Jay Hao, the CEO of the digital asset exchange OKEx, took part in Cointelegraph China HUB, an online interview column started by Cointelegraph China. In the past, Hao has stated that blockchain will eliminate transaction barriers, improve efficiency and ultimately impact the development of the global economy. But what does he think about the world of blockchain now?
Cointelegraph: Is cryptocurrency a niche industry developing with uncertainty and volatility? And how did OKEx overcome the volatility of the industry to become one of the top exchanges?
Jay Hao: As you said, the cryptocurrency industry itself brims with uncertainties, and it is OKEx’s innate mission to be prepared to meet new challenges on all occasions. In the past year, the lowest price of Bitcoin reached about $3,300 and the highest exceeded $13,000. Especially in the past three months, the global financial industry has encountered massive fluctuations under the influence of COVID-19. 24/7 free-to-trade cryptocurrency has reacted even more in this plunge.
“For exchanges, the biggest challenge brought by such huge fluctuations is the stability of the trading system and risk control under such extreme market behavior.”
So, my team and I have consistently held a consensus: in the world of cryptocurrency, technology strength must be the key to building any crypto ecosystem. In the past year, we have polished the construction of the system without stopping, and we have carried out hundreds of significant upgrades. Our unique super matching engine and Lightning 2.0 system ensure that the platform can run stable even under extreme market conditions, and also the order processing speed has ranked high on the world’s top options exchanges lists. This is indeed a matter of pride.
CT: Can you give some details about OKEx’s expansion plan or overall strategy?
JH: From my point of view, reputation is the foundation of an enterprise, especially in the crypto world. In addition to the well-known reasons why Libra’s issuance is so complicated, I think there is another factor. Business lies happen once or countless times. After all, a lie requires countless lies to make up for it, and the vicious cycle will always collapse.
As Facebook is one of the main sponsors, it was bothered with problems such as user data leakage and unauthorized collection of user data, which have seriously hurt market confidence. Lawmakers’ distrust of Facebook even exceeds that of cryptocurrency itself or blockchain technology.
“Therefore, within OKEx, I repeatedly stress with the team that we must never do anything that harms the interests of users. ‘Customer first’ is always the core value of OKEx, which also acts as the cornerstone of our internationalization.”
The internationalization of OKEx has been accelerating. At present, it has reached cooperation with the world’s seven largest legal fiat payment providers through the fiat gateway project, supported 30 fiat currencies including United States dollars and euros, and accepts 17 payment methods including Visa and Mastercard. Also, we have provided services to more than 20 million users in more than 200 countries and regions around the world, and that is still increasing.
In the crypto world, OKEx’s role is not only as a trading platform but also a blockchain technology company. We have launched OKEx Cloud, relying on the technical strength and service experience accumulated by OKEx in the field of digital assets for many years and providing exchange technology services to the world.
Besides, OKChain, independently developed by OKEx, was also completed as 100% open-source. OKChain pioneered the “commercial chain alliance” model, which will face all ecological nodes and provide efficient, free and boundless public chain ecosystems. It is a significant step for our internationalization.
In summary, OKEx’s internationalization has three points: first, customers come first; second, to meet global differentiated needs and provide localized services; and third, we are not building an exchange, but a global free, equal and healthy encryption ecosystem.
CT: According to CryptoCompare, the combined volumes of OKEx’s, BitMEX’s, Huobi’s and Binance’s derivatives markets in March totaled $514 billion, or 86% of the entire market. And OKEx took more than BitMEX. How do you see the competition in the market?
JH: In the face of competition, I always believe that continuous and healthy competition will bring new vitality into the market. While promoting the progress of the industry, it also allows users to have a better reference basis when choosing a trading platform. We will actively learn from excellent competitors. After all, the beneficiaries under healthy competition will always be users.
Can a contract dominate the competitiveness and fate of an exchange? The answer is, of course, no. No company can be popular in the world with only one function. The needs of users are constantly changing. In the business environment, the only constant is change. What’s more, in a new and rapidly changing industry like blockchain, I always believe that OKEx’s biggest competitor is ourselves, and we are also confident that we will continue to lead the industry and make breakthroughs.
CT: How does OKEx address challenges such as cryptojacking or the free-fall of the market such as occurred on March 12?
JH: As I said before, technical security is still one of the biggest challenges that trading platforms need to face. I can proudly tell you that because of OKEx’s excellent technical strength, there has never been a theft of user funds or an information security incident since its establishment. In terms of fund management, OKEx adopts enhanced cold/hot wallet management, and the risk control system is continuously upgraded to ensure the safety of user funds and information.
Due to the particularity of the industry, the order volume per second in extreme market conditions is several times higher than the normal order volume and can reach 1 million. This is indeed an objective challenge for all exchanges in the industry.
On the other hand, service solutions from the perspective of user interests are also particularly important. For the user losses caused by our platform in the extreme market on March 12, we immediately set up a special solution group to actively follow up and solve the problems, which has also been understood and supported by most users. As an objectively neutral and responsible trading platform, we are well aware that there are still many areas that need to be improved.
CT：It can be said that OKB is not only a platform coin for OKEx, but also a global token throughout the entire ecosystem of OKEx. What’s the role of OKB in OKEx’s ecosystem?
JH: Now, in many people’s eyes, OKB is less and less like a “platform token.” It creates continuous value for OKEx users. OKB ecological construction starts from several important dimensions, and its ultimate goal is to continue to create value for users.
In terms of additional rights within the OKEx trading platform, 14 application scenarios have been expanded. From the perspective of the construction of a deflation model, we are currently the first platform coin in the industry to achieve full circulation. On Feb. 10, we destroyed 700 million unissued OKB, which means that the team completely gave up its rights and holdings of OKB, and the profits were given to OKB users. Of course, this also means that OKB’s future buyback and burn will all be performed in the secondary market.
CT: Can you tell us how OKChain will empower OKB in the future?
JH: The appearance of OKChain is also an attempt of OKEx in the global decentralization tide. The big difference is that OKChain will solve the problem of large-scale landing and application of public chains because we believe this is the main contradiction in the current development of public chains.
OKChain’s uniquely designed cross-chain solution and original business chain alliance can enable each participating node to exert its power here and publish and run various decentralized applications without hindrance. The whole process does not require any review nor is there a so-called “proposal.” To a large extent, it has solved a series of problems such as transactions per second, security and adaptability that plagued the development of public chain technology.
In the future, OKB will be migrated to the main chain of OKChain. At that time, we will delete the code of the smart contract for the additional issuance of tokens and continue to improve the OKB deflation model. And the genesis block of OKChain’s basic token OKT will map 100% to OKB holders when the mainnet goes online, and OKB holders will also have the opportunity to become supernodes on OKChain.
The latest progress is that when it was open-sourced to GitHub, OKChain joined hands with the first group of ecological partners — a total of 30 global well-known enterprises from the public chain, proof-of-stake mining pool, blockchain browser, wallet and multiple other types of fields. Perhaps by that time, OKB will be less like a “platform token.”
CT：How do you see the regulatory landscape around crypto, and how does OKEx remain compliant with global regulators?
JH: I was not surprised by the result of the U.S. Security and Exchange Commission’s ban on Telegram tokens. Telegram is elaborating on the nature of its tokens, saying that Telegram Open Network is a practical tool for community members with “consumer uses,” while the SEC and the courts are more concerned about its financial attributes, believing that it can flow out of control to the secondary market. Such negotiations are doomed to a consensus.
“The supervision of any industry always needs to dynamically adapt to market changes, but a basic premise is that no matter how changes are made, everyone has a basic consensus on this industry.”
The TON ban does not completely represent the SEC’s denial of the entire digital currency. On the contrary, this judgement fully shows us the professional understanding of the SEC and the courts on blockchain technology and digital currency, which is a powerful impetus for the development of the entire crypto industry. In the globalization process of OKEx, it is our primary premise to reach a regulatory consensus with local users and regulatory agencies.
In March, we heard a lot of good news from the world: India lifted the trading ban, South Korea officially classified cryptocurrencies as an asset and Germany issued a guide to classify cryptocurrencies as a financial instrument, with many other countries also actively exploring.
This just shows that the regulatory agencies of various countries are reaching a consensus with the crypto market. Therefore, for any country and region in the world that has reached a consensus with the crypto world, OKEx is ready to embrace supervision at any time.
CT: Could you share your thoughts on Binance’s acquisition of CoinMarketCap? What were the main motivations behind this move, in your opinion? Is expansion like this a natural way for exchanges to develop?
JH：First of all, congratulations to Binance on its ecological footprint expansion. However, I have also expressed my view on social media. In contrast, I would be more inclined to spend this budget on repurchasing platform coins and giving back to users who support the development of the platform. Only when users benefit will more and more people pay attention to and support you, and the exchange ecology will naturally become stronger and stronger.
“Each exchange has its expansion strategy. There is no so-called natural occurrence. It is a trade-off between the interests of all parties. The final choice is also determined by the operator’s judgment on the interests.”
Although I have said it many times, I still have to reiterate that in the expansion of OKEx, the interests of OKEx users will always be first. It does not exclude that we will advance some important decisions by soliciting opinions from users. OKEx will continue to contribute its strength to the construction of the global crypto ecosystem, which is beyond doubt.
CT: Can you share what your favorite books are, those that have inspired you to do what you’ve been doing in the blockchain sector?
JH：Work and life are two mirrors that reflect a person. I am quite different from myself at work. In addition to books that enhance professional knowledge every day, I like to read some tragic comedy and realism novels by Shakespeare and Dickens. I remember one sentence in Dickens’s A Tale of Two Cities: “It was the best of times, it was the worst of times.” Now, in many moments, this sentence will appear in my heart. Any industry and its related technologies have two sides.
This era has given us a great platform to do what we think is meaningful and at the same time set up many constraints. Therefore, our actions must be oriented to benefit the people, society and life. A good or bad thought requires that we always have a rule in our hearts to measure and correct. These novels have influenced my code of conduct to a certain extent.
In addition to these, an avid teenager lives in my heart. Maybe you can’t imagine it, but I also like to watch popular novels like “Harry Potter” and “Lord of the Rings.” I like a story that breaks the boundaries of thinking and uses imagination to create a world of dreams and love.
Just like the blockchain industry, it is new, meaningful, borderless and does not adhere to conventions. We still have a lot of possibilities to achieve the impossible. Just like the enthusiasm brought by these novels, I think that whether it is a blockchain enterprise or a trading platform, we first need to use unlimited innovation and imagination to create services and value for society. At the same time, we must assess the situation, be bold and careful, and conduct within the rules of society.
This interview was shortened and lightly edited for clarity.