As celebrity backed projects receive a disproportionate amount of media attention, the greater scope of blockchain-enabled technology does not always get the attention it deserves. This is a shame as Blockchain’s paradigm shifting emphasis towards transparency, decentralization, and authentication is adding irreplaceable value to the financial services industry, digital contracts, virtual reality universes, art, and more.
Regardless of market volatility, these blockchain applications are not only essential to the formation of Web 3 and the new era of the internet, but they are also important resources for people looking to find financial freedom. New blockchain-powered decentralized finance platforms are democratizing transformative tools helping people reach their financial goals. With many high-profile stories in the news recently, it is important for those looking to get into the game to be educated on best practices as well as find a platform that works best for them.
This is why we spoke with Lan Yue, the Co-founder & COO of fullsuite crypto exchange BIT, about his thoughts on the crypto industry and professional journey. Please find our interview with the visionary Web 3 entrepreneur and investor below.
I: Can you elaborate on the story of when you joined Matrixport, how BIT was founded and what the original motivation was?
LY: I joined Bitmain in 2018, and then Bitmain launched Matrixport in 2019. The trading department lacked a product leader, so I came from Bitmain to be in charge of this trading product. At that time, we felt that the future development of the transaction line should be three routes.
Firstly, through building connections with clients, we wanted to focus on the transaction itself and create a product where we could do large transactions such as OTC. Secondly, we wanted to launch something which was innovative in the market, so we began creating a dual-currency investment product. Finally, we wanted to build an options exchange – although the options product was relatively unpopular in the market at the time, we felt that it had huge potential if viewed through the traditional finance perspective.
With these three directions, we started with the first two products, that is to say, we continued to iterate on the matter of large transactions. Throughout the process, I led the team to do closed research and development, and made the dual-currency investment product a reality.
We started BITin November 2019 and launched it in August 2020, which means that it took us about 10 months to build a fully self-developed derivatives exchange. Furthermore, we created the ability to add options and futures, as well as offering Unified Margin and Portfolio Margin … all in 10 months! I’d say that is pretty impressive considering that the most difficult derivatives in the crypto world are options.
In the first two months of BIT’s launch, we received a good response, becoming the second largest platform for options trading, and accounting for 20% of the trading volume of the whole market at the peak. I am very proud of what we achieved.
I: Can you elaborate on the unique selling points and features of BIT?
LY: BIT has had the DNA of Jihan Wu since its establishment. Although he is relatively low-key personally, he has a very large influence on the industry and a unique approach at creating an exchange. His deep understanding of what customers and traders want is integrated into each part of the user experience, making it one of the most professional and sophisticated platforms for trading in the crypto industry.
Regarding the strengths of the team as a whole, we have a very coherent approach backed by a heavy focus on R+D. The team have a clear sense of responsibility and our execution ability is to the highest standard.
In terms of the exchange itself, there are a number of USP’s – We support spot and futures markets, where we can make options for spot delivery products. Furthermore, we offer Unified Margin and Portfolio Margin, which is unique in the marketplace. On top of this, we are the only exchange that supports USD-margined options.
Through our current infrastructure, we will continue to innovate in the field of options trading.
I: What BIT capability do you think has the most potential to disrupt the industry?
LY: I think it would be our insights on market trends, teamwork, product development, and infrastructure, in a nutshell. I: Where do you see BIT in the next year? What about the next 5-10 years?
LY: We aim to build one of the top-level exchange platforms in the world. This is an ambitious goal that will take time.
The overall goal of this year is to lay a solid foundation, solidify the foundation, and do a good job in liquidity, products, and relationships with clients.
Next year, we will continue to make efforts in expanding our offerings in the options market. We will list altcoin options and expand our partnership with high-quality project teams, funds, and institutions in both crypto and traditional finance.
BIT provides USD margined options, and it also has compliant USD deposit and withdrawal capabilities, so I think next year will be a year of vigorous development exploring this avenue.
In terms of my long-term development, I think in 5 to 10 years, I hope that BIT will be an exchange with stronger industry influence, and we hope to contribute to the industry in a better direction.
With reference to the industry, we believe it is crucial for more regulations to come into the market and for exchanges to react accordingly. At BIT, myself, Jihan Wu and our whole team are honest individuals with integrity in everything that we do. As a result, our business practices reflect this state of mind, and we look forward to the industry developing into a more trustworthy place to do business over the next 5-10 years.
I: What do you think the future hold for crypto exchanges and altcoin options? Short term? Long term?
LY: My opinion on exchanges is that the model of a future exchange should include a wallet where users can manage their own private keys, where there is a combination of Centralized Exchange (CEX) and Decentralized Exchange (DEX) features. At present, the existing DEX is difficult for users to access, which puts people off, whereas the CEX model is much easier to use.
The recent news about FTX and other exchanges shows how this is going to be a necessary trend. It not only provides the ability to centralize the processing speed, but also has a decentralization element so that user assets can be protected.
Regarding alt coins – I have no doubt there is a market for altcoin options.
There are many project teams with their tokens listed on the spot and futures market. If they also have it in the options market, they can offer more structured products, which will help the market grow.
I: How has your past professional experience working at Bitmain, CITIC Bank, Yipay, and more prepared you for your role at BIT? And your role at Matrixport?
Yipay has a company culture to encourage people to take more responsibility, which I have taken with me to every role I’ve had. I am willing to take more responsibility since I started my career, and I also encourage the BIT team to take one step further. If each one of us takes one step further, together we can make BIT a great platform.
I: Do you have any personal anecdotes or life experiences you believe have shaped you and your outlook on business?
LY: I think it’s more of my nature, just my nature, because I’m a person who doesn’t admit defeat. I hope to do my job well, and whether I do it well by myself or bring everyone together to do it well, in short, it’s our business, so we’ll do it well. I was born with this mindset. I don’t want to waste time, otherwise, I feel sorry for myself and my team.
I: Finally, what are the benefits to Portfolio Management as you see it?
LY: It’s fourfold.
Firstly, the PM model tends to reward hedgers by offering a greater capital efficiency to their well-maintained low-risk portfolios. For speculators who have directional portfolios, however, a lower margin is not always guaranteed with the PM enabled.
Next, the calculated PM requirement allows for effective risk coverage whilst preserving capital efficiency. The final output of the margin model is used to directly collateralize margin requirements to help ensure the positions of the members.
Thirdly, margin components for PM are scenario PnL and floor margin. Scenario PnL represents the core risk analysis of the PM model by simulating the portfolio’s hypothetical profit and loss under a specific set of market conditions. And the floor margin is set for both outright and options, which, to some extent, will help reduce the margin procyclicality for low-risk portfolios.
And last but not least, the new USD PM upgrade will include USD perpetuals and options with all currency pairs under the USD margin account. The required USD initial margin will be aggregated by each currency pairs under PM methodology.
Reference to UM & PM:
UM FAQs:
https://helpcenter.bit.com/hc/en-us/categories/10681534254489-Unified-Margin
PM FAQs:
https://helpcenter.bit.com/hc/en-us/articles/10888006436121-What-is-Portfolio-Margin-
