South Korean payments provider NHN KCP to build own Layer 1 on Avalanche

NHN KCP, a South Korean payment service provider, has signed a memorandum of understanding with Ava Labs to develop a payments-focused Layer 1 network.

NHN, together with the developer behind Avalanche, aims to establish a mainnet for real-world payment use cases, utilizing Ava Cloud — Ava Labs' service that enables companies to launch and manage their own L1 blockchains.

According to a statement shared with The Block, the partnership will focus on three key pillars: ultra-fast payment authorization with sub-one-second payment processing, onchain encryption of transaction data, and a payment ecosystem with customizable infrastructure for merchants.

"This agreement is highly significant as it combines NHN KCP's industry-leading payment operational expertise with world-class blockchain technology to derive an innovative model that can be immediately applied to real-world business," said Jun-seok Park, CEO of NHN KCP.

The two companies plan to verify the technical feasibility of the joint project through a proof-of-concept and expand their connections with global financial and payment companies.

In a response to The Block's inquiry, Ava Labs Head of Asia Justin Kim said the launch date for the upcoming L1 largely depends on the passage of the pending crypto regulation in South Korea.

In addition to building the L1, NHN and Ava Labs said they will jointly explore new business opportunities in digital commerce, including tokenized deposit models, multi-stablecoin settlement structures, and cross-border payments.

Avalanche has been expanding its footprint in South Korea, partnering with various financial institutions that are looking to build blockchain-based infrastructure.

Last month, KB Kookmin Card, one of the country's largest credit card companies, announced that it is building a hybrid stablecoin payment model with Avalanche. KB is currently developing a new system that links credit cards to digital wallets, allowing customers to use both stablecoins and credit on their existing cards.