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Exchanges in Asia: future outlook from Binance co-founder, Kucoin and Chainup CEOs

We have seen a fair share of 2019 predictions, which we solicited from our community and also shared our own. 

Nevertheless, it’s always interesting to see what some of the folks outside of the community is saying, especially if they are local to Asia. These figures we included here have reasonable influence in the cryptocurrency space, including the co-founder of Binance He Yi, founders of Kucoin and ChainUp. They share some compelling views of what’s going on in Asia and in the Exchange space.

Below is a translated extract of what some of these individuals have said on 36kr.


ChainUp, Zhong Gengfa

ChainUp is a software provider for crypto exchange and wallet software. The team is based in China.

What’s happened in the last year?

The income of the exchange industry has undergone tremendous changes, and the listing fee for projects has shrunk very sharply. The exchange’s income pattern has also changed. It was the first to rely on the listing fee to obtain a large amount of income. Now it’s mainly through transaction fees and some value-added services such as futures leverage. For small and medium-sized exchanges, especially those with no actual user support, it has become relatively difficult to survive in the second half of the year

What do you think is the biggest bottleneck and challenges facing the current exchange?

The bottleneck is that the entire market is going down. There are two biggest challenges for the entire exchange space. Part of it comes from the user side: institutional investors have cash pressure, retail investors or individual investors are not in the mood to trade, and incremental users are afraid to enter. The industry is in a downturn. The other part comes from the project side: there are too few good projects. There must be value behind the project now. Many projects broke down, causing the project parties to dare not go to the market, investors do not dare to buy. This led to no new projects, and the transaction was even more sluggish.

2019 outlook on the exchange space?

I think a big direction is compliance. Many of our partners, getting licensed and becoming compliant has become the first step. The other is verticalization. General-purpose exchanges are too competitive for the latecomers, so they will choose to do vertical trading, such as copyright, games or other industries. The third is a low-cost exchange because we judge that 2019 market may be going sideways.


Binance, co-founder He Yi

What’s happened in the last year?

There are quite a lot of things going on in 2018. The first is the surge in bitcoin prices at the beginning of the year, which has drove everyone’s attention to this industry. Many people were pouring into this industry. The second is the subsequent plunge, which is also a test for the entire market. But for those who really want to build this industry, it is a good thing. In fact, when you look at the history of the Internet, you will find that today’s successful Internet companies were born when the Internet bubble burst. This is a spiral-like rise. For Binance, this year is also an extremely important year. We have gone through the process from a startup to a top company in the industry.

What do you think is the biggest bottleneck and challenge facing the current exchange space?

In 2018, I think one of the most interesting and challenging part was this global competition.

What do you think is the biggest barrier for exchanges at the moment?

First of all, the main challenge for an exchange is its technology and scale. For example, if you open a restaurant, you only need to receive ten guests. This is very easy; but you have to receive 100,000 guests, or 1 million guests. Your pressure is different. Another is international competition; the last is a license.

What changes or trends do you think we’ll see in 2019 in the exchange or blockchain space?

I think that 2019 may be an adjustment year for the industry: one is for uncovering real use cases of these tokens, and the other is management standards. Secondly, I feel that the industry itself has been slowly approaching or merging with the mainstream financial industry. In 2019, I feel that in various countries and regions, there may be a more clear regulatory model for the blockchain industry and Bitcoin.


KuCoin, CEO Michael Gan

What do you think is the biggest bottleneck and challenge facing the current exchange space?

There are two points in the bottleneck. The first point is that the countries and regions in the world have different views on the industry itself, and regulatory policies are not uniform. This leads to the development of the (exchange), especially those that are trying to become global, it’s hard to unify the pace. Secondly, the entire blockchain industry is still in a relatively early stage, and the efforts of our industry participants may need to rely on outsider understanding to exert our strength.

What do you think is the biggest barrier to exchanges at the moment?

From my personal point of view, I think the first is product and reputation. In terms of products, an exchange is doing a product that provides services for others. Therefore, stability, security and applicability are very important. I think that although the product may not be differentiated at a certain stage and new entrants used to be able to capture customers quickly, when the whole industry is more and more mature, more and more participants, professional institutions are involved, then product stability, easy to use API become a very important barrier. On the other hand, on the topic of reputation, this cannot be attained by attracting attention in a short period, but requires long-term service output and overall operational values.

What changes or trends do you think we’ll see in 2019 in the exchange or blockchain space?

It is very difficult to see the rise of new exchanges at present. Exchanges still need users, but in the trend of such a user’s continued decline and market bears, it is difficult for new exchanges to stand out. The probability of a market recovery in 2019 is very small, even if there is a small rebound, and at this time the major exchanges can quickly get started with new operations or models, just like we saw exchange mining (Fcoin) before. After Fcoin’s rise, mainstream large-scale exchanges also launched their own products. If it is just a business model innovation, it is easy to be copied.

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