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 full text of the speech is as follows:
Good afternoon, everyone. It is an honor 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 theme I am sharing 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 contrasting examples are very intriguing.
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, whether in bear or bull markets. Even if we look back at earlier periods, such as the data from 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 is noise in the market that should be ignored, but there are also long-term trends worth paying attention to, as reflected in price performance. I believe there is a long-term trend unfolding, where technological developments are driving more and more activities onto the chain and gaining 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 people’s attention to Bitcoin. As the first unique global digital currency network, Bitcoin offers people the values of transparency, control, and choice, all made possible by the unique technology of blockchain.
Returning to today’s theme, 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 and drawing lessons from regulated industries to enhance transparency, responsibility, and rights by adopting their best practices. Next, I am honored to share with you the development direction of OKX in these aspects.
Firstly, we increase transparency and responsibility through technology. Since November 2022, we have been leading the industry with the widely adopted Proof of Reserves (POR) program and have built it into an automated technical solution running on a monthly basis. We have published 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 450K+ addresses owned on the chain, openly allowing users to verify their ownership.
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 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 of traditional financial audit standards for centralized platforms.
Secondly, we have invested heavily in Web3 technologies and launched the self-custody wallet – OKX Web3 Wallet, making it a powerful one-stop Web3 gateway. We believe that by allowing users to have control over their private keys through a self-custody wallet, we are reducing the risk of platform misconduct. Furthermore, through hard work, we are committed to providing as many accessible public chains, DApps, NFT platforms, and DEX aggregators as possible 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 is 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 simpler and more convenient for a wider audience to enjoy the benefits of new technologies. Therefore, we are delighted 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. 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 are based on the belief that when we provide more choices to customers in a simpler and more secure way, they will be more capable of making wiser decisions.
In addition, we also believe that self-custody wallets are a pure technological solution, which 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 that anyone can view on GitHub. If they are interested in security audits or wish to provide feedback on these modules, we would be very welcome. These modules include but are not limited to account generation, transaction creation, transaction signing, and MPS algorithm. We are very proud of open-sourcing these modules and will continue to open-source more modules to receive 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.
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 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 licensing process 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 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 recognition for the efforts we have put in 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 authorities, 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 authorities, 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 authorizations to our customers and stakeholders in order to better serve and build in the local community. Hong Kong is an important strategic location for us, and we are honored to be part of the Hong Kong Web3 ecosystem. We are also honored to collaborate with many partners, stakeholders, and legislators 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 jointly create a better future. I am very optimistic about this. Thank you for your attention.