When crypto exchange OKX launched its first blockchain, OKTC, a few years ago, the results were underwhelming. Despite being open-source and decentralized, the chain failed to gain significant traction in the rapidly evolving Web3 landscape. Today, OKTC ranks as the 54th largest blockchain by total value locked (TVL) in its DeFi ecosystem, with just $19 million—far behind newer entrants like Polygon zkEVM and Scroll.
But OKX isn’t backing down. The exchange is making a second attempt with X1, a new Layer 2 (L2) blockchain built on Ethereum using Polygon’s open-source Chain Development Kit (CDK). This time, the strategy is different: instead of launching a standalone chain with outdated infrastructure, OKX is leveraging proven L2 scaling technology to offer faster, cheaper transactions while maintaining Ethereum-level security.
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Why OKX’s First Blockchain Struggled
OKTC, short for OKT Chain, was launched during a period when blockchain scalability remained a major industry challenge. As Jason Lau, OKX’s Chief Innovation Officer, admitted, “We ran into a lot of technical-slash-scalability issues” back in 2017–2019. High fees, slow transaction speeds, and poor user experience limited real-world adoption.
Even though OKTC remains functional and decentralized, it was built on legacy architecture that couldn’t compete with modern solutions. In contrast, today’s Layer 2 networks use advanced techniques like optimistic or zero-knowledge rollups to bundle transactions off-chain before settling them on Ethereum—drastically reducing costs and congestion.
With only $19 million in DeFi TVL according to Defi Llama, OKTC never attracted enough developers or users to create a thriving ecosystem. Meanwhile, newer chains like Base and Arbitrum have surged ahead by focusing on developer incentives, seamless onboarding, and integration with major wallets and protocols.
The Rise of Layer 2s and OKX’s New Strategy
The crypto landscape has changed dramatically since OKTC’s debut. Layer 2 blockchains now dominate Ethereum scaling efforts, offering near-instant transactions at a fraction of the cost. There are currently 32 active L2s on Ethereum, with 15 more in development, including X1.
OKX’s X1 testnet launch marks a strategic pivot toward building within the Ethereum ecosystem rather than outside it. By settling transactions on Ethereum, X1 inherits its robust security model while solving the high gas fee problem that has long plagued Ethereum users.
Lau emphasized that the timing is right: “I think there is a very clear roadmap to solving some of the issues we faced in terms of scalability—and L2s are a key, key part of that answer.”
Using Polygon CDK, OKX can quickly deploy a customizable, scalable, and interoperable L2 without reinventing the wheel. This modular approach allows teams to focus on user experience and ecosystem growth rather than底层 infrastructure challenges.
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Business Model: Long-Term Vision Over Immediate Revenue
One might assume that launching a blockchain is primarily about generating revenue—but for OKX, it’s not. According to Lau, X1 isn’t designed as a direct profit center. Instead, it aligns with OKX’s broader vision: accelerating Web3 adoption by lowering barriers to entry.
This mirrors the company’s approach to its non-custodial OKX Wallet, which generates no direct revenue but serves as a critical tool for onboarding users into decentralized finance (DeFi), NFTs, and blockchain gaming.
“By providing that tool,” Lau explained, “we’re pretty confident that the revenue and business model will come about down the road when users value us for helping them, educating them, and providing access to this next-generation internet.”
The goal is simple: get more people using blockchains. Once users are comfortable managing assets and interacting with dApps on X1, they’re more likely to engage with OKX’s broader suite of services—from trading to staking to institutional solutions.
Importantly, Lau doesn’t see X1 cannibalizing OKX’s core exchange business. He expects most users to use both centralized and decentralized platforms for years to come. “We think this transition will take place over a medium amount of time,” he said.
How X1 Compares to Coinbase’s Base
OKX isn’t alone in betting big on L2s. Coinbase launched Base, its own Ethereum L2, in August 2023. Built using Optimism’s OP Stack, Base has already captured over $580 million in bridged ETH and ranks third in market share among L2s.
Like Coinbase, OKX has committed engineering resources to support the ongoing development of the technology behind its chain—specifically, Polygon CDK. However, Lau stressed that OKX’s decision wasn’t influenced by Coinbase’s move.
“What we share,” he noted, “is a spirit of collaboration—contributing resources to build a bigger platform so more people can come in, develop, and grow.”
While both exchanges aim to expand the Web3 user base, their technical foundations differ. Base uses the OP Stack; X1 leverages Polygon CDK. Both frameworks enable rapid deployment of secure, EVM-compatible chains—but Polygon CDK offers greater flexibility in consensus mechanisms and data availability options.
X1 will be permissionless, allowing anyone to build or deploy applications without gatekeeping. Its mainnet launch is expected in Q1 2024.
Frequently Asked Questions (FAQ)
Q: What is OKX X1?
A: X1 is a Layer 2 blockchain developed by OKX using Polygon’s Chain Development Kit. It scales Ethereum by processing transactions off-chain and settling them securely on Ethereum at lower costs.
Q: Is X1 replacing OKTC?
A: No. OKTC still exists and remains operational. However, X1 represents OKX’s renewed focus on modern scaling solutions rather than standalone chains.
Q: Can anyone build on X1?
A: Yes. X1 is designed to be permissionless, enabling developers worldwide to deploy dApps, DeFi protocols, NFT marketplaces, and more.
Q: How does X1 reduce transaction fees?
A: By bundling multiple transactions off-chain and submitting them as one batch to Ethereum (via rollup technology), X1 significantly lowers gas costs for users.
Q: When will X1 launch?
A: The testnet is live; mainnet is expected in the first quarter of 2024.
Q: Does using X1 mean leaving OKX’s exchange?
A: Not necessarily. Users can interact with X1 through tools like the OKX Wallet while still using OKX’s centralized exchange for trading and other services.
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Final Thoughts: Learning from the Past, Building for the Future
OKX’s journey reflects a broader shift in the crypto industry—from isolated blockchain projects to collaborative ecosystem building. The failure of OKTC wasn’t due to lack of ambition but rather poor timing and outdated tech.
Now, with mature scaling solutions available and user demand growing for accessible Web3 experiences, OKX is better positioned than ever. With X1, it’s not just launching another chain—it’s investing in the long-term infrastructure of decentralized finance.
By aligning with Polygon CDK, prioritizing developer freedom, and focusing on education and ease of use, OKX aims to make blockchain technology truly usable for millions—not just crypto natives.
As Layer 2 competition heats up, one thing is clear: success won’t go to those who launch first—but to those who build sustainably, inclusively, and with real utility in mind.
Core Keywords: Layer 2 blockchain, Ethereum scaling, OKX X1, Polygon CDK, DeFi ecosystem, Web3 adoption, permissionless blockchain