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. I am honored to be invited once again to participate in the Hong Kong Web3 Carnival event jointly organized by Wanxiang Blockchain Lab and HashKey Group. This provides us with a great opportunity to come together and explore how to build a healthy and sustainable Web3 ecosystem.
The topic I am sharing today is “Responsible Innovation”. But before delving into this topic, I would like to talk about two interesting sets of data.
The first set is “2 years” and “7 weeks”. In 2004, it took over two years for the first gold spot ETF to reach a $10 billion assets under management (AUM). In 2024, the first Bitcoin spot ETF approved by the U.S. Securities and Exchange Commission reached a $10 billion AUM in just seven weeks. These two examples 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, some of which are noise and some are significant long-term trend signals. The second set of data shows that the number of on-chain transactions has been steadily increasing since 2019, regardless of whether it is a bear or bull market. Even if we look back further, such as data from the past 10 years, similar trends can be observed. Whether it is the Bitcoin network, Ethereum network, or others, the overall number of on-chain transactions has been steadily increasing.
These two sets of data tell us that there are noises that should be ignored in the market, but there are also long-term trends that can be observed through price performance. I believe that a long-term trend is happening, which is that technological developments are driving more and more activities to move to the chain and gain more attention.
The first Bitcoin spot ETF accumulated the same AUM as the first gold ETF in a shorter period of time, which indicates the significance people attach to Bitcoin. As the first unique global digital currency network, Bitcoin provides people with the values of transparency, control, and choice, all of which are brought 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 are also 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 widely adopted 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 mere 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. We have expanded the coverage of assets in the POR from 3 to 22, and publicly disclosed the 450K+ addresses we hold on the chain, allowing users to verify their ownership publicly. 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 for industry self-regulation, using technology to bring more transparency and meet users’ expectations for traditional financial audit standards on centralized platforms.
Secondly, we have invested heavily in Web3 technology and launched our self-custody wallet – OKX Web3 Wallet, which has been developed into a powerful one-stop Web3 gateway. We believe that empowering users to control their private keys through self-custody wallets is the most important way to reduce platform misconduct risks. Furthermore, through hard work, we are committed to providing users with access to various public chains, DApps, NFT platforms, DEX aggregators, and more through the OKX Web3 Wallet. We have done the heavy lifting of integrating these options to provide users with the most comprehensive and free choices, all of which are currently free.
Like many other innovative technologies, in the early stages of technological development, the barrier to entry for new users who are not proficient in technology is usually high. Therefore, we are committed to technological solutions, and we believe that it is crucial as a platform to make it simpler and more convenient for a wider range of people to enjoy the benefits of new technology. Therefore, we are very pleased and proud to continue investing in convenient features such as account abstraction, MPC wallet, and social recovery, which help more and more users use self-custody wallets without the need to remember and manage mnemonic phrases, and even 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, OKX Web3 Wallet has launched an AA smart contract wallet through the adoption of 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 have made for our products are based on the belief that providing customers with more choices in a simpler and more secure manner will empower them to make wiser decisions.
In addition, we also believe that self-custody wallets are a purely technological solution, which is important for ensuring transparency. Indeed, 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 want to provide feedback on these modules. These modules include but are not limited to account generation, transaction creation, transaction signing, and MPS algorithm. 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 technological platform, in addition to applying the latest technology to platform construction, we also realize 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 balance mechanisms.
In the past 12 months, we have obtained the conditional approval and license from Dubai VARA and the principle approval of the Major Payment Institution (MPI) license in Singapore. These are important milestones that we are proud of, but they are not the end. These are acknowledgments 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 regulatory agencies, 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 agencies, and key stakeholders, and take it as our important responsibility. One of our key global strategies is to ensure that we are transparent, responsible, and provide relevant authorities to serve and build better in the local area. Hong Kong is a location of strategic importance to us. We are honored to be part of the Hong Kong Web3 ecosystem, and we are also honored to work with many partners, stakeholders, and legislators to build the Hong Kong Web3 ecosystem. We will localize ourselves 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 to jointly build a better future. I am very optimistic about this. Thank you for your attention.
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