Author | WuBlockchain

This is a transcript of an interview from July 12, with minor edits and GPT processing. There may be several errors. The interviewers include WuBlockchain and other medias.

The interview content represents the personal views of the interviewee and does not reflect the views of WuBlockchain.

In 2014, you joined OK, and in 2017, you founded Binance. Ten years have passed, what are your thoughts?

He Yi: What impressed me the most was when I first entered the industry. In 2013, the price of Bitcoin rose above $1,000, and I found it very exciting. It was also the first time I had a reflection on my life. I often asked myself why I joined this industry, giving up opportunities like working for Travel Satellite TV. It was because, for the first time, something made me rethink my life and what money truly is. Since childhood, our parents have always told us that money is important. When Bitcoin’s price rose above $1,000 in 2013, it gave me a huge shock. What exactly is money? What we used to think of as money might not be money itself. This realization led me to choose to enter the crypto space.

After joining the crypto space, the most thrilling moment was when I officially announced my joining, and then Mt. Gox collapsed. At that time, I felt a sense of doom. Today’s major drops in the crypto space are nothing compared to the history of 2014. One day, Bitcoin dropped to below $100. You would just sit in front of the screen and watch it plummet. Back then, liquidity wasn’t as strong. When everyone was selling, you could see the price drop segment by segment.

In 2014, it was still a time without heroes, allowing young people to make a name for themselves. I often joked during internal meetings that our recruitment should be more diverse. If I were to interview for a job today with my background and resume, I wouldn’t get an offer. Ten years later, if a person with the same background were to graduate and interview, they definitely wouldn’t get an offer. We would ask about their English proficiency and achievements, making the process very professional. Ten years ago, people saw us as a bunch of pyramid scheme operators. Ten years later, this industry, regardless of talent and potential, still provides positive stimulation and a virtuous cycle.

Who were the most famous people in the industry in 2014?

He Yi: In my memory, it was Kaomao and Chang Jia. Back then, it was all about altcoins; apart from Bitcoin, everything was an altcoin, so everyone was a fundamentalist. A noticeable change occurred in 2017 with the emergence of Ethereum, which brought some previously theoretical concepts of financialization, broad financialization, or micro-finance to life. In 2017, people genuinely felt there were opportunities for entrepreneurship, which led to the birth of such companies.

I believe that the current so-called bull market is not driven by innovation, nor is it driven by significant changes in the industry. It is essentially driven by standalone events like ETFs. So, if you were to summarize the entire history of the crypto space or what true innovations have had a positive impact on the industry at each stage, I think there would be many takeaways. Personally, I still believe that ultimately, innovation drives the industry forward.

What are the most important criteria for Binance’s investments? Which sector are you personally interested in?

He Yi: I can align my understanding of investments with everyone else. I believe that Asian projects are relatively at a disadvantage because North America has some typical venture capital firms like a16z, which are very focused on making significant investments in the blockchain industry.

However, Asian investors and companies do face a considerable dilemma. Many Asian funds might not even want to invest in Asian companies, which reflects a lack of self-confidence, making it challenging.

Our investments can be understood as spreading seeds widely. Ultimately, you can understand that the industry’s future is still driven by innovation. To cross the chasm, there must be true innovation to drive it. Blockchain technology needs to be popularized and used by more ordinary people. We don’t know who will succeed in the end, but we try to support as many people as possible. We’ve invested in over 2,000 projects; if not 2,000, certainly more than 1,000. To be honest, I haven’t communicated with most of them, but I look at a few key criteria when investing:

Firstly, whether the founder has a long-term vision. Do they believe in the industry? If someone is just in it for a quick profit, like a gambler, they won’t stay even if they succeed. So, long-termism and faith in the industry are crucial.

Secondly, their skills and what they’ve accomplished. This includes the team’s capabilities and whether they complement each other. Thirdly, their mindset — is it capable of continuous iteration? You’ll find that some people, even if they start low, can keep improving. Through conversations, you can generally judge this. If the basics are solid, we are willing to invest some money to nurture them. You can’t chase a 100% success rate because that’s unrealistic. Traditional VCs often see nine out of ten projects fail, with only one succeeding. So, our goal is not to seek perfect investments but to foster more innovators who can build confidence during tough times, whether it’s emotional lows or before a significant technological breakthrough. In the end, if you don’t support others, you’re just a lone traveler, and that doesn’t make an industry.

I don’t often comment on projects, but I personally think the next big thing that will profoundly impact human society is still AI. I’ve spent a lot of time learning about it. We may not have invested in AI yet, but it’s essential to understand the direction of the tide.

Does Binance engage in front-running? What are the listing standards?

He Yi: When we often discuss front-running, everyone knows that if certain tokens are widely hyped and are expected to be listed on an exchange, that project won’t get listed on Binance. However, from last year to this year, there haven’t been many high-quality and trending projects in the market, making our listing team’s work awkward. Some projects spread rumors about being listed even before we’ve had contact with them, and some people use these rumors to apply pressure. If project teams don’t accept their terms, they’ll spread listing rumors. If we choose not to list the project, we might be accused of front-running.

We have strict standards and processes before listing. Each cycle, we screen projects and conduct internal reviews. If someone strongly opposes a project, it won’t pass the review. We try to minimize the time gap between deciding to list a project and the actual listing to prevent front-running rumors. The decision to list isn’t made by a single person but through a multi-layered evaluation process, ensuring the project’s technical foundation, market potential, and investment backing. Binance’s listing standards mainly include the following points:

1. Technical and Market Foundation: Does the project have a solid technical foundation and market potential?

2. Popularity and Attention: What is the project’s market heat and user attention?

3. Investment Backing: Does the project have reliable investment backing to ensure it won’t easily disappear?

4. Project Lifecycle: Is the project’s lifecycle long enough, and does it have sustainable development potential?

We put all projects that meet these criteria into a pool for observation and evaluation.

One of the main challenges we face is users’ psychological expectations. Many crypto users expect 100x or 1000x returns, while traditional investors are satisfied with annual returns of 20%-30%. As competition increases, high-return opportunities will become rarer. We need users to understand industry development and changes, and adjust their expectations.

Regarding listing choices, if a project has VC investment, users think it’s a cash grab by VCs; if the project is weak, users think Binance listed a poor project. Thus, no matter which project we list, there will always be dissatisfied users. We aim to provide market-demanded, popular, and relatively reliable projects, but this doesn’t mean all projects will increase in value. We also hope users understand market fluctuations and cycles. With increasing industry competition, high-information asymmetry opportunities for 100x or 1000x returns are diminishing. In both primary and secondary markets, competition is becoming fiercer. We hope users understand that in such an environment, finding long-term high-return projects isn’t easy. Ultimately, we need users to understand and accept reality and adjust their expectations to better profit in this rapidly developing industry.

The second part involves interest alignment and regulatory issues. When most of the coins listed on Binance are said to be tied to Binance’s interests, is this true? In reality, Binance’s investment in most coins is very limited, sometimes only holding 0.1% shares. Other exchanges might have more interest-aligned projects. Therefore, assuming Binance has vested interests in listed coins requires substantial proof.

Everyone hopes the coins listed on Binance will rise, but that’s unrealistic. No investment market guarantees only gains and no losses. Binance’s fundamental function is to provide popular and trending projects in the market while filtering out projects with high risk of collapse and selecting those with potential.

What is Binance’s future business focus and direction?

He Yi: The essence of crossing the chasm is to better apply technology to the current industry. We invest in more companies, hoping for more innovation in the industry. For Binance, we are a platform that brings more users into this industry. For example, last year we added new businesses, like the Square. The Square aims to let users who are not very interested in the crypto space come in and take a look, gradually understanding the crypto space and its investments.

Another aspect is our attempt with stablecoin business, which ultimately didn’t succeed due to regulatory costs and barriers. Additionally, since last year, there has been more focus on Web3 wallets. Competitors have performed well with external storage wallets, but everyone has a different understanding of Web3 wallets. Many peers consider them as a backup plan (Plan B) for exchanges, allowing transactions without KYC and AML when exchange businesses are affected by regulation. However, we believe Web3 wallets as a Plan B still cannot avoid regulation. Therefore, we hope to make Web3 wallets a long-tail business, covering on-chain services that existing exchange users cannot access, such as staking and on-chain transactions.

Although we currently haven’t done well enough with Web3 wallet products, we still aim to improve user experience, especially with KYC-required Web3 wallets. The future focus and direction will still be on addressing global compliance issues. As the industry develops, the global emphasis on the crypto industry increases. Binance must take on compliance responsibilities, including regulatory communication, building trust, and anti-money laundering.

I believe that if the industry can establish effective reconciliation channels with governments, it could become part of the internet. But if it opposes governments, it might turn into the dark web. Therefore, we aim to be an internet industry that serves more people. In the current bull market, there hasn’t been truly significant innovation. For instance, in the previous cycle, everyone discussed how Ethereum was too expensive to support large-scale applications. Now, speed and cost are no longer bottlenecks. The real issue is still the lack of effective assets.

What crises has Binance encountered, and how did it overcome them? What crises might occur in the future?

He Yi: Binance doesn’t have a publicly disclosed market cap, which may confuse people, but we indeed have over 200 million registered users, although not all are active. Regarding BNB’s market cap, I see it as a relative value. I don’t pay much attention to market cap because of its cyclical fluctuations. The rise and fall happen naturally. As long as we do things well, the results will naturally be good. I always believe that managing the present well each day will lead to good results.

From the first day Binance launched, every step has faced endless crises and difficulties. For example, BNB fell by 50% on the first day of listing, which might have been the biggest crisis for CZ. We also faced situations like Amazon Cloud outages, infrastructure issues, and domain delisting. Our philosophy is to solve problems as they arise and manage each day well. By consistently doing the right things, positive returns will come naturally.

Growing up, we had a concept called “When in poverty, maintain personal integrity; when in prosperity, contribute to society.” However, I think this logic has a flaw: when is one considered prosperous? My understanding is that as long as what you do positively impacts the world, reduces costs, increases efficiency, and helps users have a better experience, you are changing the world. This doesn’t necessarily mean launching rockets like Elon Musk or creating companies like Tesla. But if what you do positively impacts the world, the company will naturally grow bigger and stronger.

During development, naturally, different challenges will arise, such as regulatory pressure or talent development challenges. The company’s fast growth might mean its talent cultivation system isn’t perfect. These are issues to be solved naturally. I always maintain a positive attitude and never feel desperate when facing difficulties. Life is vast; taking each step well is what matters.

When I was in school, I ran the middle-distance 1500 meters. Every moment in life is a challenge, but if you push yourself a little further, you’ll find yourself constantly growing.

He Yi: I consider myself a very crisis-aware person. The biggest crisis for the entire industry is, of course, regulatory crisis, which affects not only Binance. Although we recently passed a hurdle in this area, regulation remains a significant challenge. The second crisis is industry competition and innovation crisis. Currently, competition among exchanges is parallel, with little difference in core skills. We constantly learn from others and improve. The bigger crisis comes from unknown uncertainties and innovation. Therefore, we encourage continuous experimentation with new things from an investment perspective and for internal employees. If colleagues want to innovate or have entrepreneurial ideas, we highly support them.

Essentially, all threats do not purely come from known competitors but from environmental uncertainties and new innovations. If new innovations appear and you remain unaware, that is the greatest crisis. Just like how major mobile phone companies didn’t realize the impact of the emergence of smartphone screens.

The entire industry has developed to the point where it’s hard to exist as a niche startup anymore. Now, effective communication with regulators and policymakers is necessary. Personally, I spend more time focusing on transforming a startup reliant on the founder’s charisma and abilities into an evergreen company. This requires improving organizational capabilities. Strong organizational capabilities will continuously cultivate good seed players.

How do you view MEME coins?

He Yi: When half of the top ten cryptocurrencies by trading volume are MEME coins, what would happen if we didn’t list them? Users and trading volume would shift to other platforms. So, often, we have no choice. Other exchanges will list these coins, and there are even third-party options available. It’s not that the entire industry is working for Binance; rather, we must make trade-offs to maximize our value and fundamentals.

This phenomenon is not unique in different market cycles. In 2014, people believed everything except Bitcoin was trash. In 2017, the market was full of hype around garbage projects, and people were highly speculative. These emotional swings occur in every cycle, but because the scale of this round is much larger and many new players have entered, emotions are expressed more directly and reflected on the internet.

In the past, the industry narrative was led by a few experts with years of technical experience, who gained influence in the market, and everyone followed their investments. If they profited, people trusted their expertise even more. In this cycle, with the emergence of user-end products, people began following a new wave of influential figures to speculate, and market emotions are still very volatile.

Whether in traditional financial markets or the current market, emotions have a significant impact. But this doesn’t negate the importance of diligently creating products and building business models. Every market boom and emotional swing impacts the mindset of users, investors, and entrepreneurs.

I often emphasize to my team the concept of “unity of knowledge and action.” This isn’t because my name is He Yi, but because I deeply understand it. Believe in what you stick to, and only through persistent effort will the results become evident. It’s like knowing that studying hard will yield good grades, or that dieting and exercising lead to a healthy body, but actually doing it is challenging due to many external temptations.

The entrepreneurial and investment market is similar. When you stick to ideals and innovation, others might mock you. But looking back, when Binance launched BNB in 2017, many people laughed at us, saying a trading platform issuing tokens was inappropriate. However, persistence in innovation and creating effective products proved meaningful. We know the industry needs product and technological innovation, and real user-oriented applications. Although challenging, this is the direction we should pursue.

Personal Future Development Direction

He Yi: I haven’t considered finding something outside the crypto industry that would interest me enough to commit. My personal traits may stem from my educational background and teaching experience, as I enjoy helping others succeed. I firmly believe that only by helping more people succeed can I achieve my own success. If it weren’t for the crypto industry, I can’t imagine what else would be worth my time and effort, possibly just returning to the investment field and sharing effective thinking patterns.

Although I don’t choose to return to education, this is a passive choice. But this doesn’t mean I can do nothing; I will still seek to do things that can help the world. I think Brian Armstrong’s choice is understandable. Considering the rapid development of AI, it is indeed more intelligent than humans. Human thought processes are relatively predictable but also prone to errors due to the gap between knowledge and action. Throughout human history, it’s normal for those who have achieved financial freedom to seek immortality or enjoy life quality, but this doesn’t mean those who leave the industry are untrustworthy, nor does it mean others have no opportunities. In fact, some who leave might create more opportunities for others.

Since 2017, I have repeatedly emphasized that I am not just starting a business; I am making history. From the first day I joined the industry, I have unwaveringly believed that blockchain will bring revolutionary changes and infinite possibilities to the world. Because of this belief, I have wholeheartedly committed to it. This also explains why I chose to leave my previous company when it was preparing for an IPO; I saw the potential era-changing impact of blockchain technology. I regard this as my mission and am willing to devote myself to it. I hope to work with more outstanding entrepreneurs and talents because belief is a spark that can ignite possibilities. If you don’t believe in yourself, you can’t achieve these things.

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