Same Coin, Different Kimchi Premium by Site: Exchange Rate or Tether?

One site may show a kimchi premium of +1.5% while another shows it near 0%. If you follow the kimchi premium calculation yourself once, you can see right away why the values split.

The kimchi premium (kimp) is a value showing by how many percent the same coin is more expensive in Korea than abroad. You need three things: the Korean price, the overseas dollar price and the KRW/USD exchange rate. The KRW/USD exchange rate shows how many won one dollar converts into.

Hypothetical numbers for the calculation

To keep the calculation easy, I will use a hypothetical coin. It is not a real coin, just an example.

• Korean price: ₩1,000
• Overseas price: $0.735
• KRW/USD exchange rate: ₩1,341

Convert the overseas price into won to make a baseline

Multiply the overseas price by the exchange rate: 0.735 × 1,341 = about ₩985.6.

This is the baseline showing roughly what the coin is worth in won abroad. You need this baseline to compare it with the Korean price in the same unit.

Divide the Korean price by the baseline and subtract 1

Dividing the Korean price of ₩1,000 by the baseline of ₩985.6 gives about 1.0146. Subtract 1 from this and multiply by 100, and you get about +1.46%.

Written as a formula, it is (Korean price ÷ (overseas price × exchange rate) − 1) × 100. If the result is negative, the coin is cheaper in Korea, and this is called a reverse premium.

Use the Tether price instead of the exchange rate, and the value changes

Most overseas exchanges show prices not in dollars but in Tether (USDT). Tether is a coin made so that one coin moves close to one dollar.

So some sites multiply by Tether's won price on a Korean exchange instead of the exchange rate. If Tether is ₩1,362, the baseline is 0.735 × 1,362 = about ₩1,001.1.

1,000 ÷ 1,001.1 = about 0.9989, so the kimchi premium comes out at about −0.11%. The same coin gives +1.46% one way and −0.11% the other.

Why the two values drift apart

It is because the Korean Tether price of ₩1,362 is higher than the exchange rate of ₩1,341. This gap is called the Tether premium. 1,362 ÷ 1,341 = about 1.0157, so it is about +1.57%.

The gap between the two premiums, 1.46% and −0.11%, almost matches this 1.57%. In effect, the exchange-rate method compares with the dollar itself, while the Tether method compares with Tether, which is what is actually used in place of dollars.

Right now the Bitcoin kimchi premium is +1.58% and the Tether premium is +1.57%. These numbers keep changing, so just use them to get a feel for it.

Which value is right?

Neither value is wrong. They simply use different bases, so comparing numbers from different sites directly gets confusing.

If you want to compare many coins on the same basis, it is easier to see them all in one place, such as the kimchi premium rankings.

Summary

You can work out the kimchi premium yourself as Korean price ÷ (overseas price × exchange rate) − 1. If you use the Tether price instead of the exchange rate, the value changes by the size of the Tether premium. When the numbers differ, start by checking whether the site uses the exchange rate or Tether.