Summary of Binance Co-founder HeYi's communication with the Chinese community
Colin Wu . 2024-06-17 . Data

Recently, Binance’s registered users surpassed 200 million, prompting an AMA where co-founder Yi He addressed some pressing concerns, including the recent incidents of wash trading and theft, the contradiction of listing high FDV projects, and the criteria for delisting “zombie coins.” Additionally, Yi He mentioned that she emails CZ every day and writes book reports. Her daily life mainly consists of working out, phone calls (meetings), and putting her child to sleep, which she finds very monotonous. She jokingly mentioned “girlfriend coins,” indicating that Binance is exploring bringing normal business models, even if it entails some ridicule and failure.

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Has Binance made any recent advancements in user security?

Yi He: Firstly, I want to say that there is no absolute security; we must always stay vigilant. This applies not only to exchanges but also to our own asset security management, whether using hardware wallets or e-commerce wallets.

Binance learned some hard lessons in its early days and has invested heavily in security. Currently, our investment in security is an ongoing process. For instance, when a user clicked on a third-party plugin that led to asset theft, we enhanced our risk control standards and levels in this area.

We have implemented dual risk control for wash trading. When there are significant price fluctuations, big data will capture information and alert us, followed by manual confirmation. At that time, we detected the price fluctuation information, but due to the large number of trading pairs involved and diverse profit-takers, the risk control judgment was not problematic.

For users who suffer losses due to clicking on plugins, we understand their expectations for Binance to back them up when they take risks. We have set higher standards for our security and risk control teams, continuously iterating on our security measures.

Some users’ assets were stolen due to account sharing, but we can track specific situations through complete user behavior logs. We recommend that everyone avoid clicking or sharing suspicious links, especially videos and live streams. If you must click, use a relatively secure and separate phone for trading accounts, particularly for users with significant assets.

When downloading apps, check if they are official versions to avoid phishing apps. Recently, there’s been a lot of panic and various voices in the community, such as questioning whether exchanges are involved in theft. We believe a well-operated trading platform would not engage in such behavior as it undermines a healthy business model. Our competitors are also doing well, and such rumors severely damage users’ trust in the entire industry. This summarizes the recent frequent security incidents.

How does Binance view high FDV, low-circulation projects, and will it intervene in opening prices and token distribution?

Yi He: First, I want to provide a framework from my personal observation and understanding, which does not represent the official logic or absolute standards. The blockchain industry is currently in a special stage, similar to the process of technology moving from niche to mainstream markets. For instance, early VR and 3D printing technologies were popular but failed to scale due to their inability to bridge the gap from niche to mainstream. Tesla succeeded by commercializing electric vehicle technology.

In the blockchain industry, we may be building a more decentralized and efficient miniature financial system. In this system, scenarios like trading, asset management, and inflation prevention already have mature business models. However, the bigger challenge is how to truly help the blockchain industry reach mass adoption, as there are almost no successful cases in practical scenarios like gaming and social networking.

I hope more projects with real business models can be built on the blockchain rather than staying in vague concepts. The anti-VC wave and the popularity of memecoins reflect the market’s lack of quality assets. Many VCs invest in projects with high valuations, but these projects fail to produce good business models. Airdrops are just data maneuvers, and trading platforms, pressured by user demand, list these projects, but ultimately no one is satisfied, and everyone suffers.

We hope every project has sustainable growth and a good business model, but in practice, trading platforms cannot control project parties and market makers. We can only provide guidance, such as hoping project parties can airdrop more tokens to users, but we cannot intervene in pricing and execution. When recruiting projects, we aim to find low-valuation teams with good business models while also recruiting market makers. However, too many requirements might lead market makers to move liquidity elsewhere.

The problem with high FDV is that only a few project parties profit while users and investors suffer greatly. This industry is an emerging market where token issuance rules can be customized, and investors and users need to spend more time researching and voting with their feet. We continually iterate our standards and requirements for project parties and market makers, but this process is a game of wits.

We hope the market will have more friends willing to solidly work on projects rather than just issuing empty projects. True success requires enduring human nature’s challenges. I hope this wave of bubbles will leave behind more excellent projects and assets.

In the future, we hope to see more blockchain assets used by entrepreneurs, not just locking users into airdrop and trading platform scenarios. The entire industry needs to cross the chasm.

How do you maintain high passion and ample energy?

Yi He: From my personal experience, I come from a humble background and have seen the highs and lows of the world. When you see the disparity in the world, you start thinking about what you want to do or leave behind in this world. I might say that material heritage is your children, an extension of your DNA. But if you have the chance to truly change the world, why not try? Like Elon Musk or Amazon, leaving something transformative. In reality, a person can only spend a limited amount of money in a lifetime, and I am not a fan of luxury goods. My greater passion lies in rebuilding myself, breaking my ceiling, and seeing my growth.

I focus on self-improvement. For example, last night I sent a message saying I got up to work out after six hours of sleep. I did get up and was tortured by my trainer. My self-requirements can be divided into several modules: First is health; fitness is not just about physique but also health. Second is the iteration of self-awareness; I recommended a book called “Mindset: The New Psychology of Success” on Twitter, which helps me with self-iteration. My advantage is that I can quickly internalize and link the knowledge after reading. Third is leaving something behind in this world; if you can change the world, why not try? This is why I have consistently stayed on the front line for many years.

If you ask me if I want to retire or slack off, of course, I do. But I have a goal to build a long-lasting company. This requires not only personal ability but also the ability to build an organization. If every senior manager at Binance can replicate my ideas, they might be more professional in skills, such as our VIP user managers who understand finance better, and the tech team that understands technology better. My goal is to build a strong and healthy organization with sustained growth.

In this regard, my role model is Duan Yongping, who is very low-key but successful in China’s entrepreneurial history. He created Subor and BBK, and later BBK split into vivo, OPPO, and Imoo Watch. He was not only successful in entrepreneurship but also in investment, such as investing in NetEase and Pinduoduo. Duan Yongping’s success proves that success can be replicated, and I hope my success can also be replicated to more people, cultivating more high-potential talents for Binance, bringing good thinking, concepts, and corporate culture to Binance.

This is what I hope to do and am working hard on. I also welcome more potential friends interested in Binance to join us.

How to select Launchpool and MegaDrop projects?

Yi He: We do not select projects based on whether they go to Launchpool or MegaDrop first; instead, we select the project first and then decide if it suits MegaDrop or Launchpool. Initially, we started with Launchpad, but due to regulatory issues with token pre-sales in many countries and regions, we switched to airdrops. We first launched Launchpool and found that many project parties want to acquire real users, and Binance’s token holders are relatively more genuine.

Binance’s Web3 wallet has KYC, proving users are real. For example, the recent ZK project was criticized because they targeted many bot studios’ users. If they had initially obtained real users through Binance’s Web3 wallet, the situation would have been much simpler. Therefore, Launchpad, Launchpool, and MegaDrop are all solutions for project parties to find real users and also provide benefits for Binance users.

Sometimes we choose to list projects because the project parties are willing to provide more airdrop shares, but this decision may not always be correct. Thus, we continually reflect and listen to user feedback. For example, high FDV projects list on other platforms with low circulation, see short-term increases, but then prices drop. There is no standard answer, such as whether low circulation or deflationary models are always good; it needs to be assessed case by case.

Our goal is to find quality projects with long-term development intentions or potential for success and then decide whether to place them in Launchpool or MegaDrop. If the project party offers fewer shares, it goes to Launchpool; if they offer more shares, it goes to MegaDrop. Regardless of the name, the key is to help project parties acquire real users and provide benefits to Binance users.

We will adjust project selection standards based on market feedback to ensure the market’s health and long-term development.

Does Binance have delisting standards for zombie coins? How to manage and remove them?

Yi He: We conduct regular reviews of tokens already listed, not limited to social media activity but also including ongoing product development, liquidity, and any significant negative news. We also evaluate tokens based on regulatory requirements in different countries and regions. If we find high-risk tokens, we will flag them for monitoring and spend more time observing them.

Recently, our delisting frequency has decreased, mainly because some project parties became active again during the bull market. We have a dedicated department responsible for monitoring listed projects, including on-chain incidents, hacker events, and user feedback. When delisting, we conduct detailed analysis to ensure accurate decisions rather than simply delisting underperforming projects.

Delisting causes harm to both project parties and token holders, so we strive to remain objective and strictly enforce listing and delisting standards. Do not assume that some “shell” projects on Binance are buyable, as these projects may be delisted at any time. We firmly oppose shell buying behavior and will close projects directly if found.

How do you view the market value comparison with Coinbase? Where is the growth potential for BNB?

Yi He: Firstly, I believe Coinbase is essentially a stock security, whereas BNB is a token, and they are not in the same league. Coinbase’s stock cannot be used on the Binance platform like BNB. BNB has extensive applications within Binance, with continuous burn mechanisms and support from BNBChain.

BNB’s usage on the Binance platform is widespread, known as the “golden shovel,” for fee deductions. Although BNB Chain’s momentum is currently not as strong as some major L2, L1 ecosystems, or TON’s user base, compared to developer-centric public chains like Ethereum or Solana, BNBChain has more real Web3 users and builders.

I believe BNBChain’s future direction is to integrate blockchain technology into ordinary people’s lives, helping more entrepreneurs and developers push the blockchain industry to the next stage. From this perspective, Coinbase and Binance are on completely different paths. Coinbase is an excellent trading platform, achieving profitability through its partnership with Circle, while Binance is taking a different path in the blockchain space.

Binance empowers BNB through continuous benefits and airdrops during project launches. Short-term price fluctuations do not mean much; we focus more on the team’s long-term efforts and goals. BNB Chain and the entire community need collective efforts from users, the community, entrepreneurs, and developers.

Which sectors do you focus on, and how do you view AI? How do you spend your day?

Yi He: Let me answer the AI question first. In the last AMA, I also talked about my understanding of AI. I believe blockchain changes labor relations and distribution of benefits, while AI is a significant productivity transformation. For example, many trading platforms and products are multilingual environments; if AI is utilized well, it can save a lot of translation costs and improve efficiency. This is a concrete example of productivity improvement. In the future, AI’s productivity enhancements will be reflected in more areas, including design, marketing, and more, reducing costs and increasing efficiency.

AI can be divided into several modules. The application side is the most common, such as OpenAI’s chatbots, which can help write plans, design, and create videos. Further up are the big model teams, which are small in scale but highly specialized. Beyond that is computing power, which explains why NVIDIA’s stock performs so well. NVIDIA’s leading position in chips makes it difficult for competitors to match. Technological advancements have significantly enhanced computing power.

Energy and data are two critical industries supporting AI development. Global wars and political struggles often revolve around energy, and future AI development will also depend on energy support. Data is another key factor; companies with massive user data have an advantage in AI development.

At Binance, we are also looking for good AI solutions. For instance, the BNB Chain’s Greenfield product aims to use data while protecting privacy, ensuring user privacy. This is our attempt to combine blockchain and AI.

Regarding sector selection, as a businessperson, I need to keep an eye on and think about various emerging sectors. Any sector that helps society with good products and services is a viable business.

My daily life is very simple: working out three times a week, usually early in the morning, followed by a full day of phone meetings. My goal is to cultivate a leadership team, building strong leadership across the industry. Besides meetings, I spend a lot of time studying organizational and management issues and communicating with our HR head. Recently, I also took on the task of writing emails to CZ, reporting work and sharing life tidbits. My life is plain and straightforward: work, exercise, family time, and reading, that’s my day.

What are Binance’s considerations for stablecoins, and how will it develop in the future?

Yi He: Our logic for stablecoins is simple; although we can’t say we accept everything, we hope this is a continuous race. Previously, BUSD was a third-party collaboration. For us, whether it’s TUSD, FDUSD, or more stablecoins in the future, we welcome cooperation. The key is whether the partner’s qualifications and capabilities match and if we can reach an agreement. We are very optimistic about the stablecoin track, but to operate it well requires favorable conditions, not just setting up a stablecoin account to accept funds.

After Binance’s user base exceeded 200 million, where will new user growth come from? First, it must be stated that registered users are not the same as active users, and some registered users may not trade or deposit. To achieve a larger market scale, more high-quality assets need to emerge. If the industry is highly competitive, it’s due to a lack of quality assets, involving crossing the chasm. Our task and consideration are how to cross the chasm, making blockchain as accessible as the internet or AI, allowing ordinary people to use it directly. Once we cross the chasm, the user scale can increase tenfold or twentyfold.

I firmly believe that if high-quality assets with practical applications appear in the crypto space, the market scale can expand fivefold or more. Each cycle will see new applications and companies emerge, and companies that persist and create value for the world will become industry leaders. Just like the top companies after the internet bubble, such as Apple, Amazon, Facebook, and Google, they continue to create value and become top global companies. We hope to see similar sustained growth and development in the blockchain field.

What plans and strategies does Binance have to attract more outside users after surpassing 200 million users?

Yi He: After surpassing 200 million users, what plans and strategies does Binance have to attract more outside users?

Binance has been making such attempts for a long time, whether through marketing, our academy, charity projects, or project listings. We’ve received some negative feedback as well. For example, we previously signed The Weeknd and later Cristiano Ronaldo. Ronaldo has 600 million followers on Instagram, with millions to tens of millions of likes on his posts. We hope to make more people aware of Binance and cryptocurrencies through celebrity endorsements.

Furthermore, we hope that users take the time to understand cryptocurrencies when registering on Binance instead of blindly following the trend to invest. Even investing in memecoins requires understanding their nature and cycles to avoid impulsive operations. Our logic is that Binance-listed projects are not necessarily of very high quality; sometimes, they are listed due to user demand. We first list some projects on the futures market, allowing users to choose to go long or short. If unsure about the long-term popularity of a project, we list it on the futures market first, where users can choose 1x or 2x leverage.

We have also made mistakes, such as the Hook project being mocked as a “girlfriend coin,” with many questioning the authenticity of its users. We found that many users were not typical crypto users but those who registered and completed tasks for rewards like motorcycles or rice cookers. These users were not typical crypto investors.

Recently, we collaborated with some Web3 projects for cross-game cooperation, attracting 1.3 million users, but only 56 became trading users because most were there to exploit rewards. In this process, some might question why we list such projects, but we hope to find applications and business models that can change ordinary people’s lives through these attempts.

Additionally, Binance Academy and charity projects bear more industry responsibility and influence. Although investments do not always yield immediate results, they at least increase Binance and cryptocurrency visibility. Signing Cristiano Ronaldo may not bring a large number of registered or trading users, but it increases awareness of Binance.

The crypto industry has much negative information and biases, but we will steadfastly push the industry forward and guide more outside users to join. Even if we face some ridicule and failure, as long as the goal is clear, we will move forward with determination.

In summary, we will continue to work hard to attract more outside users and promote the industry’s healthy development.

What impact does Binance’s regulatory settlement in the US have on its development in Europe or other regions?

Yi He: Binance’s regulatory settlement in the US will have some impact on its development in Europe or other regions. You might have noticed that one of our executives had trouble in Nigeria. From a regulatory perspective, traditional finance has a history of over a century, with regulatory systems gradually established. Therefore, when they see new things like crypto claiming to disrupt traditional finance, they naturally view it as a threat. In this context, as a leading company in the industry, we face more pressure and challenges.

Many believe DeFi can solve all problems, but in reality, the internet also went through similar stages of development. While information freedom is crucial, the internet is still under government observation and regulation worldwide. The blockchain industry will face similar challenges. If completely decentralized, especially in countries like the US, regulatory agencies will take strong measures against DeFi and will not be lenient with CeFi either. This is why CZ is currently still in the US.

If we want this industry to serve 1 billion users and push it forward, we must reconcile with regulators, build consensus and trust, and find a way to survive. When the industry reaches a large enough scale, we must demonstrate its positive impact, how it complements the existing financial system, improves efficiency, and achieves peaceful coexistence. This is the direction we are considering and moving toward.

In this process, we will face challenges, such as being unable to provide futures trading in certain regions. Additionally, compliance team sizes will become very large, and many decisions will require compliance and legal team approval. But as long as the organization is strong and the strategy is correct, these phase challenges will not affect long-term goals. Overall, we seek coexistence.

Coinbase also strongly supports embracing regulation. We may be the first globally to actively embrace regulation, especially in the US. In fact, competitors like Coinbase, OK, Huobi, Bybit, Bitget, and Bitmex have all gone through many cycles to get where they are today, with much we can learn from each. The industry is still very early, requiring joint efforts to make the pie bigger.

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