OKX President Hong: Leading industry transparency with responsible innovation

OKX President Hong was invited to attend the main forum of the "2024 Hong Kong Web3 Carnival" 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 a great honor to be invited again to participate in the Hong Kong Web3 Carnival event co-organized by Wanxiang Blockchain Lab and HashKey Group. This provides us with a good opportunity to gather together to discuss how to build a healthy and sustainable Web3 ecosystem.

The topic I will share today is "Responsible Innovation", but before I delve 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 more than two years for the first gold spot ETF to reach an asset management scale of US$10 billion. In 2024, the first Bitcoin spot ETF approved by the U.S. Securities and Exchange Commission at the beginning of the year quickly exceeded US$10 billion in asset management scale in just seven weeks, which formed a very interesting contrast.

The second group is the 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 the number of on-chain transactions has been steadily increasing since 2019, whether in bear or bull markets. Even if we turn our attention to an earlier period, such as the data of the past 10 years, similar trends are shown. That is, 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 is noise in the market that should be ignored, and there are also long-term trends that are worthy of attention and are expressed through prices. I believe there is a long-term trend going on, that is, technological development is driving more and more activities to move on-chain and gain more attention.

The first Bitcoin spot ETF has accumulated the same asset management scale as the first gold ETF in a shorter period of time, which shows that people value Bitcoin. As the first unique global digital currency network, Bitcoin provides people with the greatest value such as transparency, control and choice, which are all brought by the unique technology of blockchain.

Back to today's topic, what does our industry represent? At 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? This is our purpose here. In the past two years of development, in addition to the best applications brought by innovators, entrepreneurs and builders, we are also learning from regulated industries to enhance transparency, responsibility and rights by adopting the best practices of these industries. Next, I am honored to share with you the direction of OKX's development in these areas.

We first increase transparency and responsibility through technology. Since November 2022, we have led the industry’s now widely adopted Proof of Reserves (POR) program and built it into an automated technical solution that runs on a monthly basis. We have now published monthly Proof of Reserves reports for 17 consecutive months, and this is not just a simple repetition. In fact, we decided to improve our POR program by accepting feedback, continuously improving it, and providing more technical support for the program. We expanded the coverage of POR assets from 3 to 22, and disclosed 450K+ addresses owned on the chain, allowing users to verify their ownership publicly. In addition, we are the first platform in the industry to adopt zkSTARK technology to ensure the integrity of the POR program through mathematics, cryptography, and technology, so that users can still trust the program without the involvement of third-party intermediaries. We believe this is an important step for the industry to self-regulate, using technology to bring more transparency and meet users’ expectations of centralized platforms that meet traditional financial audit standards.

Secondly, we have also invested a lot of resources in Web3 technology, launched a self-hosted wallet, OKX Web3 Wallet, and built it into a powerful one-stop Web3 portal. We believe that through self-hosted wallets, allowing users to control their own private keys is the most important way to reduce the risk of platform malicious behavior. In addition, through hard work, we are committed to making OKX Web3 Wallet provide users with as many accessible public chains, DApps, NFT platforms, DEX aggregators, etc. as possible. We have done the heavy work 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 technology development, the entry barrier is usually high for new users who are not proficient in technology. Therefore, we are committed to technical solutions, and we believe that as a platform, it is very important to make it simpler and more convenient for a wider range of people to enjoy the benefits of new technologies. Therefore, we are very happy and proud to continue to invest in convenient features like account abstraction, MPC wallet and the social recovery it brings, so that more and more users can use self-hosted wallets without having to remember and manage mnemonics, and in the event of accidentally losing mnemonics, it is possible to continue to own and control their wallets through social contacts of their choice.

As an industry-leading platform, OKX Web3 Wallet has launched AA Smart Contract Wallet by adopting account abstraction technology, aiming to help our users trade and transfer between different chains with a simpler experience, faster speed and lower cost. All the efforts made in our products are based on the belief that when more choices are provided to customers in a simpler and more secure way, users will be more capable of making more informed decisions.

In addition, we also believe that self-hosted wallets are a purely technical solution, which is important to ensure transparency. Of course, more transparency means more responsibility. There are multiple open source and audited modules in the OKX Web3 self-hosted wallet. Anyone can view our code on Github. If they are interested in security audits or want to provide us with feedback on these modules, we will welcome it. These modules include but are not limited to account generation, transaction creation, transaction signature and MPS algorithm. We are very proud of open-sourcing these modules and will continue to open-source more modules to the community to accept feedback. We believe that as a software and technology-driven platform, providing more transparency means more responsibility, which will bring more value to the customers and community we serve.

As a technology 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 huge responsibility. Therefore, we believe that it is very important to establish a proper internal control system. We have been applying for licenses in many important and strategic 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 an internal check and balance mechanism.

In the past 12 months, we have obtained conditional approval and permission from Dubai VARA and obtained in-principle approval for the Large Payment Institution License (MPI) in Singapore. These are important milestones that we are proud of, but not the end. This is a recognition of our investment so far, and we are very confident that we are working in the right direction. But more importantly, as an organization, we will strengthen governance, improve operations, work with relevant departments and judicial institutions, and use technology and tools to jointly fight financial crime.

As a centralized platform, we will continue to adopt advanced technical means to ensure transparency with users, partners, regulators 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 our customers and stakeholders to better serve and build locally. Hong Kong is a strategically important location for us. We are honored to be part of the Hong Kong Web3 ecosystem, and we are also honored to build the Hong Kong Web3 ecosystem with many partners, stakeholders and legislators. We will adhere to localization to integrate into the Hong Kong Web3 ecosystem and make contributions so that we can invest in the long term and remain compliant.

As an important player in the industry, we are happy 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.

Disclaimer

This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any of the following advice, including but not limited to: (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets (including stablecoins and NFTs) involves high risks and may fluctuate significantly or even become valueless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals for questions about your specific situation.