OKX President Hong was invited to attend the “2024 Hong Kong Web3 Carnival” 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 great opportunity to come together and explore how to build a healthy and sustainable Web3 ecosystem.
The theme I want to share today is “Responsible Innovation.” But before delving into this topic, I would like to discuss two interesting sets of data.
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 reached $10 billion in assets under management 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, while others are significant long-term trend signals. The second set of data shows that since 2019, the number of on-chain transactions has been steadily increasing, regardless of whether it is a bear or bull market. Even if we look back at earlier periods, such as the past 10 years, similar trends can be observed. Whether it is the Bitcoin network, the 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 in the market that should be ignored, as well as long-term trends that are reflected in 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 amount of assets under management as the first gold ETF in a shorter period of time, indicating the importance people place on Bitcoin. As the first unique global digital currency network, Bitcoin provides people with the values of transparency, control, and choice that 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 essence 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.
Firstly, we increase transparency and responsibility through technology. Since November 2022, we have led the industry in the widely adopted Proof of Reserves (POR) program and built it into an automated technology solution that runs monthly. 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, providing more technical support to 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-chain, allowing users to verify their ownership. 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 even 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 traditional financial audit standards on centralized platforms.
Secondly, we have invested heavily in Web3 technologies and launched our self-custody wallet, OKX Web3 Wallet, turning it into a powerful one-stop Web3 gateway. We believe that by allowing users to have control over their private keys through self-custody wallets, we can greatly reduce the risk of platform misconduct. In addition, through hard work, we are committed to providing OKX Web3 Wallet with access to as many public chains, DApps, NFT platforms, and DEX aggregators as possible. 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 entry barrier is usually higher for new users who are not familiar with 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 delighted and proud to continue investing in convenient features such as account abstraction, MPC wallets, and social recovery, which allow more and more users to use self-custody wallets without the need to remember and manage mnemonic phrases, and even in the event of accidentally losing their 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 our product efforts are based on the belief that when we provide customers with more choices in a simpler and more secure manner, they will be better equipped to make wiser decisions.
In addition, we also believe that self-custody wallets are a purely technological solution, which is important for ensuring transparency. More transparency, of course, means more responsibility. In the OKX Web3 self-custody wallet, there are multiple open-source and audited modules that anyone can review our code on GitHub. We welcome those who 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 proud to open-source these modules and will continue to open-source more modules to the community for feedback. 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.
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 license application process is an important part of building internal constraints and balance mechanisms.
In the past 12 months, we have obtained conditional approval and licensing from Dubai VARA and received the principle approval for 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 acknowledgments of our efforts so far, and we are very confident that we are heading 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 permissions to serve and build better in the local community. Hong Kong is a strategically important location for 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 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 remain compliant.
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 building a better future together. I am very optimistic about this. Thank you for your attention.
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