million active monthly users (MAUs). Syrup Wallet, on the other hand, manages and stores debit cards, membership cards, coupons, and transportation cards, serving 15 million users with 6 million MAUs. Despite significant growth, SK Planet now faces limitations and is seeking new engines for future growth. While SK Planet has achieved significant growth with these services, it faces constraints within the membership reward program industry that necessitate a reevaluation of its long-term growth strategy. Several factors contribute to this need:

While the service offers point universality to attract users, it has recently hit a business-growth wall

A critical aspect of membership reward services is "universality," which plays a pivotal role in user acquisition and retention. Users seek the flexibility to redeem their points across a wide array of favorite stores and shopping venues. OK Cashbag's success over the past 25 years is attributed to its universal points system, facilitated by partnerships with over 90,000 affiliated stores. This strategy has enabled SK Planet to amass a customer base of 21 million.

From a financial perspective, universality is also crucial. Points issued to users are accounted for as liabilities (deferred revenue) on the company’s balance sheet, impacting its financial health as unused points accumulate. Converting these liabilities into revenue, either through point redemption or expiration, is a primary goal for companies that provide membership reward programs. However, forced expiration can lead to user dissatisfaction and churn, thus maintaining point universality is crucial to encourage users to use the earned points.

Despite the importance of universality, there are inherent limitations within the existing point system. Membership reward programs aim to lock in customers to specific affiliates and partners, encouraging repeat purchases. Consequently, most Korean membership reward services are subsidiaries of large conglomerates, restricting the universality of points to the affiliates and partners within each group. For instance, CJ Olive Network has 52 affiliates, OK Membership has 24 affiliates, and Lotte Members has 153 affiliates, with less than 10 overlapping.

To overcome these limitations, SK Planet seeks to integrate blockchain technology into its existing services, establishing a virtuous cycle of "enhancing universality → attracting new users and increasing service activity → securing more affiliated stores."

4.3 SK Planet attempts secure new growth momentum with UPTN

What is UPTN?

The UPTN project encompasses three core components:

• UPTN Chain (Infrastructure): UPTN Chain serves as the foundational blockchain network for the UPTN project, built using the Avalanche subnet. The Avalanche subnet offers distinct advantages, such as high flexibility, customizability, and reliability through the Snowman consensus algorithm. For a detailed understanding of the Avalanche subnet, refer to Xangle’s “Visualizing the Vision of Avalanche - 1.”
• UPTN Station (Wallet): UPTN Station is a user wallet service integral to the UPTN project. It enables users to manage NFTs and tokens acquired through the OK Cashbag service. UPTN Station can be accessed via KYC verification.
• Road to Rich NFT (Content): This is an NFT-based dynamic membership service launched by OK Cashbag. It features "Rocky," a character NFT, and "TEM" NFTs, each offering unique real-world benefits. Users can combine Rocky and TEM NFTs to tailor benefits to their specific needs.

Leveraging Web3 to enhance the versatility of points and broaden the value chain

SK Planet aims to transcend the limitations of the current membership reward industry through blockchain technology. The advent of Non-Fungible Tokens (NFTs) has enabled the ownership and trading of digital assets. OK Cashbag leverages this capability to allow users to trade benefits flexibly, instead of merely accumulating and redeeming points, coupons, tickets, and memberships within the app. This enhanced utility locks in existing consumers and attracts new users, fostering a virtuous cycle of "enhancing universality → attracting new users and increasing service activity → securing more affiliated stores."

Moreover, blockchain-based services offer significant potential for expanding the value chain. Web3 point applications can be divided into infrastructure, solutions, and services. Solutions further branch into data utilization/management and authentication, while services encompass wallets, communities, and marketplaces. By diversifying into these segmented roles, SK Planet can collect fees from various sources such as wallet services and marketplace transactions, beyond the fees generated by the UPTN network. This strategy allows SK Planet to diversify its revenue streams and achieve sustainable growth.

4.4 UPTN’s progress in 2024 and future roadmap

In May 2023, SK Planet embarked on its Web3 journey by launching UPTN Chain and UPTN Station. Since then, the company has continued to grow its user base through various events, including the release of OK Cashbag NFTs and T1 Precious NFTs. In 2024, SK Planet has made significant strides. Most notably, in February, the company launched a community service for UPTN Station users. This community comprises two main sections: the Lounge and the Project Community. The Lounge is a space where UPTN users and domestic crypto investors can freely discuss topics such as cryptocurrency, Web3. The Project Community is dedicated to sharing project-related information and opinions. Currently, Avalanche and Milk are onboarded in the project community, with 22,707 members in the Avalanche community and 9,647 members in the Milk community as of June 18.

While the current community member count is modest, the release of more TEM NFTs with diverse benefits and their availability for secondary trading through the marketplace are expected to significantly increase the number of community members and UPTN Station users. During the first TEM NFT launch in October 2023, the active user count was close to 50,000. At that time, three types of TEM NFTs were introduced: 1) Booster TEM (NFTs that can increase the benefits received from OK Cashbag), 2) Benefit TEM (free tickets, events, discount coupons, and more), and 3) Decoration TEM (Racky Skins). Only Booster and Decoration TEMs were released in limited quantities initially, yet they attracted many users. With the official release of TEM NFTs with benefits and the marketplace, a substantial increase in active users is anticipated.

<The surge in active addresses post-Tem NFT launch>

Source: Avalanche Subnet Explorer

Beyond community building, SK Planet has been organizing various events to bolster its membership reward service. In March 2024, the company introduced a point system called UP on UPTN Station. Users can accumulate UP points through attendance checks and events, which will be applicable across various services within UPTN Station in the future. One notable event was Lucky Days, which allowed users to use UP points to apply for prizes, contributing to the steady growth of UPTN Station's user base. As of June 17, the total number of registered users was approximately 260,000, reflecting a growth rate of 19.3% in 2024 alone. The number of daily transactions has also been rising consistently, driven by events such as the Avalanche ($AVAX) airdrop on UPTN Station and UP Point attendance checks.

<Total Addresses>

<Daily transaction count>

Source: Avalanche Subnet Explorer

SK Planet's roadmap for 2024 is as follows: The UPTN community launch took place in February, and the rest of the year will see the launch of the UPTN marketplace, Wallet Connect, onboarding of third-party NFT projects, and expansion of the multi-chain ecosystem.

These advancements solidify SK Planet's leadership in the Web3 ecosystem, promising users innovative experiences through enhanced services. SK Planet is poised to continue spearheading Web3 adoption with its user-friendly blockchain-based applications.

For those interested in a deeper understanding of UPTN's development and SK Planet's vision, refer to Xangle’s “Road to Rich: SK Planet's Rewards Program Meets NFTs” and “UPTN Project: SK Planet's Arc Reactor.”

 

5. Closing Thoughts

This article has explored the Web3 transition endeavors of prominent Korean companies. The Web3 ecosystem is currently in dire need of a breakthrough application to achieve mass adoption. Despite continuous infrastructure development, the anticipated development cycle of "infrastructure → application" has yet to materialize due to the absence of applications that can captivate the masses. Thus, the seamless integration of blockchain technology into established applications by NEXPACE and SK Planet is particularly noteworthy.

NEXPACE is leveraging blockchain technology to enhance its flagship IP, MapleStory, aiming to create a derivative ecosystem with boundless content. The MapleStory universe enables users to freely create and trade content, with in-game items and goods managed via blockchain-based tokens to ensure transparency. This initiative seeks to offer users a fairer and more trustworthy gaming experience, securing sustainable growth for Nexon.

SK Planet is addressing the structural constraints of the membership reward industry by converting points and benefits into FTs and NFTs via the UPTN platform, allowing them to be traded freely on the marketplace. These innovations are designed to attract new users and increase existing user activity, while simultaneously expanding a sustainable ecosystem through various business models.

While these companies have not yet fully launched their services, preventing them from being seen as leaders in Web3 mass adoption, their significant progress and steady growth are promising. The milestones they are reaching suggest a significant potential impact on the Web3 space. It will be exciting to watch NEXPACE and SK Planet's journeys and see them recognized as pivotal in the mass adoption of Web3 in the future.