The unstable macroeconomic situation along with the collapse of FTX and Alameda Research provoked a crisis in the industry.
This is not the first crypto winter for CoinEx: Since its launch in December 2017, the exchange has attracted more than 4 million users from 200 countries.
We asked CoinEx Founder Hypo Yang about his experience of managing a business during a bear market, the prospects for Web3, and his attitude towards the Proof-of-Reserves initiative.
Cryplogger: Hello Jan! On December 24, CoinEx turned five years old. Since the founding of the exchange, the crypto market has managed to update its historical maximum and again enter the bearish phase. How did the company go through the different stages of this cycle?
Hypo Yang: Hello! We launched CoinEx when the cryptocurrency market was at its peak. The crypto-winter came to replace us, but we did not retreat, as we initially focused on the long term.
The exchange team focused on optimizing the product and integrating new services like financial account And automated market maker (AMM). Thanks to this, CoinEx attracted new users who were interested in the DeFi segment.
We are optimistic about the future: the crypto industry is in its early stages of development, strong market fluctuations are the norm.
I am sure that new solutions in the spirit of DeFi 2.0 will attract more users, and after a while the community will revive again.
Cryplogger: What important changes have taken place over the years?
Hypo Yang: It’s been a busy five years. Ethereum dominance declined after the proliferation of networks without EVMand the bandwidth of the network itself has increased significantly thanks to second-layer solutions like Arbitrum, Optimism and zkSync.
The crypto industry has witnessed a shift from ICOs to DeFi, GameFi, Play-to-Earn and X-to-Earn. Many DeFi protocols have been well received by users.
In 2022, the world can no longer ignore cryptocurrencies: they have become a popular investment option in many countries. So, El Salvador recognized bitcoin as the official currency, and the SEC approved the bitcoin futures ETF.
Cryplogger: What challenges have you faced lately?
Hypo Yang: With a crisis of confidence. It is related to external factors: many investors have become disillusioned with the industry due to the illegal use of customer funds by exchanges.
The current crypto winter will expose even more issues that the community is overlooking in a bull market. First of all, the issues of safe storage of user funds.
Reputation takes years to build and is destroyed in seconds. Knowing this, we regularly conduct comprehensive code audits and stress tests, as well as monitor exchange systems around the clock.
As a result of this policy, there have been no security incidents since launch on CoinEx.
Cryplogger: By “external factors” do you mean the collapse of FTX?
Hypo Yang: Of course, FTX and other “black swans” like the collapse of Terra and the bankruptcy of Celsius hit the market hard.
However, my experience is that such crises often provide good investment opportunities.
Cryplogger: How did these “black swans” affect the crypto industry?
Hypo Yang: I believe that the situation around FTX and Alameda Research cannot be judged on the entire industry. The same is true for Terra. These are the problems of individual companies that invested in each other and traded heavily leveraged user assets.
The problem is that such platforms are too centralized and opaque. Before the media revelations, no one suspected that FTX had misappropriated clients’ money and that Alameda Research was heavily in debt.
FTX did not notify traders of the risks taken and the movement of funds. This is extremely disrespectful behavior. Exchanges should provide trading services, not earn additional profit by risking clients’ assets.
User funds CoinEx 100% secured. And I guarantee that the exchange will not abuse this money.
Cryplogger: What do you think about the Proof-of-Reserves initiative?
Hypo Yang: This is a good way to increase the openness of centralized platforms, which contributes to the healthy development of the industry.
Transparency is one of the key advantages of cryptocurrencies. I think the market has learned its lesson with FTX. Over time, the publication of data on reserves will become a prerequisite for doing crypto business.
Cryplogger: Are you planning to disclose CoinEx reserves?
Hypo Yang: We have already proven that customer balances are 100% backed by exchange reserves using proof-of-reserves — own solution based on the Merkle Tree.
With it, users can at any time check whether their assets are included in the reserves of the exchange.
Cryplogger: CoinEx, along with many other crypto exchanges, is issuing a native token. Did the FTT collapse affect your CET policy?
Hypo Yang: No, because CoinEx Token is a completely different story. It can be used outside of the exchange to pay for transactions on the CoinEx Smart Chain.
In addition, we buy back and burn CET every month. This information can be easily checked in the section About CET on the exchange website.
Cryplogger: During a bear market, many users invest in instruments with small but stable returns. Are there similar services on CoinEx?
Hypo Yang: Yes, it is an automated market maker and a financial account.
The first allows you to earn on providing liquidity for pools, the second – on deposits with compound interest. However, when using AMM, you need to consider the risk of intermittent losses.
By the way, there is already published information about promotionsdedicated to the fifth anniversary of CoinEx. In the first, we will distribute $100 to twenty participants, and in the second, we will distribute 300 000 CET between 100 exchange users.
Cryplogger: What do you think about Web3? Do you plan to add support for such applications?
Hypo Yang: The CoinEx ecosystem already has several Web3 infrastructure services: the ViaWallet wallet, the ViaWallet Explorer, and the CoinEx Smart Chain (CSC) platform.
For now, we’re limited to them. Web3 has a long way to go to mainstream adoption.
Cryplogger: Did the sanctions against Russia and Belarus somehow affect CoinEx policy?
Hypo Yang: No. While we operate in accordance with local regulatory requirements, our primary CoinEx is an international platform that provides services to customers around the world.
We believe that blockchain technologies and cryptocurrencies should be available to anyone, regardless of their country of residence.
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