Why Did OKX Launch X1? Understanding the Strategy and Opportunities

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The race among major cryptocurrency exchanges to launch their own Layer 2 (L2) networks has intensified. With Binance’s opBNB and zkBNB, Coinbase’s Base, and Bybit’s upcoming L2, OKX has now entered the arena with X1, its Ethereum Layer 2 built on Polygon’s Chain Development Kit (CDK). Announced on November 15, X1 marks OKX's strategic move to strengthen its ecosystem and capture a larger share of the evolving Web3 landscape.

But what exactly is X1, and why does it matter—not just for OKX, but for users, developers, and holders of OKB, OKX’s native token? This article dives into the motivations behind X1, its potential impact on OKB’s value, and how you can get involved early.

What Is X1 by OKX?

X1 is a zero-knowledge (ZK) Ethereum Layer 2 scaling solution developed using Polygon’s CDK. Built on zkEVM Validium, it offers high scalability and flexibility while maintaining security through validity proofs. A key differentiator is that OKB, OKX’s platform token, will serve as the native gas token on X1—used for transaction fees, DeFi interactions, and NFT transactions within the ecosystem.

According to the official roadmap, the X1 mainnet is expected to go live in Q1 2025. While no new token will be issued for X1, the integration of OKB as its utility token creates new demand drivers for the existing supply.

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Why Is OKX Launching Its Own Layer 2?

While many L2s aim to scale Ethereum for the broader community, exchange-led L2s like X1 serve a dual purpose: ecosystem expansion and competitive positioning. Here’s why OKX made this strategic move:

1. Capitalizing on the L2 Trend

After the intense Layer 1 (L1) "blockchain wars," attention has shifted to Layer 2 scaling solutions. Ethereum remains dominant, and the focus is now on enhancing its throughput and user experience. OKX’s own L1, OKT Chain, has struggled to gain traction. By launching an Ethereum L2 instead, OKX aligns itself with Ethereum’s growing ecosystem while avoiding direct competition with underperforming L1s.

2. Enhancing OKB Utility and Value

OKB is one of the few fully circulating exchange tokens, with a capped supply reduced from 300 million to 230 million through buybacks and burns. Integrating OKB as the gas token on X1 introduces new utility and increased demand. Every transaction, smart contract interaction, or dApp usage on X1 will require OKB—potentially driving long-term price appreciation if adoption grows.

3. Building a Closed-Loop Ecosystem

OKX aims to create a seamless Web3 gateway. With X1, users can interact with decentralized applications, trade NFTs, and participate in DeFi—all within an ecosystem anchored by OKX’s Web3 wallet and exchange infrastructure. This closed-loop model increases user retention and reduces dependency on third-party platforms.

4. Strengthening Competitive Moats

When an exchange controls its own blockchain, it gains leverage over project listings and user flows. Just as Binance-listed tokens often avoid rival exchanges, projects built on X1 may prioritize OKX for trading—creating a self-reinforcing ecosystem. This strengthens OKX’s market position against Coinbase, Binance, and others.

5. Responding to Industry Pressure

With competitors launching or growing their L2s, OKX couldn’t afford to fall behind. The launch of X1 ensures OKX remains relevant in the race for blockchain dominance—even if the goal isn’t to outperform Arbitrum or Optimism technically, but simply to stay competitive.

How Does X1 Compare to Other Exchange-Led L2s?

While X1 is based on zk-rollup technology—a more complex and later-to-market approach compared to optimistic rollups—it benefits from strong backing:

Compared to Base (Optimistic Rollup) or opBNB (EVM-compatible), X1 focuses more on ZK scalability and tight integration with OKX services rather than broad developer appeal—at least initially.

What Does X1 Mean for OKB's Future Value?

The integration of OKB into X1 could significantly influence its valuation. Let’s break down the potential impacts:

However, investors should remain cautious. The announcement of X1 wasn’t sudden—OKX revealed plans for an Ethereum L2 (originally called OKB Chain) as early as February 2024. Any short-term price surge based on hype may already reflect expected gains.

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How Can You Participate in X1 Early?

Even without a new token launch, there are ways to engage with X1 during its early stages:

1. Testnet Participation

Although official incentives haven’t been announced yet, testnet participation often leads to retroactive rewards—similar to how early Arbitrum or Base users were airdropped tokens. Given that OKT Chain previously rewarded testers with OKT, it’s plausible that active X1 testers could receive benefits.

To get started:

Note: Currently, only cross-chain functionality is available; dApps and other features are still in development.

2. Monitor Officially Supported Projects

Once the mainnet launches, watch for dApps and protocols endorsed by OKX. These projects are likely to receive funding, visibility, and possibly exclusive listing advantages—offering early users potential gains and “first-mover” benefits.

Think of it like Binance Launchpool: early participants in vetted projects often see strong returns.

Frequently Asked Questions (FAQ)

Q: Will X1 have its own token?
A: No. X1 will use OKB as its native utility token for gas fees and ecosystem interactions—no new token will be created.

Q: How is X1 different from OKT Chain?
A: OKT Chain is OKX’s independent Layer 1 blockchain with limited adoption. X1 is an Ethereum Layer 2 built with modern ZK tech, offering better scalability, security via Ethereum, and alignment with the broader Ethereum ecosystem.

Q: Is X1 better than Arbitrum or Optimism?
A: Not necessarily in technical performance—yet. X1 isn’t primarily designed to compete with top-tier L2s. Instead, it serves as a strategic tool for OKX to retain users and expand its Web3 footprint.

Q: Can I earn rewards by using X1 now?
A: While no official rewards program exists yet, participating in the testnet may qualify you for future incentives. Keep an eye on OKX’s official channels for updates.

Q: Why use zkEVM Validium instead of standard zk-rollups?
A: Validium offers higher throughput by storing data off-chain while still verifying computation on-chain via ZK proofs. This improves speed and cost but slightly reduces decentralization compared to full on-chain data availability.

Q: Does using X1 require leaving the OKX exchange?
A: Not at all. X1 is designed to integrate seamlessly with the OKX Web3 Wallet and centralized exchange services, allowing smooth transitions between CeFi and DeFi experiences.

Final Thoughts: Is X1 a Game-Changer?

X1 may not aim to revolutionize Layer 2 technology—but that’s not its purpose. For OKX, X1 is less about innovation and more about survival and growth in a fiercely competitive market.

It doesn’t need to outperform Arbitrum or become the most decentralized L2. It just needs to keep pace with Binance and Coinbase—ensuring OKX stays relevant in the Web3 era.

While exchange-run blockchains face criticism for centralization risks and lack of focus, they offer undeniable advantages: massive user bases, capital resources, and integrated tooling. If executed well, X1 could become a key entry point for millions of new crypto users.

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As always, approach with informed caution—especially when investing based on ecosystem developments. But one thing is clear: the battle for blockchain dominance has moved from L1s to L2s, and OKX is now officially in the ring.