Dialogue with HOPE Founder: From PayPal to HOPE, Experiences and Persistence on the Entrepreneurial Journey

Host: Gu Liang, TokenDance Builder

Organizer: Builder luvya, TokenDance

TokenDance invited former PayPal & HOPE founder Flex Yang to the DeHero column.

In this conversation, he repeatedly emphasized "connecting the dots," stating that everything is for the best. While the recent PayPal crisis may seem dire, as the founder and largest creditor of PayPal, he said without the difficulties faced by PayPal, there would be no HOPE and no bright future for HOPE;

Regarding the HOPE project, he expressed that the HOPE project is a contribution to world peace. He also mentioned that HOPE starts with ETH but will later have a broader transmission mechanism;

For advice to entrepreneurs, he said not to underestimate the young and inexperienced; while one may face many obstacles early on, past experiences and lessons will gradually accumulate behind you, silently pushing you toward the future. What you need to do is persist, be willing to give, and not be overly concerned about immediate gains and losses.

He particularly shared his experience of winning a global competition during his first entrepreneurial venture, discussing what impressed investors about PayPal's rise to a $2 billion valuation in less than five years, and responded to the notion that "some say HOPE is the Hong Kong dollar of the crypto world."

Here’s a recap of the highlights from that evening's space:

Early Experiences

TokenDance: When did you start getting involved with blockchain? What was your experience before creating PayPal?

Flex: My entry into cryptocurrency was also due to various coincidences, during a co-creation class at JD Finance.

Speaking of my experiences before founding PayPal, aside from entrepreneurship, I want to share my educational journey as a youth: I am from Dali, Yunnan, and have been interested in physics since childhood, hoping to throw out "a hundred thousand whys" to explore the mysteries of the universe. After the college entrance examination, by chance, I applied to City University of Hong Kong, where I studied business instead of physics, thus coming into contact with more financial knowledge and business information, which led to my first entrepreneurial venture. After overcoming numerous challenges, I won a global entrepreneurship competition, gaining recognition from a panel of judges, which fueled my passion for entrepreneurship. Later, I joined PwC, returned to Beijing to start my own business, and received investment from Lightspeed China.

One significant experience during my university years was participating in an entrepreneurship competition, which greatly influenced me. Later, one of the judges from that competition offered me a position at PwC in auditing. Although I was inexperienced and initially only did basic tasks like meeting minutes and cash flow checks, this job deepened my understanding of "toxic leverage" and gradually clarified the reasons behind financial crises.

Returning to my involvement with blockchain, it was just around the end of 2017, during a booming period for the crypto industry, which made me feel that "when God closes a door, he opens a window."

TokenDance: Why did you choose the crypto financial services sector?

Flex: Most choices are based on fate, coincidence, and market trends, rather than a single factor. Perhaps I faced many obstacles in the past while still inexperienced, but those past experiences gradually accumulate behind you, pushing you toward the future when you face new challenges. Looking back now, many new DeFi projects moving forward are driven by what I learned during PayPal's restructuring process.

Additionally, I chose the crypto financial services sector because my greatest inspiration from my previous experiences came from studying government bonds. Exchange rates and interest rates are quite important in financial services, and "interest rates" are relatively simple to understand; it's about the different values of money now and in the future. For example, if I have 5 million RMB now, its future value depends on the choices made in between, and those choices require the value of time.

While exploring the market, I found that no one was providing interest rates at that time, but in the traditional financial world, there is a larger space for interest rate services. So, I chose the crypto financial services sector.

TokenDance: Your personal Twitter states "Hope the Light Be With You." What do you think are the lights for entrepreneurs on their journey?

Flex: Upon entering web3, I believe it brings different hopes (HOPE) to everyone. The existing web2.0 system is too heavy, while web3.0 can help us break through the "pre-arranged routes" of previous generations. Looking back at history, during the early tribal period, intermarriage was allowed within tribes; with the development of agriculture and technology, more transferable assets emerged, and asset sovereignty was established, needing to be passed on to the next generation, thus creating family and supply relationships. The steam engine and electrification eras transformed the relationship between landlords and farmers into that between communism and workers; now, in the era of big data, data has become the means of production, no longer just land and capital, making data ownership simple yet crucial.

When we use Douyin in web2.0, as users, the first page we encounter is agreeing to platform terms before registering. Many mistakenly believe our personal Douyin account represents ourselves, but it actually only represents what that platform owns of you. Therefore, data rights are becoming increasingly important, and we hope to bring everyone personal sovereignty, or rather, ownership of their own data. This naturally requires new production relationships to emerge, and our ongoing exploration of tokenomics reflects this relationship, serving as a social experiment that brings hope to ordinary people, which is why I believe the project should be called HOPE.

As for the project's slogan, we have continuously discussed it within the team, and we believe "My Heart is Bright" is the most representative, leading to "Hope the Light Be With You." It actually derives from Wang Yangming's theory of "unity of knowledge and action," emphasizing that knowledge is the beginning of action, and action is the completion of knowledge. Only by combining knowledge and practice, without relying solely on one, can we succeed. If we cannot even follow our inner thoughts, then doing these things is meaningless.

You just asked, "What are the lights on the entrepreneurial path?" For me, there are two.

The first is the sense of achievement from winning a championship in my first entrepreneurial venture, which gives me greater motivation to persist in entrepreneurship. When I talk to many investors now, one reason they choose to invest in my project, including PayPal, is because I am still persevering. Difficulties will always exist, but for entrepreneurs, persistence is key; clear the clouds and do meaningful things without being blindly anxious.

The second is Steve Jobs' speech at Stanford, where many may remember "Stay hungry, stay foolish," but for me, the most impactful part was when he shared his first story and said "connecting the dots." In that story, he shared why he dropped out of school to audit a calligraphy class, learning that it seemed useless for the future, but ten years later, when they designed the first Apple computer, that experience suddenly flashed through Jobs' mind and was all applied, giving the Apple computer such beautiful fonts and spacing.

Therefore, many times, do not worry about immediate gains and losses; on the entrepreneurial path and in life, it is always right to give first. Maybe not today, tomorrow, or next year, but perhaps ten, twenty, or even fifty years later, those you once helped will assist you; this is unpredictable. You cannot predict the future; often, you can only see the connections when looking back. They connect from points to lines, forming the final you and what you do. You just need to follow your heart and strive to do the right thing without being overly calculative; these little bits will connect your future path, leading you to a farther future.

Take last year's PayPal bankruptcy as an example; it seems terrible now, but perhaps ten years later, you will find that without PayPal's bankruptcy, there would be no HOPE, lacking a hope to lead everyone into web3.0 to explore new production relationships, and there would be no possibility of confronting certain powers in the future. I really like a saying, "Do not underestimate the young and poor." Many once attacked and suppressed CZ, but later found he grew very strong; many things may bring you more benefits when viewed from the future.

About the Project

TokenDance: HOPE is based on the long-term bullish expectation for BTC. If BTC experiences severe volatility and selling pressure, failing to form excess reserves, how will HOPE respond?

Flex: The fundamental reason HOPE chooses BTC and ETH as reserves is that BTC and ETH represent the overall trend of the crypto industry; other small coins are currently not very significant (except for USDT and USDC, which are specific historical products). If we consider the current HOPE as a decoupled stablecoin, it was actually not decoupled in the last cycle.

Regarding your question, I want to start with a long-term judgment: I believe BTC's price will be higher. Its price fundamentally depends on three things: one is the Federal Reserve's policy, the second is the U.S. government's fiscal policy, and the third is geopolitical risk. The more accommodative the first two policies are, the higher Bitcoin's price will rise; the higher the geopolitical risk, the higher Bitcoin will also rise. These three factors will continue to ferment over the next 2-3 years, so I believe BTC is bullish in the long term.

If this judgment holds, then HOPE can naturally quickly become an excess reserve stablecoin; if this judgment does not hold, it’s still okay because at least the customers' BTC is still there, and they have received returns, so I believe users have not been shortchanged. If BTC experiences severe volatility and selling pressure, then I think that is a situation the industry needs to address.

TokenDance: Recently, there has been a surge in narratives from Hong Kong, with a viewpoint suggesting that the crypto market and macroeconomics are tightly intertwined, marking the beginning of a cycle. How do you view this perspective? What impact does this tight intertwining have on HOPE's development? What role does HOPE expect to play in the mass adoption of the crypto market?

Flex: I believe this viewpoint is correct; this is not just the beginning of macroeconomics but also of geopolitical intertwining. The earliest inspiration for HOPE came from a book called "Network State" by former Coinbase CTO Balaji Srinivasan, which mentions a relationship suggesting that global politics will move toward a multi-level structure, with the most representative being three levels: China, the U.S., and the so-called technology level.

To put it concretely, it involves complete technology, combined with the power of the U.S., and the power struggle within technology regarding crypto sovereignty and personal sovereignty. This inspires me to think that there will be a relatively constant mutual impact relationship. In the first two levels described, conflicts due to inconsistencies in values and interests will inevitably occur, and those represented by technological power will benefit from this conflict.

Most of China's foreign exchange reserves are in U.S. Treasury bonds, so how to "de-dollarize" is also a very long-term issue. What role does Hong Kong play in this? This relates to the mainland framework of China. In the upcoming de-dollarization actions, aside from the current central bank's adjustments, its plan A will definitely be the internationalization of the RMB, promoting a new payment network, namely CBDC (Central Bank Digital Currency). I believe the promotion of CBDC is good, but essentially, the global credit of the RMB still has some shortcomings, which requires generations of efforts to build up its credibility.

Plan B would be a traditional stablecoin like the Hong Kong dollar, which is not the U.S. dollar but is actually pegged to it. Among the traditional world stablecoins pegged to the U.S. dollar, the Hong Kong dollar has the highest proportion, with a scale more than four times that of USDT. It’s worth noting that during the sanctions against China from 1990 to 1997, Hong Kong played a role in connecting China to the world and the world to China. I believe that in the process of de-dollarization, it will also play an important role.

If greater conflicts arise, the Hong Kong dollar may also be sanctioned, leading to plan C, which is cryptocurrency. Many people believe that this time in Hong Kong is a speculative move, but I see it as a long-term layout.

In the future, if there is mutual distrust and non-recognition, cryptocurrency may serve as a neutral tool, playing a very important role. We hope to reconnect the world in such an environment, striving for world peace, just a small idea.

TokenDance: There is a viewpoint in the media that "HOPE will be supported by BTC and ETH in its early development. In other words, if BTC is gold and ETH is the U.S. dollar, and the Ethereum ecosystem is the U.S., then HOPE will become a currency supported by gold and the dollar, much like the Hong Kong dollar, and building on HOPE will make it the Hong Kong Special Administrative Region of the crypto world." How do you view this perspective?

Flex: This actually stems from our personal understanding of the Hong Kong dollar. This year marks the 40th anniversary of the Hong Kong dollar being pegged to the U.S. dollar, and it also happens to be the 30th anniversary of the HKMA (Hong Kong Monetary Authority). The HKMA was established after Hong Kong's return and was later than the peg of the Hong Kong dollar to the U.S. dollar. The fundamental factor for the Hong Kong dollar's peg to the U.S. dollar is the use of the U.S. dollar as a reserve.

We and the Hong Kong dollar have adopted many distributed practices. Although the Hong Kong dollar reserves U.S. dollars, fundamentally, its reserves are distributed, not just keeping its reserves in the U.S., but also in other countries and regions, including the U.K. and China.

Another aspect of distribution is the distribution mechanism of the Hong Kong dollar. I believe many people have been to Hong Kong and may have noticed that there are two types of Hong Kong dollars: the first type is legal tender issued by the HKMA for amounts of 10 HKD and below. The other type, for amounts of 10 HKD and above, is banknotes issued by various banks. If you notice, the 500 HKD note states "promise to pay," meaning it is a bank note. This note is issued by three banks: Bank of China, HSBC, and Standard Chartered. The third aspect of distribution is the diversity of its transmission network.

From the perspective of HOPE's self-custody, it is distributed. The second distribution is the distribution mechanism. The third point is for a broader transmission mechanism; we start with ETH but will not only run on ETH (where there are high fees) but will also try other networks like BRC-20, BRC-30, etc.

About the Future

TokenDance: The AI sector is booming, and many VCs are shifting from web3 to AI projects. How do you view this phenomenon? Is it a winter for web3 entrepreneurship? What advice and counsel do you have for entrepreneurs in the DeFi sector?

Flex: There has been too much speculation in the past. What we just mentioned about "persistence" and "not being stingy with giving first" applies here as well. I believe everything is for the best. 2018 was a winter, and the Bitcoin crash on March 12, 2020, was also a bitter winter. I think we are not in a winter yet; we just need to wait for a cycle. In ancient China, there was often talk of yin and yang, and modern songs sing: "Without experiencing wind and rain, how can one see the rainbow?" So the revolution has not yet succeeded; we still need to work hard.

Another thing is about AI; I haven't seen AI reach the next level yet. When it does reach the next level, AI will develop its own sense of sovereignty. At that time, will it recognize the government's ledger? Actually, it won't; it will recognize the openness of the crypto world because it is fairer, allowing for ownership. I believe cryptocurrency and AI are inseparable.

Audience Interaction

Audience 1 - Luca: Hello Flex, we have seen that the SEC has recently filed a lawsuit against Coinbase and is seeking to freeze Binance.US's assets. Earlier reports indicated that HOPE anchors its BTC in Coinbase. Facing such risks, if Coinbase is sanctioned and it affects HOPE, what preventive measures does HOPE have?

Flex: We have always thought about this. On one hand, the HOPE stored in Coinbase is in a European institution of Coinbase, not Coinbase US, because the risk in the U.S. is still relatively high. On the other hand, the cold wallet we chose in Coinbase is a segregated account, which means it has a separate address, or it is actually regulated and isolated from bankruptcy. A more core point is that we will definitely have an automation process going forward, and this service will carry protocol custody. Why hasn't protocol custody been implemented yet? The first reason is that there are many security issues with protocol custody that need to be continuously verified before it can be launched. The second reason is that the fundamental market demand is still focused on security first; things outside the current regulatory framework are not the primary consideration. This also gives us more time to build up the self-custody reserve system, which we expect to roll out in the third or fourth quarter.

Fundamentally, this does not truly solve the so-called security issue; it is still the team, not the community, that controls it. We use a centralized team to make this happen faster, and we expect to take five years to resolve this, meaning that in five years, the voting rights held by the team will be less than the market's voting rights, at which point it will truly become a so-called decentralized stablecoin.

Audience 2 - Luvya: Hello Flex, because I saw your personal Twitter this afternoon stating "My Heart is Bright," and you just mentioned Wang Yangming and how most people prefer to get along and make friends. Wang Yangming has two famous sayings: one is "Although the world is vast, with a thought towards goodness and a heart of conscience, even ordinary people can become sages." The other is his last words, "My heart is bright, what more is there to say?" So, do you usually read Wang Yangming's philosophy? Or what do you think of Wang Yangming's philosophy?

Flex: I actually haven't read much; I focus more on Wang Yangming's stories. As you just mentioned, the way ancient people spoke is quite different from ours. Returning to modern times, why are various countries so divided? The root cause is not just that the leaders of the U.S., China, and Europe experienced many bad things in the 1960s, leading to distrust of anyone. What I like most about Wang Yangming is his attitude towards life; he thinks of solutions by analyzing root causes, which I believe is worth learning.

Audience 2 - Luvya: I also want to ask, since you left PayPal at the end of 2021 and created your own new project during PayPal's financial crisis, why did you choose to return?

Flex: This choice, as I just mentioned, may be due to multiple factors. Looking back at PayPal's clients and those who once fought alongside me, I believe many would say you should avoid this time, but I believe that since things have happened, I could not have built PayPal without the support of these people. Therefore, I chose to return and use my experience to better implement this matter, whether in liquidation or restructuring.

Note: The above content does not constitute investment advice.