The kimchi premium is the difference between a Korean price and an overseas price after converting them to the same currency. A higher Korean price produces a positive premium; a lower one produces a negative premium, often called a reverse premium in Korean.
The basic formula
Kimchi premium = (Korean price ÷ overseas price converted to KRW − 1) × 100
For illustration, suppose the overseas price is $100, the exchange rate is ₩1,400 per dollar and the Korean price is ₩144,200. The converted overseas price is ₩140,000, so the Korean price is 3% higher. The premium is 3%.
Compare like with like
- The same asset: Matching tickers can still refer to different tokens.
- The same currency basis: Distinguish USD prices from USDT prices. USDT is not always worth exactly one dollar.
- Similar observation times: If only one price has refreshed, the apparent momentary gap can be large.
- Selected exchanges: The result depends on the Korean and overseas venues chosen.
When reading CoinMadang's figures, also check the exchange pair, exchange-rate time and quote times. Actual exchange bids and asks are different from the last executed price.
The displayed gap does not become profit automatically
Trading, withdrawal, network and currency-conversion costs all matter. Your desired quantity may not fill at the displayed price, and prices or exchange rates may change during transfer. Deposit or withdrawal suspensions, limits and rules governing movement of funds require separate checks.
A large premium is therefore a reason to check quote freshness and transfer availability before treating it as an immediate profit opportunity. This article explains how to read a price gap; it does not guarantee that arbitrage can be executed profitably.
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