President Hong of OKX: Responsible Innovation Leading Industry Transparency
OKX President Hong was invited to attend the “2024 Hong Kong Web3 Carnival” main forum on April 6, 2024, and delivered a keynote speech on “Responsible Innovation”. The following is the full text of the speech:
Good afternoon, everyone. It is an honor to be invited once again to participate in the Hong Kong Web3 Carnival organized by Wanxiang Blockchain Lab and HashKey Group. This provides us with a good opportunity to come together and discuss how to build a healthy and sustainable Web3 ecosystem.
The theme I am sharing today is “Responsible Innovation,” but before delving into this topic, I want to discuss two interesting sets of data.
Advertisement – Scroll down for more
The first set is “2 years” and “7 weeks”. In 2004, it took more than two years for the first gold spot ETF to reach $10 billion in assets under management. In 2024, the first Bitcoin spot ETF approved by the U.S. Securities and Exchange Commission at the beginning of the year quickly surpassed $10 billion in assets under management in just seven weeks. These two form a very interesting contrast.
The second set is on-chain transaction data. For those who have experienced bull and bear markets in the capital market, there are various signals in the market, some of which are noise, while others are significant long-term trend signals. The second set of data shows that on-chain transaction volume has been steadily increasing since 2019, whether in bear or bull markets. Even if we look back at earlier periods, such as data from the past 10 years, similar trends can be observed. Whether it is the Bitcoin network, the Ethereum network, or others, the overall on-chain transaction volume has been steadily increasing.
These two sets of data tell us that there are noises in the market that should be ignored, but there are also long-term trends worth paying attention to, as reflected in the price performance. I believe that a long-term trend is happening, that is, technological development is driving more and more activities to move to the chain and gain more attention.
The first Bitcoin spot ETF has accumulated the same amount of assets under management as the first gold ETF in a shorter period of time, which indicates the importance people attach to Bitcoin. As the first unique global digital currency network, Bitcoin provides people with the values of maximum transparency, control, and choice, all of which are brought about by the unique technology of blockchain.
Returning to today’s topic, what does our industry represent? Since the birth of Bitcoin and Web3, the true spirit of the industry has always revolved around transparency, responsibility, and rights. How can we provide more transparency, responsibility, and rights through the enablement of technology, products, and solutions? That is our purpose here. In the past two years of development, in addition to bringing the best applications as innovators, entrepreneurs, and builders, we have also been learning from regulated industries, adopting their best practices to enhance transparency, responsibility, and rights. Next, I am honored to share with you the future development direction of OKX in these aspects.
First, we increase transparency and responsibility through technology. Since November 2022, we have led the industry in adopting the widely used Proof of Reserves (POR) program and built it into a monthly automated technical solution. We have been publishing monthly reserve proof reports for 17 consecutive months, and this is not just a simple repetition. In fact, we have decided to update the POR program by accepting feedback and continuously improving it, and provide more technical support for the program to enhance our POR solution. We have expanded the coverage of POR assets from 3 to 22 and publicly disclosed the 450K+ addresses we hold on-chain, allowing users to verify their ownership openly.
In addition, we are also the first platform in the industry to adopt zkSTARK technology to ensure the integrity of the POR program through mathematics, cryptography, and technical guarantees, so that users can trust the program without the involvement of third-party intermediaries. We believe this is an important step towards industry self-regulation, using technology to bring more transparency and meet users’ expectations for centralized platforms to comply with traditional financial audit standards.
Second, we have invested heavily in Web3 technology and launched our self-custody wallet – OKX Web3 Wallet, and have developed it into a powerful one-stop Web3 gateway. We believe that by allowing users to control their private keys through self-custody wallets, we can reduce the risk of platform misconduct. In addition, through hard work, we are committed to making the OKX Web3 Wallet provide users with more accessible public chains, DApps, NFT platforms, and DEX aggregators, etc. We have done the heavy lifting of integrating these options to provide users with the most comprehensive and free choices, and all of this is currently free.
Like many other innovative technologies, in the early stages of technological development, the entry barriers are usually higher for new users who are not proficient in the technology. Therefore, we are committed to technological solutions. We believe that as a platform, it is crucial to make it easier and more convenient for a wider range of people to enjoy the benefits of new technologies. Therefore, we are very pleased and proud to continue investing in convenient features such as account abstraction, MPC wallets, and social recovery brought by our products. These features help more and more users to use self-custody wallets without the need to remember and manage mnemonic phrases, and in the event of accidental loss of mnemonic phrases, they can still continue to own and control their wallets through their chosen social contacts.
As a leading platform in the industry, the OKX Web3 Wallet has launched an AA smart contract wallet by adopting account abstraction technology, aiming to enable our users to trade and transfer between different chains with a simpler experience, faster speed, and lower costs. All the efforts we make are based on the belief that when more choices are provided to customers in a simpler and more secure manner, they will be more empowered to make wiser decisions.
In addition, we also believe that self-custody wallets are a purely technical solution that is important for ensuring transparency. More transparency means more responsibility. In the OKX Web3 self-custody wallet, there are multiple open-source and audited modules, and anyone can view our code on GitHub if they are interested in security audits or wish to provide feedback on these modules. These modules include but are not limited to account generation, transaction creation, transaction signing, and MPS algorithms. We are very proud to open-source these modules and will continue to open-source more modules to accept feedback from the community. We believe that as a software and technology-driven platform, providing more transparency means more responsibility, which will bring more value to our customers and the community we serve.
As a technology platform, in addition to applying the latest technology to platform construction, we also recognize that as a centralized platform involving user assets, we have a great responsibility. Therefore, we believe that establishing appropriate internal control systems is crucial. We have been applying for licenses in many important and strategically significant jurisdictions, not only because it is important for our global operations and business, but also because we believe that the process of applying for licenses is an important part of building internal constraints and balancing mechanisms.
In the past 12 months, we have obtained conditional approval and licenses from Dubai VARA and received the principle approval of a major payment institution license (MPI) in Singapore. These are important milestones that we are proud of, but they are not the end. They are recognition of our efforts so far, and we are very confident that we are moving in the right direction. But more importantly, as an organization, we will strengthen governance, improve operations, cooperate with relevant departments and judicial institutions, and use technology and tools to jointly combat financial crimes.
As a centralized platform, we will continue to adopt advanced technological means to ensure transparency with users, partners, regulatory organizations, and key stakeholders, and consider it as our important responsibility. One of our key global strategies is to ensure that we are transparent, responsible, and provide relevant powers to our customers and stakeholders in order to serve and build better locally. Hong Kong is of strategic importance to us, and we are honored to be part of the Hong Kong Web3 ecosystem. We are also honored to work with many partners, stakeholders, and lawmakers to build the Hong Kong Web3 ecosystem. We will adhere to localization to integrate into the Hong Kong Web3 ecosystem and make contributions so that we can make long-term investments and maintain compliance.
As an important participant in the industry, we are pleased to be part of the industry, and we will continue to work towards building a healthy and sustainable ecosystem in the Web3 industry to create value. We look forward to bringing more transparency, responsibility, and rights to users and the industry through technology, and together build a better future. I am very optimistic about this. Thank you for your attention.
