Dialogue He Yi: What are Binance's standards for investment and listing? This bull market has not yet seen truly strong innovations

Author: Wu Says Blockchain

This article is a transcript of an interview conducted on July 12, edited slightly and processed by GPT, and may contain numerous errors. The interviewers include Wu Says, Planet Daily, Foresight, and Deep Tide. The content reflects the personal views of the interviewees and does not represent the views of the media.

You joined OK in 2014, founded Binance in 2017, and now ten years have passed. What are your thoughts?

He Yi: What stands out the most to me is probably when I first entered the industry. In 2013, the price of Bitcoin surged, reaching over $1,000. At that time, I felt it was so exciting, and it was also the first time I reflected on my life. I always asked myself why I joined this industry and gave up opportunities like working at Travel Channel. It was because I felt that for the first time, something made me rethink my life: what is money? Since childhood, our parents have always told us that money is important. I felt that when Bitcoin's price rose above $1,000 in 2013, it gave me a huge stimulus to question what money really is. What you previously thought of as money might not be money itself, and this directly led me to choose to enter the crypto space.

After joining the crypto space, the most thrilling moment was probably when I officially announced my job, and then the market crashed. At that time, I felt like it was a disaster. Today, some significant drops in the crypto market are really nothing compared to the history of 2014. There was a day when Bitcoin dropped to about $100. You would just sit in front of the screen watching the price plummet, and back then, liquidity wasn't that strong. When it was time to sell, everyone was selling, and you could really see the price dropping in chunks.

In 2014, it was still a time without heroes, where the young became famous. I often joked in internal meetings that we should diversify our recruitment because I said if I were interviewing today with my background and resume, I wouldn't get an offer. So I think ten years later, if someone with the same background graduated and interviewed, they definitely wouldn't get an offer because we would ask about their English proficiency and achievements, right? It would be very professional. You would feel that ten years ago, people saw us as a bunch of pyramid schemers, and ten years later, this industry, whether in terms of talent or potential, is still a positive stimulus and cycle.

Who was the most famous person in the industry back in 2014? I remember it was Cat Wang and Chang Jia. At that time, it was all altcoins; apart from Bitcoin, everything else was an altcoin, so everyone was a fundamentalist. A significant change occurred in 2017 with the emergence of Ethereum, which allowed some ideas that were previously just discussed to materialize, such as financialization, broad financialization, or micro-financialization. In 2017, people genuinely felt there were opportunities to start businesses, leading to the birth of such companies.

I think the so-called bull market now is not driven by innovation, nor is it driven by significant changes in the industry; it is actually driven by independent events like ETFs. So if you summarize the entire history of the crypto space or each stage in terms of what real innovations have positively impacted the industry, I think there are quite a few gains. Personally, I still believe that ultimately, innovation drives this industry forward.

What are the most important standards for Binance's investments? Which sectors are you personally interested in?

He Yi: I can roughly align my understanding of investment with everyone. I believe that relatively speaking, Asian projects tend to suffer a bit because, after all, North America has some typical venture capital firms, like a16z, that are very focused on making significant investments in the blockchain industry.

However, there is indeed a huge awkwardness for investors and companies in Asia. Perhaps Asian funds themselves are not that keen on investing in Asian companies, which reflects a bit of self-deprecation, and I think it's quite difficult.

You can understand our investment as hoping to sprinkle pepper on the industry. Ultimately, you can understand that how far this industry can go is still driven by innovation. Crossing the chasm ultimately requires real innovation. Blockchain technology needs to be popularized and used by more ordinary people. Who will succeed in the end is uncertain, but we hope to support as many people as possible. To be honest, we have invested in over 2,000 projects, if not 2,000, then definitely over 1,000. However, I haven't really talked to most of these projects or communicated with them, but I think investment fundamentally looks at several framework aspects:

First, I think it's essential whether the founder has a long-term perspective and belief in this industry. You will find that if they are just in it for a quick profit, like running off to a villa by the sea, they are no different from gamblers. Even if they succeed, they will ultimately just sell their tokens and run away. So I think it’s important to have a long-term perspective and confidence in the industry.

Second, I think a very important point is their skills. What have they done? Each person's capability model, including your team's model, should be complementary. Third, I think it’s about their thinking structure. You can understand it as whether they are in a state of continuous iteration. You will find that many people can keep iterating, even if they start from a lower point, but they can keep evolving. In the process of dialogue with them, you can generally make a judgment. I think if the fundamentals are acceptable, we are willing to invest some money to nurture them. We cannot pursue a so-called 100% success rate because that simply does not exist. Look at traditional VCs; they might invest in ten projects, and nine of them fail, with only one succeeding, which is quite common. So I think the essence is not to invest in this matter; we still hope that more innovators in this industry can emerge, continuously building confidence for everyone, whether in the long night of current emotions or before a significant technological leap. Ultimately, if you do not support others, you will end up as a lone wolf. If you are the only one on this road, I think that cannot constitute an industry, right?

I don't usually comment on projects, but I personally believe that the next big impact on human society will fundamentally be AI. I have spent a lot of time learning about this, but it doesn’t necessarily mean we have invested in it. However, I think you need to know the direction of the tide.

Does Binance have a "mouse warehouse"? What are the listing standards?

He Yi: We often discuss "mouse warehouses," and everyone knows that if certain tokens are widely promoted, they will inevitably be listed on a certain exchange, which means that project will not be listed on Binance. However, from last year to this year, there haven't been many quality and hot projects in the market, which makes our listing team's work awkward. For some projects, we haven't even contacted them, but rumors about their listing have already spread, and some people even use these rumors to exert pressure. If the project parties do not accept their conditions, they will spread rumors about the listing. If we choose not to list a project, we may sometimes be accused of having a "mouse warehouse."

We have strict standards and processes before listing. Each cycle, we screen projects and conduct internal reviews. If someone strongly opposes a project, it will not pass the review. We try to minimize the time gap between the decision to list and the actual listing to eliminate rumors of "mouse warehouses." The listing decision is not made by a single person but is ensured through a multi-layered evaluation process, confirming the project's technical foundation, market potential, and investment backing. Binance's listing standards mainly include the following points: Technical and Market Foundation: Does the project have a solid technical foundation and market potential? Hype and Attention: What is the project's hype and user attention in the market? Investment Backing: Does the project have reliable investment institutions supporting it to ensure it won't easily run away? Project Lifecycle: Is the project's lifecycle long enough, and does it have sustainable development potential? We will place all projects that meet these standards into a large pool for observation and evaluation.

One of the main challenges we face is users' psychological expectations. Many users in the crypto space expect returns of hundreds or thousands of times, while traditional investors are already very satisfied with annualized returns of 20%-30%. As competition intensifies, high-return opportunities will become increasingly scarce. We need users to understand the development and changes in the industry and adjust their expectations.

In terms of project selection, if a project has VC investment, users will think it is VCs harvesting retail investors; if the project is weak, users will think Binance is listing garbage projects. Therefore, no matter which project we list, there will always be dissatisfied users. What we hope to provide are projects that are in demand, have hype, and are relatively reliable in the market, but this does not mean all projects will rise. We also hope users can understand market fluctuations and cycles. With the intensifying competition in the industry, opportunities for returns of hundreds or thousands of times with high information asymmetry are becoming increasingly rare. The entire industry, whether in the primary or secondary market, is becoming more and more competitive. We hope users can understand that in such an environment, finding projects that can bring long-term high returns is not easy. Ultimately, we need users to understand and accept reality, adjust their expectations, and better profit in this rapidly developing industry.

The second part involves conflicts of interest and regulatory issues. When most of the coins we list are related to Binance's interests, is this true? In fact, Binance has limited holdings in most coins, with some even having only 0.1% ownership. Other trading platforms may be more involved with projects that have conflicts of interest. Therefore, the belief that Binance has conflicts of interest with the listed coins needs to be effectively substantiated.

Everyone hopes that the coins on Binance will rise, but this is unrealistic. No investment market can guarantee only increases without decreases. Binance's fundamental function is to provide popular and highly sought-after projects in the market, but we also hope to filter out those with risks of running away and identify projects 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 are more about investing in more companies, hoping to see more innovations emerge within the industry. For Binance, we are a platform that allows more users to enter this industry. For example, we added new services last year, like the Square. The role of the Square is to allow users who are not very interested in the crypto space to come in and take a look at any time, gradually understanding the crypto space and its investments.

On another front, we have tried stablecoin services, but due to regulatory costs and barriers, we ultimately did not succeed. Additionally, since last year, there has been a lot of focus on Web3 wallets. Competitors have performed well in external storage wallets, but everyone's understanding of Web3 wallets differs. Many peers see it as a backup plan (Plan B) for exchanges, continuing to trade through wallets without KYC and anti-money laundering when exchange businesses are affected by regulations. However, we believe that Web3 wallets as Plan B still cannot avoid regulation. Therefore, we hope to position Web3 wallets as a long-tail business, covering on-chain services that existing exchange users cannot access, such as staking and on-chain trading.

Although we are currently not doing well enough in the Web3 wallet product, we still hope to enhance user experience, especially for Web3 wallets with KYC requirements. The future focus and direction will still be on solving compliance issues globally. As the industry develops, global attention to the crypto industry is increasing, and Binance must take on compliance responsibilities, including communication with regulators in various countries, building trust, and anti-money laundering issues.

I believe that if the industry can establish effective reconciliation channels with the government, it could become part of the internet. But if it stands in opposition to the government, it may turn into the dark web. Therefore, we hope to become an internet industry that serves more people. In the current bull market, there has not been any significant innovation in the true sense. For example, in the last cycle, people discussed how Ethereum was too expensive to support large-scale applications. Now, whether in terms of speed or cost, these are no longer bottlenecks. The real issue is still the lack of effective assets.

What difficulties or dead ends has Binance encountered? How did you overcome them? What crises might arise in the future?

He Yi: Binance does not publicly disclose its market value, which may be confusing, but we do have over 200 million registered users, although the number of active users is not that high. Regarding BNB's market value, I think it is a relative figure. I personally do not pay much attention to market value, mainly because of its cyclical fluctuations. Price increases and decreases happen naturally; as long as we do our job well, the results will naturally be good. I have always believed that as long as we manage the present well every day, we can achieve good results.

From the first day Binance went live, every step has been filled with infinite crises and difficulties. For example, BNB dropped 50% on its first day, which might have been the biggest crisis for CZ. We have also faced situations where Amazon Web Services went down, and our infrastructure and domain names were archived. Therefore, our philosophy is to solve problems as they arise and manage each day well. By sticking to doing the right things, we will naturally receive positive returns.

From a young age, we have a concept called "when poor, focus on self-improvement; when successful, help the world." But I think this logic has a flaw: when is it considered successful? My understanding is that as long as what you are doing is positive for the world, can reduce costs, improve efficiency, and help users have a better experience, you are changing the world. This does not necessarily have to be like Elon Musk launching rockets or Tesla's achievements. But if what you do has a positive impact on the world, the company will naturally grow stronger.

In the process of development, different challenges will naturally arise, such as regulatory pressure or talent development challenges. The company's growth speed is fast, but the talent cultivation system may not be perfect. These are issues that need to be resolved naturally. I always maintain a positive mindset and do not feel like I am at a dead end when facing difficulties. Life is a wilderness; just take each step well.

When I was in school, I used to run middle-distance races like the 1500 meters. Every moment in life is a challenge, but as long as you push yourself a little more, you will find yourself continuously growing.

He Yi: I consider myself a person with a strong sense of crisis. From the perspective of the entire industry, the biggest crisis is certainly regulatory crisis, which is not just for Binance. Although we just passed a hurdle in this regard, regulation remains a significant challenge. The second crisis is the competition and innovation crisis within the industry. At this stage, the competition among exchanges is parallel, and the core skill points of each exchange are not significantly different. We are also continuously learning from others and improving. The greater crisis actually comes from the unknown uncertainties and innovations. Therefore, we encourage continuous attempts at new things from both investment perspectives and internal employees. If colleagues want to pursue innovative businesses or have entrepreneurial ideas, we fully support them.

Essentially, all threats do not purely come from known competitors but from environmental uncertainties and new innovations. If new innovations emerge and you are unaware, that is the biggest crisis. Just like back in the day, mobile giants did not realize what the emergence of smartphone screens meant for them.

The entire industry has developed to a point where it is difficult to exist as a niche startup like in the past. Now, effective communication with regulators and policymakers is needed. Personally, I spend more time focusing on how to transform a startup company supported by the charisma and abilities of its founders into a long-lasting company. This requires an enhancement of organizational capabilities. If the organizational capability is strong enough, it can continuously cultivate good seed players.

How do you view MEME?

He Yi: When half of the top ten coins by trading volume are MEME, what happens if we don't list these coins? Users and trading volume will flow to other platforms. So often, we have no choice. Other trading platforms will also list these coins, and there are even third parties to choose from. This does not mean that the entire industry is working for Binance; rather, we must make a compromise to maximize our value and fundamentals as much as possible.

This phenomenon is not unique in different market cycles. In 2014, everyone thought that apart from Bitcoin, everything else was garbage. In 2017, people also felt that the projects being hyped in the market were all garbage, and there was a strong speculative mentality. This emotional fluctuation appears in every cycle; it’s just that this round of market has expanded significantly, with many new players entering, making emotional expressions more direct and reflected on the internet.

In the past, the industry narrative was dominated by a few experts who had years of technical experience and gained influence in the market, leading everyone to invest following them. If they profited, people would trust their technology even more. In this round, with the emergence of some user-end products, people began to follow a new wave of influential figures to speculate, and market emotions remain very volatile.

Whether in traditional financial markets or the current market, emotions indeed have a significant impact. But this does not negate the importance of seriously developing products and building business models. Every market's craze and emotional fluctuations will impact the mindset of users, investors, and entrepreneurs.

I often emphasize "unity of knowledge and action" to my team members. This is not because my name is He Yi, but because I have a profound understanding of it. Believe in what you believe in and stick to it; only through repeated persistence will the results manifest. Just like we have known since childhood that studying hard will yield good grades, wanting to lose weight and have a good body requires discipline, but it is challenging to do so due to many external temptations.

Starting a business and investing in the market is similar. When you stick to ideals and innovation, others may mock you. But if you look back, when Binance launched BNB in 2017, many people were also laughing at us. At that time, some even said that exchanges should not issue tokens. But the fact proves that persisting in innovation and creating effective products is meaningful. We know that the industry needs product innovation and technological innovation, and products that truly have users and applications. Although this is challenging, it is the direction we should persist in.

Personal future development direction

He Yi: I have never thought about finding something outside the crypto industry that interests me enough to invest in. My personal character traits may stem from my previous educational background and teaching experience; I enjoy helping others succeed. I firmly believe that only by helping more people succeed can I achieve my success. If it weren't for the crypto industry, I find it hard to imagine what else would be worth my time and energy; I might just return to the investment field, providing effective thinking patterns.

Although I do not choose to return to the education sector, this is also a form of passive choice. But this does not mean I can do nothing; I will still look for things that can help the world. I think the choice of Kunbei is understandable. Look at the speed of AI development; it is indeed smarter than humans. Human thinking logic input and output are relatively predictable but can also easily go wrong because the gap between knowledge and action is significant. Throughout human history, it is normal for those who achieve financial freedom to pursue longevity or enjoy a quality of life, but this does not mean that those who leave the industry are untrustworthy, nor does it mean that others do not have opportunities. In fact, some people may create more opportunities for others after leaving.

I have repeatedly emphasized that since 2017, I have not just been starting a business; I have been creating history. From the first day I joined the industry, I firmly believed that blockchain would bring revolutionary changes and infinite possibilities to the world. It is precisely because I believe this that I have devoted myself wholeheartedly to it. This also explains why I chose to leave when my previous company was preparing for an IPO, as I saw the potential era change that blockchain technology could bring. I view this as my mission and am willing to invest in it. I hope to work together with more outstanding entrepreneurs and talents. Because belief is a spark, and only by believing can we see more possibilities. If you do not believe in yourself, you cannot accomplish these things.