Edited by WuBlockchain

Recently, Bybit held an online media conference where CEO Ben Zhou and Shunyet Jan, Head of Institutional and Derivatives Business, shared updates on Bybit’s current development and outlook. Below is a summary of WuBlockchain’s notes:

Thoughts on the polarizing performance of VC tokens and memecoins

Currently, there is a palpable skepticism toward “VC tokens,” as many perceive them as “pump and dump” schemes — projects packaged with VC capital that are quickly cashed out. VCs have gradually lost their reputational value in the crypto space, with “VC” often evoking negative connotations. This model feels overly traditional.

On the other hand, the memecoin phenomenon is fascinating. Many memecoin projects are entirely community-driven, with founders often holding little to no tokens, funds, or resources. For example, some teams operate on minimal budgets and have no token reserves, yet manage to attract attention through sheer community enthusiasm. They distribute tokens directly to users without profit motives, forcing exchanges like ours to support them at a loss.

When such projects gain sufficient momentum, we might proactively approach them for collaborations, requesting that they align with our operational needs. Specifically, this means encouraging the project to promote its token listing on their community channels, organizing events to attract users. Exchanges, in turn, hope to gain active users from these communities. For resource-limited projects, we might even offer funding or resources, essentially “making their budgets” to facilitate cooperation.

This dynamic reflects a shift in the industry: exchanges are no longer in a commanding position but are actively seeking partnerships with trending projects. This evolution is intriguing and adds vitality and challenges to the ecosystem.

How does Bybit allocate assets?

From a financial perspective, Bybit adopts a very cautious asset allocation strategy:

1. Low allocation to Bitcoin

Despite being in the crypto industry, Bybit holds a relatively small amount of Bitcoin. This is because most of our revenue is generated in stablecoins, with perpetual contracts (USDT-margined) being our main trading product. This means user transaction settlements are primarily in stablecoins.

2. Assets are mainly stablecoins and fiat

About 80% of the company’s assets are in stablecoins, with the remaining portion held in fiat currencies. The primary goal of this allocation is to ensure financial stability rather than seek asset appreciation. In other words, our finance team prioritizes survival through bull and bear markets over speculative investments.

3. Operations-driven asset holding

Stablecoin and fiat holdings are primarily for operational needs, such as paying employee salaries, vendor fees, and media spending. This prudent financial strategy ensures smooth operations and allows us to adapt flexibly to market changes.

The Strategic Significance of Bybit’s Hong Kong Licensing Efforts

Bybit’s pursuit of a Hong Kong license is not primarily driven by the market size in Hong Kong itself. The trading volume in Hong Kong is relatively limited — for example, the business scale of exchanges like OSL and HK remains modest. For Bybit, the significance of a Hong Kong license lies more in its strategic value than in immediate market returns.

1. Boosting Team Confidence

Being a Chinese-led team, holding a Hong Kong license significantly enhances team morale. Compliance serves as a strong advantage in both talent acquisition and team stability. For example, top-tier candidates from prestigious companies place great emphasis on a firm’s legitimacy and long-term development plans. Having a Hong Kong license makes Bybit more appealing to such high-caliber talent.

Additionally, team members can take pride in their company’s status as a licensed Hong Kong institution. Simple moments, such as explaining the company’s position to family during Lunar New Year gatherings, can contribute to a sense of pride and unity.

2. Demonstrating Commitment to Compliance

A Hong Kong license is also a statement of Bybit’s commitment to regulatory compliance in Chinese-speaking markets. For a Chinese-founded company, licensed operations in Hong Kong align with its market positioning and corporate responsibility. This is not just external validation but also an internal affirmation of Bybit’s vision, particularly as it aims for a 100-year presence in the crypto industry.

The Case of Singapore

Bybit is also applying for a VASP (Virtual Asset Service Provider) license in Singapore, though progress there has been slower. This is largely because Singapore was not a priority market for Bybit during its earlier stages, delaying its initial regulatory preparations.

Recently, Singapore has eased some of its crypto regulatory policies, especially after the FTX collapse, with the MAS (Monetary Authority of Singapore) revising certain requirements. Bybit began its application process 12 to 18 months ago and is now in the interview stage.

Priorities and Global Expansion

While the Hong Kong license holds substantial strategic and morale-boosting value, Bybit’s current priority lies with its European licensing efforts. Europe is seen as a key growth market, and under the MiCA (Markets in Crypto-Assets) regulatory framework, compliance will have a direct impact on Bybit’s scale and competitiveness in the region.

Additional Observations

1. Progress of Major Exchanges on Hong Kong Licenses

Currently, many major exchanges have yet to secure Hong Kong licenses. Regulators may initially work with smaller entities to gain experience before extending licenses to leading players.

2. Internal Talent Development

To address high personnel costs and a limited pool of qualified Responsible Officers (ROs), Bybit is focusing on internal talent development and certification programs to bridge the gap.

3. Long-Term Planning

Licensing efforts in Hong Kong and Singapore are not aimed at short-term market gains. Instead, they lay the foundation for long-term compliance strategies, making Bybit more attractive to institutional clients and top-tier talent.

Ben Zhou attributes Bybit’s success to three key factors:

1. Stable Strategy

Bybit has always pursued a steady and methodical approach in both operations and product development, avoiding rash decisions. This resilience has allowed the company to adapt to market changes and build a solid foundation over time.

2. Product-Centric Focus

Bybit places a strong emphasis on product development and optimization. From the outset, the company has prioritized user needs and continuously improved the trading experience. Ben’s external communications mainly center on products and branding, minimizing distractions from other areas.

3. Role Positioning in the Industry

Bybit sees itself as a “stage builder” in the industry, rather than a performer. While some exchange founders seek the limelight, Bybit has opted to focus on delivering reliable products and services, letting users and partners take center stage.

Regional User Preferences and Market Characteristics

Different regions exhibit distinct crypto preferences and demands, which influence Bybit’s product and operational strategies:

1. Asian Market

Asian users are more familiar with derivative markets and leverage tools, given their prevalence in traditional finance. There is also a notable interest in GameFi and memecoins, particularly among Korean and Chinese-speaking users.

2. European Market

European users are more conservative, favoring stability and low-leverage investment strategies. Their interest in high-volatility assets like GameFi and memecoins is less pronounced compared to Asian users.

3. Global Market Trends

Despite regional differences, global trends can unify user focus. For instance, during a Bitcoin price surge, users worldwide shift their attention to Bitcoin and major assets. Conversely, when mainstream coins lack “narratives,” funds often flow to smaller projects and emerging assets.

Contribution of UTA and Institutional Volume

In Bybit’s unified trading account (UTA) system, institutional users contribute 70%-80% of the trading volume, despite representing only about 20% of the user base. Retail investors, making up 80% of users, account for a smaller share of the total volume.

Token Listing Strategy: Three Core Principles

Key Factors in Listing Decisions

Bybit’s token listing process is influenced by several considerations:

1. Market Trends and Industry Influence

Projects often prefer to list on Binance first. If Binance lists a token, other exchanges tend to follow suit, especially during bull markets when Binance’s influence is most pronounced.

2. Potential for New User Acquisition

Bybit evaluates a project’s popularity and its potential to attract new users, considering factors like regional interest, valuation reasonability, and its likely impact on market performance.

3. Collaboration with Other Exchanges

Bybit has observed a synergy with exchanges like Upbit, where tokens performing well on Upbit tend to show similar success on Bybit. This dynamic often informs its project selection.

Token Listing Process and Details

Ben Zhou shared additional insights during a December 3 livestream, highlighting Bybit’s listing requirements:

• Promotion Budget: Projects are expected to allocate promotional funds for user engagement activities, though legal constraints prevent exchanges from holding tokens directly.

• Security Deposit: Bybit requires a $200,000-$300,000 deposit in stablecoins to ensure promotional goals are met; otherwise, penalties may apply.

• Evaluation Process: The process includes form submissions, internal voting, research by Bybit’s research institute, and a listing review meeting. Evaluations focus on fundamentals and risk controls, including on-chain data, address authenticity, use cases, user distribution, project value, token valuation, value capture mechanisms, and team credentials.

Bybit’s listing strategy remains flexible, dynamically adjusting to market trends and project specifics.

Trends in Stablecoins and Asset Tokenization

The Evolution of Stablecoins

While USDT and USDC dominate the market, interest-bearing stablecoins are emerging as new competitors. Bybit supports multiple stablecoin options but remains cautious in predicting which will become dominant.

The Direction of Asset Tokenization

1. Traditional Assets in the Crypto World

Assets like bonds or stablecoins are increasingly used as blockchain collateral for trading and investment. This trend is gaining traction in institutional circles.

2. Integration of Crypto with Traditional Finance

Examples include ETFs (Exchange-Traded Funds), which extend from traditional futures markets into crypto, sometimes even integrating on-chain assets. The SEC’s recent approval of Bitcoin-related ETFs has further accelerated this trend.

Although the tokenization of real-world assets like real estate has been discussed extensively, the most practical applications currently focus on stablecoins and financial instruments like bonds.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish