This article is an interview with Bybit CEO Ben Zhou during Token 2049 in Singapore. WuBlockchain has closely followed Bybit for a long time, from its early days when Bybit surpassed BitMEX by relying on product experience and no-KYC requirements, through its wild expansion and subsequent layoffs during the bear market, to its current focus on professional derivatives and spot trading, where it briefly held the second position, only behind Binance. Ben Zhou detailed the journey, candidly responding to many questions, including the reasons for their transformation, current strategy, views on TON’s rise, U.S. regulatory challenges, and Bybit’s corporate culture.

Recently, Ben has also given many interviews. He joked that he’s the only founder of a major exchange who frequently gives interviews. This conversation was no exception, and he was very open and expressive.

It’s important to note that the opinions expressed in this interview are solely those of the interviewee and do not represent WuBlockchain’s views. Readers should strictly abide by the laws and regulations of their jurisdictions.

The audio transcription was done by GPT and may contain errors. Please listen to the full podcast: YouTube Spotify

Ben’s Personal Background and Bybit’s Origins

Colin:

Could you briefly introduce your background?

Ben:

I went to New Zealand when I was very young, around 11 years old, and finished high school there. Afterward, I attended university in the United States. After graduating, I worked in New York for a year at a Fortune 500 company, and later was sent back to Suzhou Industrial Park to manage an industrial project related to aerospace and factory management. However, after a year, I felt the work was uninteresting and wanted to try something new, which led me to forex trading.

Through a friend in Japan, I joined a small startup forex company at the time, where I became one of their 5th or 6th employees. I worked there for seven to eight years, during what was a golden age for China’s forex market. Many middle-class individuals were keen on trading forex, gold, euros, and U.S. dollars, and margin trading became hugely popular. However, by 2015, with tighter regulations on forex, I saw the market becoming unsustainable and began looking for new opportunities.

By 2016, crypto started emerging, and in 2017, I decided to enter the space. As a trader, I used multiple exchanges but found that BitMEX and OKX often crashed, especially during market volatility. I realized there was a need for a better derivatives trading platform and decided to create Bybit, leveraging my derivatives experience.

Among the exchange founders, I’m probably the only one with real retail forex experience, which gave us a significant advantage. Initially, we drove traffic through KOLs, focusing on derivatives. However, by 2021, we realized that while our product was good and user feedback was positive, the conversion rate was low. Only about 5% of crypto users engage in derivatives trading, so we decided to expand into spot trading, recruiting a team from Huobi to launch fiat and spot trading.

Nowadays, we no longer rely on agents or KOLs to attract users. Instead, we focus on collaborations with communities and projects, such as our partnership with TON. Our strategy differs from other exchanges — we act more like an infrastructure provider, where the project is the main star. We are very open, and as long as a project has users, we’re willing to cooperate. For example, we were the first exchange to partner with Circle USDC and have worked with Copper and Fireblocks. In contrast, Binance is more limited in collaborating due to its own ecosystem, such as BNB.

I believe this strategy differentiation has allowed us to carve out a position in the market. Our role is clear: we pave the roads, but we’re not the ones providing the thrilling nightlife in the city. We bring users to the project, and it’s up to the project to grow. Going forward, we’ll continue this open and collaborative attitude, driving cooperation with projects and KOLs to grow together.

Colin:

I understand that Bybit has gone through several critical stages in its development. The first stage was when you overtook BitMEX by offering a better product experience, especially when they faced regulatory issues. The second was during the last bull market when you expanded from a derivatives-only exchange to a comprehensive trading platform. Throughout this process, you made several adjustments. The third stage is the recent bull market, where Bybit clearly performed very well. For instance, your speed in listing tokens and your brand advantage over smaller exchanges were evident in spot trading.

Ben:

So, it’s not just about listing more tokens, but rather focusing on collaborating with top projects, which also recognize the strength of our brand.

Colin:

It sounds like you’ve managed to maintain a solid middle-ground positioning. Exchanges like OKX and Binance have more of their own businesses, such as their platform tokens and stablecoins. Bybit previously considered launching a platform token but later shifted towards a public chain. How did you decide not to pursue a platform token?

Ben:

I believe it was mainly a matter of focus and capability. Being a project and running an exchange are two entirely different paths. You can’t have your cake and eat it too, so we decided to focus on our core exchange business. During the previous bull markets, many believed that exchanges should have their own ecosystems, like Binance, Huobi, and OKX, which benefited from a strong flywheel effect to quickly acquire users.

However, we were slow to act on the platform token, and by the time we considered it, the effect was already diminishing. We realized that surpassing the existing ecosystems would require more effort than we could muster, so we decided not to create our own ecosystem but rather integrate into others, such as TON and Solana. We felt it was better to be part of these ecosystems, acting as their partner exchange and supporting their development.

Colin:

That strategy might be one of the reasons you’ve seen such success in the recent bull market, especially in spot trading.

Ben:

Yes, during this bull run, our spot trading volume at one point held the second-highest position.

Understanding the TON Ecosystem and Token Effects: Diminishing Impact

Colin:

It seems like you’ve been paying close attention to TON. Did you also invest early in their OTC? And roughly how many new users did the TON token bring?

Ben:

Actually, we didn’t invest early. We only participated in the last round of funding about half a year ago. TON had a huge user base, but they struggled to convert those users into ecosystem users. Recently, though, they seem to have found an effective method by incorporating gamification and token rewards to attract users.

Colin:

So, TON has established a user acquisition pipeline with exchanges.

Ben:

Yes, many are now copying this model. TON’s success has inspired others, but this model is also being overused. Some upcoming token projects might need to be cautious, as the same users might just be moving around between projects.

Colin:

Does your data show that the acquisition effect is diminishing?

Ben:

Not yet. Some tokens brought in millions of new registrations, with 400,000–500,000 of those becoming deposit users.

Colin:

Where are these new users mainly coming from?

Ben:

Primarily from Eastern Europe, Africa, South Asia, Nigeria, India, and a few European countries.

Handling Competition with Binance: Returning to Specialization

Colin:

It sounds like you’ve retained a favorable middle-ground position. While OKX and Binance have their own internal ecosystems, like platform tokens and stablecoins, Bybit previously considered a platform token but shifted towards public chain integration. What was your thinking behind not launching a platform token?

Ben:

I think it comes down to focus and capacity. Being a project and running an exchange are two completely different paths. You can’t have both, so we chose to focus on our core exchange business. In previous bull markets, people said that exchanges needed their own ecosystems, like Binance, Huobi, and OKX, to benefit from a flywheel effect to rapidly acquire users.

We were a bit slow on platform tokens, and by the time we considered it, that effect had already weakened. We also realized that surpassing established ecosystems would require a huge effort beyond our capacity. So, instead of building our own ecosystem, we decided to integrate with others, like TON and Solana. Rather than build our own, we preferred to become part of those ecosystems, supporting their development as their partner exchange.

Colin:

That strategy may be one reason for your recent success during this bull run, especially in spot trading.

Ben:

Yes, during this bull run, our spot trading volume was at one point second in the market.

Understanding the TON Ecosystem and Token Effect: Diminishing Impact

Colin:

It sounds like you’ve been keeping a close eye on TON. Were you also early investors in their OTC? How many new users did the TON token bring in?

Ben:

Actually, we weren’t early investors. We joined their last round of funding about half a year ago. TON was still figuring out its growth path when we started working with them. They had a large user base, but converting them into ecosystem users was a challenge. Recently, they’ve found success through gamification and token rewards to engage users.

Colin:

TON and the exchanges seem to have created a seamless user acquisition funnel.

Ben:

Yes, many are now copying the model. TON’s success has inspired a lot of imitation. But the model is also being overused. Some upcoming tokens, like the Hamster token we’re about to list, follow a similar path. We’re seeing signs that these projects may start to decline, as many of them just recycle the same user base.

Colin:

Is there any data showing that this user acquisition method is becoming less effective?

Ben:

Not yet. One token alone brought in millions of registered users, with about 400,000 to 500,000 being depositing users.

Colin:

Which regions do most of these new users come from?

Ben:

Mainly from Eastern Europe, Africa, South Asia, Nigeria, India, and a few European countries.

Colin:

Do you think the pull of new tokens is starting to fade?

Ben:

I think we’re starting to see that. For instance, with the Hamster token, I expect the pull to start fading. The next batch of tokens might not be as strong in acquiring users, either.

Colin:

Yes, this user acquisition model requires innovation. You can’t keep using the same approach to attract users.

Ben:

Exactly. They’ve found a short-term way to bring in large numbers of users, but this method won’t work forever. The industry needs constant innovation to keep attracting and retaining users.

How to Compete with Binance: Focusing on Specialization

Colin:

Do you spend much time thinking about how to compete with Binance and OKX, or finding ways for Bybit to surpass them?

Ben:

Since the start of this year, we’ve stopped focusing on market share. We’re now more focused on optimizing our products. At this stage, the key is to make the best product possible. My focus is on refining every detail of our product. I believe the future of centralized exchanges will hinge on liquidity and the professionalism of the product. With increasing global regulatory demands, many countries will either force exchanges out or limit leverage, which means we may start to lose quality customers. If you secure local licenses, you might only be able to operate in certain regional markets, like Europe or Turkey.

Colin:

High-net-worth clients and institutional traders may still find ways to follow you, though.

Ben:

Yes, that’s exactly it. Globally, you can still attract institutional clients and experienced users who can adapt to new regulatory environments, like moving to places like BVI (British Virgin Islands) or Seychelles. These users will find ways to continue trading under new regulations. But not everyone will be able to keep up with the regulatory changes, so we’re focusing on sharpening our expertise. We’ve launched the UTA (Unified Trading Account), which is a system that allows for more efficient margin management. We see this as a key direction for future development.

Colin:

With stricter regulations, retail traders will have fewer options for offshore exchanges, but high-net-worth traders will always find ways to trade, such as through multiple passports.

Ben:

Yes, absolutely. These traders will find alternative methods to continue trading.

Colin:

So, after expanding broadly during the last bull market, would you say Bybit is now returning to a more specialized focus?

Ben:

Yes, exactly. During the last bull market, we expanded rapidly, but there were areas where our systems weren’t fully optimized. While everything looked good on the surface, we needed to fine-tune our internal systems. Now, we’ve streamlined our spot trading system and returned to a more specialized state. Our team includes some of the most experienced talent in financial products. Initially, when we launched spot trading, I didn’t involve the core team. Now, our most experienced team has taken over and optimized our systems for high availability. I believe that’s our current advantage, and professionalization will be key to our future growth.

Focusing on Web3 Wallets

Colin:

Besides spot and derivatives trading, are there other areas where you plan to focus more of your attention?

Ben:

The first direction, as I mentioned earlier, is increasing our professionalism. The second is Web3 on a global scale, which is why other exchanges are also investing heavily in Web3.

Many people misunderstand Web3 as merely serving non-compliant markets, but I think that’s wrong. Web3 is actually designed for compliant markets because many users can no longer trade through global centralized exchanges. In regulated markets, centralized exchanges may face restrictions on the products they can offer, and local users might turn to decentralized solutions. Decentralized exchanges (DEXs) and wallets will still allow you to serve those users.

In this environment, I believe Web3 wallets will be a crucial entry point. Our strategy in this area is to act as a broker rather than trying to do everything ourselves. We partner with projects like MetaMask and rely on traffic to generate revenue. While liquidity is shared in the decentralized space, centralized exchanges have the advantage of brand recognition. Users who have previously used your products might transition to using your wallet.

This wallet doesn’t need to be overly complicated. Just offer some perks that allow users to get more benefits from you, gradually building their loyalty. Over time, users may find your wallet to be a good choice. We’re focused on cultivating this user mindset.

Internal Culture: Speed!

Colin:

Another point I find interesting is Bybit’s internal culture. For example, when you conducted layoffs, the letter you sent was very moving, and many employees praised how well the situation was handled. In contrast, many companies mishandled their layoffs. Bybit offered generous severance packages, which earned praise from employees. However, this year, you’ve also made several changes at the senior and mid-management levels. What are your thoughts and ideas on internal management? Some have said that, due to your Western-leaning educational background, particularly your time in New Zealand, where people are known to be friendly, your management style is relatively gentle, which benefits the employees.

Ben:

Yes, we strive to maintain a relatively humane management style. I believe in this industry, you’re likely to run into the same people again and again. Many employees who leave might end up working for one of our partners, or even competitors. So, we don’t want to part on bad terms. In fact, several employees who left Bybit have returned to us, whether due to layoffs or their own decisions to leave. I think this culture of mutual respect is important, especially in such a small industry circle. It’s important to maintain good relationships, as we’re bound to meet again in the future.

Ben:

As for my core management philosophy, I believe the most important thing is execution and speed. Often, the problem is that some employees can’t keep up with our pace. Some may not be able to handle the intensity, or they can’t match the company’s development speed. So, we emphasize the ability to iterate quickly. I’m sometimes surprised by how colleagues from other exchanges react to our internal speed; they often comment on how fast things move at Bybit.

Our efficiency ratio is very high, with about 1,600 employees, which is relatively small compared to the top exchanges. This means we have to iterate our products quickly. Although this fast pace can sometimes lead to less polished products, I believe in this industry, the cost of moving too slowly is extremely high. If you wait to perfect everything, others will have already completed their projects, and you’ll have missed the opportunity. So, I’ve always believed that speed of execution is more important than waiting for perfection. That’s our choice, and it’s the guiding principle behind our management approach.

Embracing Dubai’s Regulatory Continuity

Colin:

You’ve moved your headquarters to Dubai. What led to that decision?

Ben:

We moved to Dubai because, in our discussions with regulators, we found that Dubai was a place that truly welcomed the industry, rather than treating us as guilty from the start. The government in Dubai and the UAE as a whole sees crypto as an opportunity. They realize that oil won’t last forever and want to attract more fintech and cutting-edge technologies. They are very supportive, providing not only policy support but also practical measures like visas, making us feel welcome.

Colin:

There’s an idea that as offshore exchanges grow, they will inevitably leave behind some markets or gray areas, which creates opportunities for smaller exchanges to rise. Do you think this trend still exists?

Ben:

It absolutely still exists! For newer exchanges, it’s a great opportunity. We’ve given up some markets, like Germany, where we’ve started implementing KYC, effectively leaving those markets behind. Smaller exchanges that are slower or more lenient with KYC can gain an advantage. This year, you’ll see a harsh reality: the top three exchanges will likely exit the European market, especially in derivatives trading.

Europe is one of the biggest markets, but with increasing regulatory pressure, many exchanges will have to scale back their business, and after obtaining licenses, they’ll only be able to offer some limited services. Meanwhile, smaller exchanges that aren’t bound by these regulations will have an opportunity.

Colin:

So you’re planning to obtain licenses, right?

Ben:

Yes, we will definitely obtain licenses, as we plan to develop in the European market for the long term. We can’t give up on Europe. While smaller exchanges might benefit from relaxed regulation in the short term, exchanges that operate openly cannot afford to be too aggressive and must maintain compliance.

Colin:

Indeed, regulators can always find out what you’re doing, no matter how transparent or opaque. The challenge from regulatory pressure will only get tougher for the industry.

Ben:

Yes, compliance will become an increasingly significant challenge. Well, let’s wrap up here for today. Thanks for your time.

Colin:

Thank you!

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