Original | Odaily Planet Daily
Interview | Qin Xiaofeng
How to organize |
On the evening of July 12, on the occasion of Binance’s 7th anniversary, Binance co-founder He Yi accepted a joint interview with Chinese media (Odaily Planet Daily, Wu Blockchain, Shenchao, Foresight News). He Yi gave a detailed account of Binance’s management philosophy and development plan, current and future market trends, his years of experience, and responded to recent market doubts.
In this round of bull market, although Bitcoin ETF was approved and the price continued to rise, the altcoin market remained sluggish. In addition, multiple VC-backed infrastructure projects with high circulation market value were launched one after another, further draining the liquidity on the market. As the world's largest encryption platform, Binance has been subject to a lot of doubts. At the same time, Binance itself has also completed a major transformation in the past few months, moving towards compliance, CZ resigned, and the team was replaced. Under the pressure and challenges from both inside and outside the industry, how can Binance, led by He Yi, "cultivate both inside and outside", and at what speed and where should this encryption ship sail?
Due to the large number of questions in the interview, Odaily Planet Daily divided the content into three sections: Binance, industry, and He Yi’s own three plans for the convenience of readers.
7th Anniversary: Binance’s Past, Present, and Future
1. Since last November, CZ stepped down and the new CEO Richard Teng took office. Has the Binance business been greatly affected by the transition between the old and the new? As a new partner, how do you evaluate Richard Teng's work in the past few months?
He Yi: Regarding performance and CZ’s departure - First of all, I think CZ’s departure did not have a big impact on our performance. The core indicators include trading volume, number of currencies on the platform and global market share, and everyone can see the public data. Of course, we also have some small losses, mainly because Binance stopped operating in some regions (such as Russia) in the settlement with the United States. However, we have made positive progress in negotiations in countries such as Nigeria and India, so the overall business data is still positive.
He Yi's evaluation of Richard Teng - Richard Teng has a regulatory background and is very helpful in communicating with regulators in various countries. He understands their language and can enhance mutual understanding, which is very helpful for the company's public trust. In addition, Richard Teng is a very mature manager, and the company is in the process of continuous team iteration under his leadership.
2. Regarding the issue of insider trading in coin listings, I have personally observed that there have been many cases of "early leakage" of coin listing news. Regarding coin listing management, can you introduce some measures that Binance has taken to prevent insider trading? In addition, what are the criteria for Binance to select projects? In the case of a sluggish market, what measures has Binance taken to maintain user confidence and enthusiasm?
He Yi: Regarding the issue of insider trading in coin listings - First of all, I would like to address everyone's concerns about insider trading in coin listings. In the past, when we mentioned insider trading, we meant that some tokens were promoted in the market, but the projects themselves were not listed. However, from last year to this year, there are not many truly excellent or popular projects in the market, which has caused us trouble. We may not have talked about some projects yet, but rumors of listing have spread. Even if the project is in a hot cycle, we must carefully consider whether to list the token.
Any project that is a little bit popular in the market will be rumored to be listed, and this happens frequently. Some people even threaten the project owners, saying that if they don’t give them benefits, they will spread rumors of insider trading. This sometimes forces us to list some projects that we were still observing.
Criteria for listing coins - The decision to list coins is not decided by one person. We have a set of strict evaluation criteria. First, we will consider the fundamentals, technology and market popularity of the project; second, whether there is investment endorsement is also a consideration; finally, we will look at the life cycle of the project and the team's capabilities. In fact, the project party often does not know whether it will be selected before listing the coin.
Understanding of ROI - From 2014 to now, the overall ROI is not bad, but there are not many projects that can survive well in the long run. There are not many projects that can seize the volatility to make money in each cycle, and there are even fewer projects that can bring high ROI to users in the long run. This problem exists not only in the cryptocurrency circle, but also in Nasdaq and NYSE. Therefore, I think there are not enough effective assets in the industry, which is also the biggest challenge we face.
The problem of psychological expectations - In the past 10 years, there have been many myths about making money in the cryptocurrency circle, and many users have the psychological expectation of catching coins that increase 100 times or 1,000 times. But in fact, many investment cases lose money. In contrast, VCs who came from Web 2 have psychological expectations and know that some projects will fail. They are very satisfied with an annualized return rate of 20%.
Investors in the cryptocurrency industry have too high expectations for returns. Even if a project has an annual return of 20%-30%, many people will think it is not good enough. As competition in the industry becomes more and more fierce, opportunities for high returns will become fewer and fewer.
Finally, I think it’s still a matter of psychological expectations. The industry has grown, competition has become more intense, and opportunities for high information asymmetry have become fewer. There is a huge difference between everyone’s psychological expectations and the actual situation. This kind of thing is difficult to explain, but as a trading platform, we hope to provide projects with large market demand and long life cycles, rather than the myth that everything will rise.
3. This year, Binance’s coin listings have been controversial. First, the number of coins listed is large and the speed is fast; second, most of the coins listed have interests related to Binance. People will feel that in this cycle, both retail investors and project owners are working for Binance. What do you think of this view? What is the value of Binance’s coin listings?
He Yi: Number and speed of listing coins: fact or opinion? - First of all, when we talk about the large number of coins listed on Binance and the fast speed of listing coins, is this a fact or an opinion? The facts can be spoken by statistics. From last year to this year, Binance has only listed more than 30 coins. On other platforms such as Bitget and Bybit, the number of coins they list starts at 100. So, when someone says that it is better for Binance not to list any coins and only keep Bitcoin, is this representing the interests of Binance or the interests of other exchanges? Obviously, if Binance lists more than 30 coins, then others list hundreds of coins, not to mention.
Conflict of interest and project screening - Some people say that most of the coins listed on Binance have a conflict of interest with Binance, which involves two issues. First, if Binance really only lists projects related to its own interests, most coins may not be listed on Binance at all, because Binance does not invest in many projects. Second, Binance does invest in some projects, but this does not mean that most of the coins listed on Binance have a conflict of interest with Binance. These can be verified by specific data.
In addition, some people think that Binance asked the project for tokens for profit, but in fact, it was to ensure that the project tokens could be distributed to real users, rather than being obtained by fake accounts controlled by the Luma Studio. If Binance really wanted to pay the listing fee, it could have just asked directly, why beat around the bush?
Market sentiment and investment returns - the reason why people are angry is actually that the market performance is lower than expected and the investment return rate is lower than expected. In this case, emotions are easily incited and a target needs to be found to attack. Therefore, I think that the number and speed of Binance's listings is actually a misunderstood issue.
Binance's business diversity - Binance is not just a spot exchange, we provide a variety of trading products and non-trading products. For most ordinary people, financial products with an annualized return of 10%-20% are enough, such as the stablecoin financial products we provide. If you expect a return of 100 times or 1,000 times, there are indeed no projects like in the past in this cycle.
As the industry matures, information gaps become smaller and smaller, competition becomes more and more intense, and the return on investment will naturally decrease. Everyone should understand that the fundamental function of the trading platform is to provide relatively popular and hot projects, but it does not mean that these projects will definitely rise.
The concept of the investment market - we hope to screen out those projects that have a relatively greater chance of success and longer life, but this does not mean that the coins on Binance will definitely rise. In any investment market, this concept is biased. In addition to financial management and spot trading, we also provide contract products, which are suitable for more mature traders to hedge risks.
In general, as the industry grows, there will be more and more professional counterparty traders. If others are more professional than you, you may suffer a loss. Therefore, we cannot require Binance's "vegetable market" to sell only the least vegetables, while other vegetable markets sell more diverse products, and users will naturally choose the more diverse vegetable markets. This is indeed a challenge we face.
4. Looking back at the past few years, Binance's business has blossomed in many areas, improving the transaction categories in the vertical dimension, and expanding horizontally to investment, charity, public chain, etc. In this round of bull market, Binance does not seem to have made any big moves. Can you introduce some of the next business focus and direction, as well as related future plans?
He Yi: Technology application and innovative investment - I have mentioned crossing the chasm many times. The essence is to discuss how to better apply technology to the current industry. We continue to invest in more companies and hope that there will be more innovation in this industry.
Platform expansion and user participation - For Binance, we are a platform that provides a platform to expand more users to enter the industry. In the past two years, we have added content business, such as our Plaza, with the aim of allowing users who are not interested in the cryptocurrency world to participate and gradually understand the cryptocurrency world and investment.
Stablecoins and Web3 wallets - We worked on stablecoins for a while, but due to regulatory costs, Circle eventually won. People are now more concerned about Web3 wallets. Although our competitors have done a good job on Web3 wallets, we believe that even the second choice cannot avoid regulation. So we hope to make Web3 wallets a long-tail business that covers current exchange users. Of course, Binance Web3 products still need to work harder on user experience.
Compliance issues and global expansion - Our biggest business focus in the future is to solve compliance issues around the world. In the past, the industry was small and no one paid attention to us, but now the whole world regards cryptocurrency as a formal industry. We must communicate with regulators in various countries, build trust, and conduct anti-money laundering, etc. This is our general direction in the future.
Industry future and long-term layout - I have always believed that if this industry can establish an effective reconciliation channel with more companies and governments, it may become part of the Internet. But if it is in opposition to the government, it may become a dark web. We hope that Web3 will become an Internet industry that serves more people. Although many of the things that have been laid out before are still waiting for the results to be gradually implemented, we will take our time. In this round of bull market, the industry currently has no real huge innovations.
5. What is the current proportion of Binance employees working remotely? What are the difficulties and things to pay attention to in managing this large-scale and wide-ranging form of remote work? How to prevent insiders from doing evil?
He Yi: Binance Remote Work - I think Binance may not be the first company to try large-scale remote work, but we did it on a large scale. This attempt is a gift of the times and a more effective collaboration model. From a management perspective, the effectiveness of tools and the establishment of trust are the keys to the success of remote work. Collaboration between people requires trust, especially when there is no face-to-face contact.
Recruitment is very important in management. Finding the right people means their values and language are more similar to yours, making it easier to build trust. The transparency of management rules and evaluation systems is also critical, and effective communication can help build trust.
These issues are important even in in-person work, but they become more prominent in remote work due to the lack of frequent face-to-face meetings.
Preventing insiders from doing evil - from two dimensions: preventing external attacks and internal security defense. First, invest enough time and resources in security to ensure that external defense measures are in place.
Secondly, more important is internal security defense. Recruiting the right people, effective security information management and hierarchical management are all key. Historically, one of the reasons for the theft of some trading platforms was improper personnel or improper security information management, which led to internal personnel stealing user information or assets.
Finally, continuous investment and management are the key to maintaining safety. There is no 100% safety in this world, but we need to constantly work to improve the safety factor.
6. From a startup to today, Binance has gone very smoothly and has become a giant with more than 200 million users and a market value of nearly 100 billion US dollars. What turning points do you think have profoundly changed the fate of Binance in this process? But as a co-founder, have you and Binance ever fallen into difficulties or even desperate situations? How did you get out of it?
He Yi: Market capitalization and number of users - In fact, Binance does not disclose its market capitalization, but we do have more than 200 million registered users, but not so many active users. Regarding the issue of BNB's market capitalization, it is essentially the result of cyclical changes. I don't really look at these numbers. The rise and fall of market capitalization is natural. The key is to do things well, and the results will naturally be good. I have always believed that as long as I manage my current work well every day, the results will be good.
Facing difficulties - In fact, since the first day of Binance's launch, every step has been full of crises and difficulties. For example, BNB fell 50% when it was first launched, which may be the biggest dilemma for many people. In addition, if there is no settlement with the SEC, Amazon Cloud will be delisted, infrastructure domain names will be delisted, and even Apple and Google will be delisted, which are all huge difficulties. For us, we solve problems when we encounter them. There is no so-called moment of fighting a trapped beast. We just need to manage every day well.
Do the right thing - I always insist on doing the right thing, and I believe there will be positive returns. Since childhood, we have all had the idea of "If you are poor, you should take care of yourself, and if you are rich, you should help the world", but I think there is a logical flaw in it. When is it considered "rich"? What does it mean to "help the world"? My understanding is that as long as what you do has a positive impact on the world, can reduce costs, improve efficiency, and help users have a better experience, you are changing the world.
Changing the world does not necessarily mean launching rockets or making Teslas. As long as what you do helps ordinary people, your company will naturally grow bigger and stronger, and then become "successful". Of course, there will be different challenges in each step of development, whether it is regulatory pressure or talent development challenges, which are all natural and just need to be solved.
Mindset and Positive Thinking - I have a more optimistic mindset and tend to think positively. When faced with a difficult situation, I never felt that there was no solution, but focused on solving the problem. This positive psychology attitude helps us better cope with and solve challenges.
The current situation and subsequent forecast of this bull market
1. The recent market is bleak. News such as Mt.Gox and the German government selling coins have made traders cautious and pessimistic. Some even say that the bull market is over. What do you think of the current crypto market?
He Yi: Industry cycles and market perception - This industry goes through a trough every few years, and the media will report its "death" in a big way. A large number of users will leave in each cycle. I think this reflects the changes in the entire environment, and there is not enough sober awareness of short-term ups and downs. For example, when the Mt. Gox incident and the German government sold coins, everyone became pessimistic. But as I said, when Bitcoin fell from $600 to $100, many people thought the game was over and everyone would lose their jobs. If you have experienced bigger storms, you will be calm about the fluctuations in front of you.
Bitcoin halving and market performance - Why does halving necessarily lead to price increases? In fact, Bitcoin prices did hit a new high after the halving, and did not deceive everyone. However, the real underperformance was in the altcoins. The rise in Bitcoin prices, whether it was the halving or the approval of the ETF, directly stimulated Bitcoin, and the capital overflow did not cover the entire industry.
Personal investment strategy - For the market, I choose not to look at the price because I don't trade myself. I have held BNB since 2017 and have never sold it. For me, I trust my understanding of the industry and my judgment on which assets are more valuable. Of course, sometimes judgments are wrong. For example, USDT's innovation is unquestionable and it is still mainstream. In 2017, everyone was using PoW, and Bitcoin dominated, while PoS was proposed by Ethereum and has now become mainstream. Everyone believes that PoS is a more efficient solution.
Research and judgment - In this industry, there are many micro variables that require investors to make independent judgments and conduct research. I believe that only through in-depth research and independent judgment can we better understand and participate in this industry.
2. Shenyu previously proposed a view that there will be no copycat season this year. What do you think? Will there be a copycat season in the future? How long do you think the bull market will last?
He Yi: Regarding the macro economy and the cryptocurrency world - look at this issue from two dimensions. Although many people will criticize Shenyu, I think Shenyu is just expressing his own point of view, and from his point of view, this point of view is neither right nor wrong.
First of all, where does the money in the cryptocurrency world come from? If we regard the financial and semi-financial markets around the world as a large pool of funds, then under macroeconomic regulation, such as when interest rates are raised and money is printed, these funds will naturally flow to the trading market. Looking back at history, each round of cryptocurrency rise is closely related to macroeconomic changes. In addition to flowing into the stock market, these funds will also overflow into the cryptocurrency world, which is a typical feature. However, many friends in the cryptocurrency world do not pay attention to this large macro logic.
About the bull market and ETFs - Some people asked me when the next bull market will come. I think this bull market came earlier than I expected because the approval of ETFs stimulated investors' attention to the cryptocurrency market. However, if we look at key online data such as international Google search data, the user scale has not expanded significantly. This means that the ETF news only stimulated cryptocurrency users to invest uncertain funds in the market, bringing a small rise, and Bitcoin also broke through the previous high.
However, it should be noted that the inflow of funds from traditional finance into the cryptocurrency market is based on the logic of the traditional financial market. The inflow of funds is mainly concentrated in Bitcoin and a few other currencies, rather than the altcoin market.
Shenyu's views and market logic - I understand Shenyu's views, he has macro-rational structural thinking. Although, many retail investors may not agree with this view, because they also made money by speculating in Meme coins. I think the long-term development of the industry does not depend on whether it is a copycat season, but on whether the industry can continue to innovate and generate effective assets.
I am optimistic about this industry in the long term, and short-term fluctuations are normal for me. I am not a trading player, I do not trade, I am more of a historical perspective. For high-frequency traders, they focus on fluctuations, while long-term players need to understand the concept of value investment, which tests one's understanding of value coins.
In summary, it is not true to simply think that you can make money by investing in altcoins. Even in 2018, many people held on to currencies such as EOS, but in the end they did not get the expected returns. Therefore, it is very important for investors to understand different investment strategies and the definition of value coins.
3. We have observed that people’s confidence in the industry has decreased recently. On the one hand, it is a decline, but more importantly, the industry’s technical narrative has been shattered. People have discovered that the so-called technology and products are just disguises. The essence of this industry is still a game of liquidity, emotions and chips. Making products is not as good as launching memes, and speculating on technology is not as good as speculating on memes. In many cases, even half of the top ten transactions on Binance may be memes. In your opinion, will this become the norm in the future cryptosphere? Will there be real external crypto applications in the future?
He Yi: Coin Listing Selection and Market Reality - Regarding the issue of coin listing selection, I think we often face the situation that if Binance does not list Meme coins, users' trading volume may be lost to other platforms. Therefore, we often have no choice. Even if we do not list a certain coin, users can still choose to trade on other platforms, and there are even third-party platforms that can provide this service. Therefore, in the decision of listing coins, we can only make a compromise and maximize the value and fundamentals of Binance as much as possible.
Emotional fluctuations in market cycles - In this cycle, there is a common phenomenon, whether it is in 2014 or in 2017, people tend to call most projects garbage, except for a few. In 2017, the emotional fluctuations in the market were very obvious, and many people participated in the market with a mentality more like gambling. When the market went up, everyone was very excited, and when the market went down, everyone complained about everything. I think this kind of emotional fluctuations, whether the market is going up or down, will appear in every market cycle. Especially in this round, many new players entered when the market expanded in the previous round, so their emotional expressions are more simply and directly reflected on the Internet.
In fact, in the industry, most narratives are led by a small number of very experienced experts with deep technical skills. These experts have many years of experience in the industry and have a high voice in the industry. When they talk about which projects are promising, they have a great influence and will drive more investors to follow their choices to invest. If their investment behavior really brings profits, then everyone will trust their judgment more. Therefore, in each market cycle, many people will invest according to technology trends or industry development trends to make profits, thereby strengthening their trust in technology or industry.
Technology and Innovation - From the last round of the market to this round of the market, more user-oriented products such as Stepn have emerged, and some people have earned reputation and influence. They led everyone to participate in all this, just like leading everyone to participate in the new revolution and leading everyone to participate in the development of new products. However, the market's enthusiasm and emotional fluctuations should not be misunderstood as whether the industry can build a real business model and product. This requires actual innovation and business construction, not just market enthusiasm and emotional fluctuations.
The importance of unity of knowledge and action - I have recently emphasized an important thing with my team members, that is, unity of knowledge and action. This is not just about having an idea, but also about actually doing it. Only by persistently practicing and pursuing your own ideas can you finally achieve the desired results. Just like when we were young, as long as we studied hard, our grades would not be bad, but many people know but cannot do it. The same is true in the entrepreneurial and investment markets. We must stick to our own ideas and innovations, and not change our direction because of fluctuations in market sentiment.
Market reaction and historical experience - When BNB was launched in 2017, many people laughed at it and thought it was ridiculous for a trading platform to issue coins. However, more often than not, we cannot stand still because of market reactions and emotions. We all know that the industry needs real product innovation and technological innovation, and products that can achieve practical application and influence for users.
4. Binance Labs is one of the most influential investment institutions at present. What are the most important investment criteria?
He Yi: Regarding investment in Asian projects - from my point of view, Asian project parties will still suffer some losses. After all, there are some large venture capital companies in North America that focus on the blockchain industry, such as a16z, and they have invested heavily. However, Asian investors often face embarrassing situations, and sometimes even Asian funds are reluctant to invest in local companies, which seems to be a self-deprecating phenomenon.
For us, our investment strategy is more like sprinkling pepper. In the end, how far this industry can go is still driven by innovation. I have mentioned the concept of "crossing the chasm". This kind of crossing ultimately requires real innovation drive to enable blockchain technology to be used by more ordinary people. We hope to support more people. Although we may have invested in more than 2,000 projects, at least 1,000, I have not been in-depth with most of the projects. Our investment focuses on several key points:
1. Long-termism of the founder: Does the founder have confidence in the industry? If he just wants to make a quick buck and then exit, this mentality is no different from that of a gambler. We hope to support those who have long-term confidence in the industry.
2. Founder’s skills: Do the founders have actual experience and skills? For example, some people may just pull a few groups and rely on shouting orders to increase the price of the currency. This skill is not enough for us to invest. What we value is the ability model of the founder and the team, whether there are complementary skills.
3. Thinking structure: Does the founder have the ability to continuously iterate? We focus on the founder's way of thinking and whether it can continue to grow and iterate. Through dialogue with them, we can determine whether they have this ability.
If a founder performs well in these aspects, we are willing to invest in them, although we cannot pursue a 100% success rate. It is common for traditional VCs to invest in 10 projects, 9 of which may fail and only 1 will succeed. We hope to continuously build confidence in the industry's long nights by supporting more innovators, whether it is an emotional long night or a long night before a technological leap.
Where will the future of the first sister go? Is she counting down to retirement?
1. As a co-founder of Binance, you have already achieved financial freedom. Have you ever considered "retiring" and handing over Binance to professional managers? Can you tell us about your future plans? How do you find a balance between family and work?
He Yi: Time management - about the balance between work and family. Maybe because I am a woman, people often ask me this question, but rarely ask male entrepreneurs. But I think that regardless of gender, the fundamental problem is time management. The core of time management includes two aspects.
First, spend time on more important things. Apart from about six hours of sleep a day, I may not spend much time with my family, but fortunately we work from home and can see our family from time to time. So, the key is how to use the remaining time on important things.
Second, the management of time granularity. I usually don’t spend too much time on face-to-face communication. Meetings are usually controlled within 30 minutes, and more effective meetings are expected to end within 15 minutes. In essence, this is the management of time granularity.
About retirement - I am a person with a strong sense of responsibility. I hope to build the company into a long-lasting system. I want to train enough successors in each module. They may be better and more professional than me. I can only organize these people together and maximize their value. I have a high desire for talent. I hope that the team has enough and strong people, and each of them can manage better than me, so that I can let go.
I particularly admire Duan Yongping. After he retired from BBK, he still has successful companies such as vivo, OPPO and Xiaotiancai watches. This is a successful retirement. With a good structure and a good talent team, it doesn't matter whether you retire or not.
2. Which recent project impressed you the most and why?
He Yi: Regarding future trends - I don’t comment on specific projects, but I think each of us is in a specific era, and certain trends of this era will have a huge impact on our lives and environment.
In the Web2 era, the wave of mobile Internet has had a huge impact on the traditional web era. And now, I have caught the wave of Web3.
I think the next technology that will have a huge impact on human society is essentially AI. I have spent a lot of time learning about AI. Although we may not invest in any projects, I think it is important to understand the direction of the trend.
3. Many veterans in the industry have begun to pursue their favorite careers outside of crypto, such as CZ building an education business, and the founder of Coinbase founded a biological company that studies immortality. If you have the spare time to do what you like, what would you do outside of the crypto industry?
He Yi: Personal interests and future plans - I have never thought about this. It is difficult for me to be interested in starting a business outside of the crypto industry. However, my personal characteristics may make me want to help others succeed more. I studied education and worked as a teacher, so I like to teach others. I have always believed that only by helping more people succeed can I succeed.
If I am not in the crypto industry, what else is worth my time and energy? It might be to help more people succeed. I might still return to investing and provide effective advice. I understand CZ has to do education. If he doesn't do it, he will have nothing to do. He still has to find something that can help the world.
Views on the future development of technology - I also understand the choice of the founder of Coinbase, because AI is developing so fast, and AI is indeed more advanced than humans. Humans are a relatively simple code design, and the logical input and output are relatively predictable, but people often make bugs, and there is a big gap between knowing and doing.
Throughout human history, poor people want to make money, and those who make money want to live forever. After having money, it is possible to roughly judge what a person wants to do. It may not only be the founder of Coinbase, but also some OGs in our industry. After they make money, they may want to have more children to continue their DNA, or pursue immortality and enjoy the quality of life.
Views on the future of the industry - these are all normal logic, and it does not mean that those who leave the industry are not trustworthy. It is precisely because those people leave that there are more opportunities. People who are financially free enjoy life, but it does not mean that others have no opportunities.
