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Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos may be present.
Rob McNealy – RobMcNealy.com
Hey Rob McNealy here. And today we are talking to Hyder Rafiq, he is the global Chief Marketing Officer of oak a coin, which is an American based cryptocurrency exchange. And you don’t hear a lot about American exchanges too often, because they’re just frankly, aren’t many of them. But I wanted to get his take on the crypto world. And so well, let’s welcome to the show. Hi, there. How are you today?
Haider Rafique – OKCoin
I am. Well, thanks for having me, too.
Rob McNealy – RobMcNealy.com
I appreciate you coming on the show today. I think based on some of our earlier talks, you got a lot of really, really good insights. And I wanted to share some of those their audience. Before we kind of jump into that though, can you give us a little bit about your background? How did you get into the crypto space? And how did you join the ok coin team.
Haider Rafique – OKCoin
My experience with crypto started when I left Microsoft, I believe it was 2014. And I was playing around with an e commerce idea that we had with a two engineers from Microsoft, we ran into a payments problem. Most of our customers were coming from China, South Korea, India and those markets. And by allowing Bitcoin as a form of payment, we were able to increase the amount of orders we were able to fulfill on on our e commerce platform. So that was my first exposure to crypto and Bitcoin. I ended up working for a few years in enterprise enterprise Product Marketing, b2b product marketing for a software company, only to find myself in 2017, like most of us and the sense of urgency that hey, I should actually go work in crypto, it’s more exciting than than what I’m doing. I got fortunate I ended up becoming the first head of growth@blockchain.com spend two years they’re building out their growth function, their their marketing function, and also their monetization while I was there, and I was hooked, I was in the rabbit hole deep. When I decided to leave blockchain I was looking for the next gig I wanted to take on was something ideally at an exchange. And I came across Okay, coin long with a few others and Okay, coin was fairly unique in what they were trying to build. And, and the leadership was was, you know, one that I really resonated with. So that’s, that’s how I ended up at Ok, coin. There’s a lot of exciting stuff going on here.
Rob McNealy – RobMcNealy.com
So what would you say differentiates Okay, coin from some of its other competitors, both globally, and you know, domestically?
Haider Rafique – OKCoin
So we are a Global Exchange? A lot, oftentimes, the question I get is, are you guys the US entity of because you’re now headquartered in the US? Are you a US entity? For Okay, coin? Are you similar to say, for example, by Nance us, and we’re not, we’re actually truly a global exchange. And the difference is, we’re actually headquartered in the US, in San Francisco, the way we differentiate ourselves is ultimately at a very macro level. The reality is Rob, we all have a lot of choices. When you think about buying crypto, whether you buy crypto through a wallet product, or you buy through an exchange, there’s just so many brands out there for anyone to choose from, what we try to do differently is we try and ultimately create an experience that is going to be really meaningful for the customers. We’re on that journey. Are we there hundred percent? Not yet. But we’re working really hard towards essentially differentiating on customer experience. So part of that means we’re not going to maliciously charge customers, fees, high fees you’re seeing that happen in the industry. So our fees are very competitive in the industry. We’re about one of the lowest fees exchanges out there. We’re also Fiat based exchange for for retail investors who don’t know that language, it’s essentially the ability for anyone to link their USD account, most say your chase or your Wells Fargo account very easily with the crypto exchange just like you would with any traditional brokerage firm like TD Ameritrade or fidelity, and being able to make a deposit and use that deposit to buy and sell and trade crypto. So in addition to that, we’re constantly adding new high quality projects and assets on our exchange, we’re giving investors and traders exposure to those to those emerging investment opportunities. Generally, when we step back from all of this, I think the ultimate goal for okay coin is to be the best customer service and customer experience. And like I said, we have a we have a long way to go.
Rob McNealy – RobMcNealy.com
So one of the things that you know, I see is has been a barrier to adoption of cryptocurrency. It has been the difficulty Using crypto the on ramps to user experience user interface, what are some of the things that you’re doing with ok coin that maybe helps that out a little bit and simplifies that for more unsophisticated investors or people that are new to cryptocurrency?
Haider Rafique – OKCoin
Yeah, the relationship I would share with you is when you think back 20 years ago, and there weren’t any digital brokerage products, or if there were very few people used it. Typically an investor with some disposable income and savings, and a portfolio would go through a financial adviser that called him up and say, hey, how should I How should I get exposure to the markets? What should I invest in? You know, that kind of thing. And that financial advisor would tell you how to allocate your you know, how to allocate your your savings, essentially, with digital brokerage firms, that sort of paradigm changed a little bit. People want to believe that they can actually take ownership of their investment decisions. So now you’re seeing this over the last two decades, you’re seeing a wave of retail investors, people with disposable income and savings, signing up for these brokerage platforms, and learning about what are bonds? How do I buy stock really easily? How do I get exposure to x company or that company? How do I read earnings reports, so on and so forth. So the user now the customer now is a lot more savvy than the customers a generation or two ago, they’re more familiar with these financial tools than they were previously. crypto is hard. There are a couple of aspects of crypto that have been really challenging for us onboarding, a big wave of customers with disposable income with an appetite for investment exposure. The reasons are like You teased up. Historically, it’s been really hard because of regulations and compliance and what have you to work with banks that that world has changed a little bit. Now you have products like plaid, you can integrate with and it’s really easy for anyone to use their credit card or their bank account acth rather, to fund their account. This is as simple as, say, downloading the Uber app and linking your your bank account to it. So you can start using that app on a regular basis. So the world looks much easier now than it was say back in 2017, when it was really hard to get get to, you know, purchasing crypto somewhere. And even if you did it, the trust factor wasn’t there. So a lot of people kind of shied away from it. So that has become easier. I think the part that really still needs a lot of work is oftentimes what I see having worked at Now, second, crypto company and advisor view in the middle is we are still using nomenclature and language as if we’re speaking to engineers, as if we’re speaking to people who actually understand crypto already have been in it since since its formation. But what we’re not doing a great job of is rewriting the way we we talk to our customers in a way that they understand. And customer you know their way, okay, coin looks at customers is a couple of different ways. We look at customers as folks who have not had any exposure to crypto, they’ve heard about it at family dinners or to a friend or to their financial advisor. And they’re intrigued. They wanted to sign up for a trusted platform, one that they feel secure, their money’s not just going to evaporate, somebody is going to just you know, get off the radar and their money’s gone. And then there’s another segment of people which, which is, you know, essentially people who’ve actually been trading a little bit here and there. They’re not professional traders, they have a full time job. But they like the aspect of trading. They’re a little more savvy. And even for them. This crypto language that we have, is sort of new and intimidating oftentimes. And then you’ve got the third category, which is like folks that are just day traders. This is what they do and live in breed. And what we’re finding is even those folks, that segment of people who haven’t traded crypto previously come into the crypto ecosystems and they’re kind of lost, they have to spend a lot of time educating themselves on you know, what does defy mean? ledger mean, or what is an explorer, all this kind of stuff. So a lot of the things that we’re trying to do at ok coin are not there yet, is fundamentally create a product create an experience that welcomes everyone. Any investor any trader, not just the crypto traders or investors who’ve been in it, and have high conviction and understand some of these things.
Rob McNealy – RobMcNealy.com
Well, I think one of the things you, I think are kind of alluding to is is the ease of use and that abstraction I agree with you, most of us in the crypto industry, we take for granted that our audience understands, you know, all these weird nuanced things about the technology and the language. But I think if we look at how we can abstract that away, I think that’s important. And I think, you know, crypto projects would be best served if they tried to figure out how not to educate people, I think that’s really difficult, right? To try to educate people on a new technology. People, for instance, don’t know how credit card work, you know, they don’t know all the middlemen, the swift technology and all that kind of stuff. We don’t when people don’t know that, they just know their credit card works. And I think that’s one of the things that I see it been missing from the conversation with dealing with the masses, is, you know, not about how we educate. But I think we need to focus on, you know, how do we abstract all that technical stuff that people really don’t need to know, in order to leverage and use the technology? What do you think?
Haider Rafique – OKCoin
I agree with you, I think a lot of the early projects that start that actually are trying to build or have a great utility or a use case, are often creating the project or the product in a way that captures the network that’s really fully sold in and knee deep in this stuff, because it’s easier for them, to onboard into a product, give them feedback, so on and so forth. So you have these like pockets of networks, and and communities that are being built around each of these protocols or assets or projects. And those folks are not your retail investor. So you keep seeing a shift of like these 3040 50 million, you know, crypto users around the world who go from project to project, what I’m not seeing is this like high velocity of increase in adoption. We have a lot of people in the world, not just 3040 50 million people. And I think that that onboarding new customers and new retail is not happening. My fear, oftentimes, maybe fear is not the right word is competitively speaking, we don’t necessarily focus on competition, we focus on customer experience. But as a marketer, I don’t worry about you know, other exchanges or other wallets and what they’re going to do or what have, you might sometimes oftentimes, my worry is that we’re in crypto, we’re doing all the hard work from an engineering standpoint and technology standpoint. And here comes traditional brokerage firms or consumer apps that have the trust of consumers. And they’re going to come in and turn on the knobs and now offer really easy exposure into crypto. And when majority of the market share that’s there to be had for us in crypto. I think that’s I think that’s the biggest risk to crypto industry is traditional finance and FinTech coming in and reaping the benefits of what crypto engineers have been building over the last 10 years or so.
Rob McNealy – RobMcNealy.com
Well, you know, I think crypto is doing it to itself, though, to be honest. And I’ve been in this space for more than three years now, which is in dog years is a long time. Right? And, but as a project, you know, I I’m always looking at what other projects are doing or not doing, as far as you know, doing outreach to other communities outside of the existing crypto community. And at least with us, we’ve tried to focus on with TUSC to not cannibalize. I’m not trying to steal people’s I’m not trying to steal people from Bitcoin, right? I’m not trying to steal a theory of people into our and bring them in our community. That’s not our focus, our focus is bringing in people that aren’t already not in crypto, and and I think one of the reasons people aren’t doing it is hard. Okay, it’s hard to go and do that marketing. It’s hard to go knock on doors and do traditional sales. And I think I think there’s a couple of reasons for that. I think one of the reasons is developers and engineers hate those activities. They don’t typically like to do business development and sales and marketing. And so they don’t, but I think the other thing is that going out and going out and knocking on doors, kind of goes against the ethos of decentralization, because now you have a centralized sales and marketing function. And a lot of people don’t like doing it. It’s hard. And I think, and I do believe long term, the projects that exist now that start focusing on those activities are going to be the long term winners. And I agree with you, I think is is it’s inevitable that traditional finances coming into the space, the question is, who’s going to be left standing after they do? And I think that those are things that people in the crypto world probably really need to think about.
Haider Rafique – OKCoin
Agree, I absolutely agree with you. I think it’s gonna be an interesting next few years. There’s so much opportunity for all of us, I think, to to get out of our comfort zone and, and, you know, see what we’ve not typically been comfortable with doing. I think there’s this sentiment in Silicon Valley or in tech or even in crypto. If you build they will come. Well, the reality with that that notion is, if you build and they will come takes you to a certain point in your product, then you hit a saturation point, take a look at Uber, they were running marketing campaigns, meaning they were creating flyers and shipping them to people at their homes at a certain period of time. And eventually, Uber was doing out of home billboard ads, they did all kinds of marketing to get to becoming a household brand name. All products do. eBay did it. PayPal has done it. I think I think my hope is that crypto is, you know, not just that, okay, coin, but the entire industry gets out of that comfort zone and realizes that if any of us want to become a household brand name, we’re gonna have to look at the playbooks of previous consumer brands who’ve done it really successfully. And what have they done that were reluctant to do? And, you know, how can we learn from them?
Rob McNealy – RobMcNealy.com
Well, it’s interesting, I read an article not too long ago, about that exact thing, like what are the top crypto or sorry, what are the top tech companies do to get their first you know, 10,000 users. And it’s pretty interesting to see all the all the little legwork that those guys had to do. And and you wouldn’t even think that those guys were hustling. But every one of those guys hustle, they’d been even watching what Etsy did and Uber and Airbnb and some of these projects, it’s a really good good little historical research project, if you or anybody in the audience has time to look at it. And we have, because we believe that is going to be important. And you have to have a plan to do that. Because I you know, I am like, I’m not a developer. So I think of things a little differently. I’m more of a marketer, like you. And when you go and look at, you know, I view crypto, even a decentralized crypto projects, they’re still a product, right? They’re still a service and used and they’re not somehow above the laws of marketing or supply and demand. And this is where that like, it’s, it’s interesting, because there’s a lot of engineers in Silicon Valley, they get this right, these tech engineers and these tech companies get that. And it seems like there’s it just hasn’t really translated yet to the crypto projects. And I really don’t know why that is yet. But I still think that there’s a lot of opportunity there for the the crypto products that do do that. And I think in the next probably five years or so, I think the projects that do focus on those things are going to be coming out in front after the hype and, and what I was saying earlier is about crypto is doing it to itself is that we’re getting all excited about you know, I would argue a lot of these defy projects and Ico kind of projects, they take away from the attention from the you know, the more legitimate, you know, projects that are doing the dirty work and focusing on just, you know, wheels down kind of stuff, but and I think we we’re cutting our own legs off, so to speak, because we’re focusing on just getting rich quick in these really obnoxious, you know, ROI of yield farming and things like that. And that takes all the excitement away from like, Oh, you guys are actually building something long term. And I don’t know what to do about that. Like, I can’t control that, of course. But I mean, what do you think? I mean, you’re an exchange, I know, you guys have been listing a lot of defy projects lately as well. And is this something that’s gonna be a permanent thing? Or is this just you know, the fact is, you know, we’re writing other hype cycle.
Haider Rafique – OKCoin
It’s a bit of both, I think, but don’t quote me on this, because I’m not an economist. I think the way I look at it is the other day, I got an ad in, in Gmail, my gmail account, which was from Marcus by Goldman Sachs, and it had this interesting message, which was, you know, get the highest yield on your savings, if you deposit to Marcus. And we we offer a yield higher than national average. So I went on their website, and the yield that they were offering on deposits was point 6%, I believe. And, you know, it occurred to me having been deepened, defied now, especially the last like month or so, going through our listing process. We have crazy numbers and defy reality is again, what does defy even mean to a regular person? Do we even need to say that it’s a defy product when we market this stuff? Or do we actually focus on the utility we focus on, hey, if you put x money in, here’s the API you can earn. And here’s why it’s important. You know, we’re in an economic downturn, there’s that really high unemployment rate, people are depleting their savings. You know, the markets sort of really volatile. So people are looking at other instruments in which they can protect their investment and their savings and in dire times, Have an outlet where they’re able to creatively earn, earn money for the lack of better term. We offer and defy their protocols offering 60% APR even more than that, right? And sure, there’s a volatility in that number. But the reality is a way I think about it as a marketer is, this is not about defy, if we go out there, if and when we launch our own earn product. And we go out there and we position our earn products, as Hey, you know, participated in our defi ecosystem or what have you, we’ve failed because again, we’re going after capturing that, that crypto user, not the folks that actually really, really need this stuff that have taken a hit because of COVID, the last six months or so. So if this is true, and how do we position this stuff? Ultimately, the utility is you have exposure to higher API, a ridiculously higher API than what you would find through traditional banks. Mark is being an example. So why don’t we go out there and not include any defy language and just say, subscribe to this or opt into this or put your deposit into this into this product? And you get between this and this percentage API, which is much higher than what you would find in traditional markets? Now, the obvious question, anybody who’s not in crypto among my network asks is, well, what’s the risk? Because crypto has this, you know, the optics and perception that it’s, it’s a, it’s a tulipmania? You know, it’s the Wild West? You know, there’s no regulation, your money can just completely evaporate. I think that world has changed. I think it is a lot more trusted now. For example, okay, coin, all your USD deposits are FDIC insured. So things are things are happening in terms of winning trust from customers, but ultimately, any yield product, high yield product, even if you look at markets, they have this like long, ugly legal disclaimer at the bottom of their landing page of their website, which says something along the lines of this is a really high risk instrument. Be aware. And that’s how we should educate people, retail investors and crypto users about these crypto instruments. Every every crypto asset has its own risk level, I think the best part we can do is a humanize the language focus on our utility, because people largely speaking outside crypto really don’t care about 99.9% of the stuff we talked about. So if I go and tell my mother and father or my uncle or somebody in my family, hey, if you put $10,000 in this instrument, you will you will have the potential to get exposed to 50% plus KPI. Suddenly I have their attention. Okay, great. Now I’ve done the first part. The second part is I need to warn them hey, by the way, this is a high risk instrument, don’t put all your savings in it be responsible, get the right level of exposure, I never go tell my friends, hey, buy bitcoin and just spend everything you have and just buy bitcoin and just keep buying Bitcoin. I don’t say that I what I tell people in my network is if you have a portfolio and you’re building a portfolio, make sure you have exposure to crypto, and I tell them about the high value assets and the thesis behind them. And then it’s up to you and your risk appetite, how much exposure you want. Is it 5%? Is it 10% maybe you have higher conviction, you want to go a little higher, but I think that’s generally how we should all explain this stuff if we really want to attract the broader market.
Rob McNealy – RobMcNealy.com
I agree and so I you know, personal financial literacy is kind of one of my little you know, pet peeves in the United States and, and when I see people saying I’m all in on crypto that scares me To be honest, because I think that’s how people get really, really wrecked. And, and and definitely I’m very pro crypto. But I also am very pro This is super high risk in a lot of these projects. And and I don’t think a lot of people are good at assessing risk. And I don’t think a lot of projects, kind of point that out. But I think that’s one of the things that I see as a kind of a thread that weaves through the crypto world is that you get a lot of people that are not financially literate, that are investing or mal investing or investing too much in things. And and ultimately, I don’t like seeing people get hurt because of that. And I wish more crypto projects would say what you’re saying is figure out a port, you know, you should have savings outside of crypto In other words, and you should have investments outside of crypto, it’s prudent to do that. And I’m glad to hear that you at least philosophically also agree with that. And I think I think it’s important and I think you’re right. I think we need humanize that language. Um, I know we’re getting close on time but….
Haider Rafique – OKCoin
Banks By the way, are not not doing it any or traditional brokerage firms are also not like the you know, the North Star you want to look at, for example, if you sign up for TD Ameritrade or any of the brokerage firms out there, and you have to see $100,000 deposit in your account and you’re day trading, you’re going in and out of positions. Eventually, very quickly, TD Ameritrade will say, hey, by the way, Rob, you know, we see you have 100,000, how about we give you margin, how about your five for margin, so you can trade more. And I think like, getting it back quickly, and I speak, I say this from experience, there was a time that I had some disposable income. And I started day trading. And it was scary how quickly I started to get that five x 10 x leverage from from one of the brokerage firms that I was trading on. So my point is here, it’s not that crypto needs to take that responsibility. These tools have now become consumerized, you now don’t have the financial advisor or the middleman warning you. Hey, Rob, be careful what you’re doing here. So now you have access to these really complex instruments that typically were, you know, designed for professional traders or investors. Now people like you and I can sign up for it. And within a couple of minutes, we’re off to a start. So I think the responsibilities across the board and finance we all need to do a better job of driving responsible investing behavior.
Rob McNealy – RobMcNealy.com
You know, I couldn’t agree with you more on that either. I really, I’m really glad to hear you say that. So Hyder, where can people find out more about you? And okay, coin?
Haider Rafique – OKCoin
So, my Twitter is HaiderSF, it’s pretty easy to find me. But I think more importantly, for your audience, I would I would want them to come on. OKCoin and give us a try. We do have the lowest fees. Unlike the challenges that other exchanges are facing in crypto, we have really low downtime, most of our downtime is related to announced maintenances. So what will not happen is the market is hot and you’re trying to place a trade. And suddenly you can claim as I say that worlds are locked and your deposits are locked or you know, the fees are like just ridiculous. We’re we’re trying to build a trusted platform we have a lot of work to do. We have a lot of high quality assets to add. We have a lot to improved in terms of our user experience. But I can assure everyone that we pay attention to every customer. We’re looking at everyone’s experience and we’re trying to make it better. So if you’re ultimately looking for an experience that’s trusted, and you’re gonna you’re going to be heard. I think I would give Okay, quite a trial,
Rob McNealy – RobMcNealy.com
either. Thank you so much for coming on the show today. I know you’re busy and I do appreciate your time.
Haider Rafique – OKCoin
Thank you. Thanks for having me. Talk to you soon.
Rob McNealy – RobMcNealy.com
And folks, I’ll have all those links up at Rob McNealy calm and make sure you hit that subscribe button. We got a lot of other great shows coming up and you’re gonna want to stick around and thank you so much and you have a great day.
Haider Rafique, the Chief Marketing Officer of the OKCoin crypto exchange, talks with Rob McNealy about defi & adoption in this transcript.
Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos may be present.
Rob McNealy – RobMcNealy.com
Hey folks Rob McNealy here. And today, I’m pretty excited. We are talking to Lennox law. He’s Director of Financial markets of the oke x exchange. And they’re one of the biggest exchanges in the world. And I’m really excited to see what they’re up to. So Lennox, how are you today?
Lennix Lai – OKEx.com
Hi, Rob. Yeah, sure. I’m really appreciated as we on the call. We were happy to see you folks here.
Rob McNealy – RobMcNealy.com
Well, so, um, let’s just jump right in here. And, you know, tell me a little bit about Okay, x hat, and how did you get involved with the crypto exchange world?
Lennix Lai – OKEx.com
Yeah, my other background, the traditional finance background. So basically, I was a quon trader in Hong Kong for around 10 years. So I’m, I’m also kind of like compliance and regulatory guys in Hong Kong. So, like three and a half years ago, that’s where we’d like to join. Okay, yes. Because Because the okay group back in the time, would like to expand the exchange business internationally. back in time we are, we’re actually very big in China already. We overing Bitcoin Exchange servers for local currency, that becoming one of the best one of the biggest crypto exchange in China already, and we would like to expand to the international market. So that’s the reason I joined and starting to build and branded as the name of Okay, yes, the Okay, x name, actually very benchmarking Hong Kong exchange is also called H key x. So we will lie to branding, our exchanging expertise, and also the traditional financial knowledge, so to brand in the world to bring crypto to traditional finance. So that’s how it gets done for Okay, it’s like three and a half years ago.
Rob McNealy – RobMcNealy.com
So what would you say some of the biggest challenges are of running an international exchange right now.
Lennix Lai – OKEx.com
So we are actually one of the earliest player in the field. So back its time we gather a lot of good player like pinole nacer, but Phoenix, Khan base already in place cracking, that’s all the big we’re, we’re accurate, very, very small compared for we’re the biggest player back in the field. So good. So we think we we are facing several challenges. First, we are primarily and very, very Chinese based exchange. So everything in terms of the team in terms of the product, in terms of the gods are all very, very Chinese. So we have to change the entire organization style, the language or the culture within the organization. So if you think about it, every every, every anyone will ever run come in your thing that would actually agree that changing the culture changing how an organization work, can put upside down use agile for football. So bringing the international value and international culture back to your very China exchange is the most complex and complicated task that we ever engage. And also, we we do have a lot of problem on our product. So so we have to SM be a team with the financial known edge cells to completely redesign for every single aspect of all okay, yes, from all across all our products, spot derivative, so everything else from the gods. So I think that might be yourself a big challenge we we come across, but at the same time, we are facing regulatory challenge all around the world. So that we have the assembly of really big compliance teams to tackle regulation everywhere, and apply proper licensing and getting the proper sandbox in crypto. So while we’re talking to regulators, we have splaying of this as well to convince that we are trying to be a good guy. So we have to, I think, in general, we, we are actually building a rocket, but at the same time we are driving a Ferrari. That’s, that’s the whole that’s the summary.
Rob McNealy – RobMcNealy.com
Well, you know, I like Ferrari, so that’s good. But so what would you say the, the biggest challenges from a regulatory standpoint, at least geographically, which countries are the hardest ones to work in?
Lennix Lai – OKEx.com
Yeah, I think back in time, like 2017 2018 our, I think all the Gulf Money can’t like being skeptic or some, some of them are actually quite hostile to, to crypto or to virtual currency. They have no knowledge at all to what’s going on in Bitcoin area. They are actually interest but they think that virtual currency or crypto actually engage a lot in unless it activities, anti money laundering. There’s some of the areas that regulators are mostly very concerned. And at the same time they’re trying to fit in, they’re trying to bring crypto try to explain crypto in a way that the current regulation that they’re already implementing, they’re trying to fit and crypto onto their current regulation, which is very difficult. So. So back in 2017 2018, most of our job is to explain to our regulators, to all those regulated, hey, this is crypto, this is just some kind of digital xx. And this is some kind of a digital asset that we would only allow KYC people to buy or sell, and exactly like a meeting your financial standard that your AML standards, so to explain all those stuff to all kind of regulators. So we starting to see some progress. So we see the US come over digital as a framework. We see some of the government like multiskilled, Malta government to have a virtual currency framework. We see Korea and Japanese government, they do endorse and have some kind of regulation related to cryptocurrency after after the industrial of commitment for around two years or more.
Rob McNealy – RobMcNealy.com
So would you say is there a particular jurisdiction that’s been harder to work with?
Lennix Lai – OKEx.com
I think there’s no jurisdiction that is hard to work with as long as they they are open to talk about are they’re not being hostile companies shut the door. Most of the jurisdiction I would say they would eager, eager to learn were, were very eager to learn from the biggest player in the field. They will like to understand they of course, they will raise a lot of question. But each of us have the jurisdiction of particular friendly, like a Singaporean governments and the Korean government. And even the Maltese government actually quite proactive to want to draft local regulation or specific regulation just for crypto. The other jurisdiction, I think they are very interest, they would like to bring in the crypto, the crypto xx into debt, the security law, or the derivative law, they are interest, but at the same time, they were actually very difficult for them to to actually blend in the current regulations.
Rob McNealy – RobMcNealy.com
How do you see things like the travel rule affecting your operations?
Lennix Lai – OKEx.com
I think the travel rule did actually spend spent a lot of effort for us to completely redesigned out how the how the AML KYC would be implemented into into the current operation. So before that is accurate, we don’t need to, we only need to worry about the global standards update our KYC AML AML. But travel rules actually means that we have to specifically design our checking procedures for all the European biggest customers across the field. I don’t think that is a trouble a big problem to our operation. But it’s just caught one of the costs of the business if you want to play the field with the big boy, we want to be a global platform. That’s just part of the cost of operation. We’re happy to pay for that.
Rob McNealy – RobMcNealy.com
So do you have much of a footprint you would say in the United States at this point?
Lennix Lai – OKEx.com
We don’t have we don’t allow us customers at the moment that is fun. It’s fun time.
Rob McNealy – RobMcNealy.com
Is that something you’re going to do in the future? You think you don’t have to look if it’s proprietary you don’t have to answer but I was just curious is that on your roadmap?
Lennix Lai – OKEx.com
Actually we do have a partner exchange as you belong to a similar group is called okay con. So a ready get up basically orderlies in in us say over the open to the US customers. So it’s really completely different platform is that is basically a partner with Okay, yes. But only that the product that available on Okay, Khan platform is very very different than OKEx, but the technology and the and and the matching engine is using similar technology OKEx.
Rob McNealy – RobMcNealy.com
Actually got the one of their marketing guys is coming on my show on Wednesday. This week.
Lennix Lai – OKEx.com
That’s awesome.
Rob McNealy – RobMcNealy.com
Sure. So yeah, it’s gonna be fun. And so I think, you know, that’s always fascinating to me is, you know, how, you know, the regulatory piece of this looks from the inside. Like I always say, when I’m when you know, I’m kind of mixed, are kind of in a weird position, because I also have a project, but I’m also you know, and you doing a podcast and things. So it’s like, when I see crypto from a very different angle on because on the project side, you see, you see the world very differently in crypto when you’re working inside of it. And, you know, you see all the warts, and, you know, the good and the bad all the way around. But I always like to hear, you know, what does it look like on the exchange side, because, you know, there’s a lot of there’s a lot of, you know, unscrupulous exchanges out there. And I can tell you, having dealt with several of them in the past myself, and so that’s why I’m always interested in you know, the more legitimate exchanges like okay, x in what they’re doing and how they’re handling it. So let’s shift gears a little bit. You know, there’s, there’s a lot of exchanges out there. That seemed to be dodging regulation as part of their business model. I’m not gonna name names. Mm hmm. But there’s some exchanges that you don’t even know where they’re where they’re domiciled.
Lennix Lai – OKEx.com
Mm hmm.
Rob McNealy – RobMcNealy.com
In the row, and so since you don’t know where they’re domiciled, and it’s even interesting, even with smaller exchanges, you know, you go look up try to look up information on the exchange. And on coin market cap, it says they’re based here, and then you go to their website, and it says, their base there and you never know where they’re really located. And, and so that’s always kind of a red flag for me, is, especially at the centralized exchange, because they’re not you don’t know where they are. So there’s supposed to be a centralized routing, that correct, there’s no central location to go. And I’m not saying you should go after people, but, you know, you don’t know who these people are, in some cases or where they are right. And it seems like some of these exchanges are doing it deliberately to avoid complying with you know, international regulations. Again, not going to name names but how do you guys compete with that?
Lennix Lai – OKEx.com
We don’t need to compete wave the wave this some the exchange was smaller Sykes Chang that’s trying to doubt regulations, okay. He exists 1000 people group already so we cannot doubt any regulation, we actually equally comply to the jurisdiction that we allow to surface that we offer our service, we cannot we have to we have 1000 people to be responsible. But for all the other smaller sigh exchange, they have the reason maybe they have the reason to, to try and get up regulation as much as they can, because some of the really small sites chain is kind of like us using hidden ranch approach. They just want to open a small exchange trying to grab the users based on can’t if there’s some trouble there’s as close down and reopen Yeah, in another one using similar technologies. And so, so, so, of course, I would like to invite other users to be aware of the of the of the of the really, really small size exchange, and they you and you basically apparently you cannot find where they are they do they do not have a register overs, or they do not have a property you may you don’t need to know where they base, they don’t show up on time. So, and some exchanges do not have a long history with short history you you have to be be aware of that because talking about central exchange, meaning that all the crypto acts act as an custody with the with the hand of the founding team or the wallet team. So so so actually, you carry a lot a lot of counterparty risk, if you will lie to trade with them. So girl someday, some of this most exchange also do not have a high priority or high high scrutiny of the project that allowed it to list on the exchange. Most of the exchange mode most of the project is required to pay a huge sums of listing fee in order to get listed two bonds of small exchange that grabs exposure users, traders as they can and try to win the way in in a relatively short period of time. The the opening exchange in terms of module cars is relatively easy. But running an exchange operation with proper cyber security Republic compliance team, the proper operation team is take the years of years of efforts. So I would also always to emphasize the SSA only focus on the major exchange in the world because they already there they have the history and and and protecting your crypto execs from millions of millions hacker in the world is not an easy task. It’s a date and day by day commitment. So we we care a lot about our reputation, we care a lot about regulation, we have to comply everywhere in terms of regulation. So it’s I don’t think it’s the as a direct competition with us, compared with the other smaller exchanges.
Rob McNealy – RobMcNealy.com
So right now the the best I can see there’s at least probably, I don’t know, 500 exchanges out there right now floating around. And there seems to be more popping up, you know, every single day. And there also seems to be a lot more decks is kind of in various, you know, stages of development. Oh, how do you see the market for exchanges in the future? Do you think centralized exchanges are going to be you know, the most popular? Do you think dex is going to become more popular? Do you think there’ll be more exchanges out there fewer exchanges, what do you think your? What do you think the future is gonna hold that way?
Lennix Lai – OKEx.com
Yeah, I think I think that the potential with DAX is actually for interesting. So that’s can be the only problem for DAX maybe before or, or for this few years, as people have been talking about. It’s mostly related to the capacity, the technological capacity of whatever chain, whatever blockchain that you’re implementing. So but we see silver these years that we see a lot of breakthrough in the under underlying technologies that have a huge promise on on the TPS, that transactional per seconds, right now, per blots. So those look like that DAGs, if they can manage to handle a search even a certain portion of the trading volume, that’s currently our central exchange is currently trading per day, I think that would give us an interesting use case potential to crypto so that everyone will would able to trade universally. And also everyone collects their own token universally, and that technologic technology is free. It’s open source. So everyone would have the capability to operate to open it DAGs and, and and eventually, everyone can compete with each other with a unique event age or unique appetite to different tokens. So tasks can be can be very interesting. Can I think if somehow, if the technic tech, technical side, transform your technical side becoming really promising, like the TPS reaches certain thresholds, and it’s safe enough to be trustable to two to four traders, and the UI and UX the user experience side of using das has been substantially improved it the tags in terms of trading volume and the size can could be grows exponentially. But while the central exchange, I think that’s still play a very important a crucial role. In in crypto in crypto x RP uses carry a lot of expect in in, in, in in define. So for example, like center central exchanges do are happening to having a lot of products very complex product that’s basically right now cannot cannot able to cannot able to undertake by the tax for now, for example, like derivatives of perpetual swap, we’re talking about millions of millions of borders or of thousand thousand trade per days, but it cannot be executed with our proper high frequency matching engine at this point moment.
Rob McNealy – RobMcNealy.com
So essentially, as the technology improves, and maybe you start getting these non custodial cross, you know, chain indexes, those are probably increase over time, but it’s just not quite there yet, I guess.
Lennix Lai – OKEx.com
Yeah, I think I think it’s getting a lot faster right now, but per lepromatous standing, we’re talking about some of the Kings don’t care about thousand TPS compared to 20 or 30, TPS in one or two years ago. So if it is go around two or three times more, I think we can handle probably on spot exchange ready. And some of the really, and, and I’m talking about some of the DAX, that’s able to manage derivatives, if they are able to manage the liquidation engine of the derivatives under this certain time of DAX under that under, under, there’s a dow around 1000. TPS, that will be so interesting because because read when you’re talking about highly leveraged Chang, when the market is move, you have to execute and use, you have to send your orders in the blink of a second otherwise, otherwise, you’re you’re you you would trigger Casa de liquidation or you create, you create problem of trouble in onto your problem, I’ll do a platform. So that I will be very, very interesting to see that how does handle highly leveraged instruments?
Rob McNealy – RobMcNealy.com
It’ll be interesting. What’s your take on the latest sushi sandwiches and hamburger de fi products that are out there?
Lennix Lai – OKEx.com
Yep. I think that everything is everything is looking to be right now is having having an insanely high yield for some of the token, I think, in general, I think is an other way for distributing token or distributing newly the newly minted token to user this looks exactly like the another way of the Ico or default token in 2017. Or, or or or the ieo. That that changed initial offering is a new or or B. I think it does vary because airdrops so whoever carrier one token you got, you got a candy. We’re called airdrop tokens free token from the token. So similar mechanism. The ultimate purpose is is also a sales of my own newly minted token. But what defy or sushi or hamburger was over sashimi is actually having a mechanism in place, meaning that you have to stick one token first, for for an for an odd token in order from any other token. So that would that actually the sticking components normally is over collateralized, meaning that you have to deposit more token first, in order to in order means or farm, relatively smaller size of token. So the risk compared to other risk compare if the other the other? The other mechanism dies? The other distribution mechanism? I think that would be a lot a bit a bit more healthier to token holder. And I think that define innovation would last for really a long time. I think. I think I agree. The the either inflation rate or youth right now is insane is not sustainable. But the way that how we understand defy the way that people are interesting participant divide a project that allowed it or that we would be perfectly to participant divide would be becoming a really, really hot trend for for upcoming years.
Rob McNealy – RobMcNealy.com
I think the future is going to be very interesting in this space. I you know, I’ve haven’t been shy. I’ve been saying that this, in many respects is Ico 2.0. And, and I just hope that the fallout that comes out of this is good innovation. But it’s gonna crash back down. Right? I think you said it too. It’s not sustainable. What we’re seeing out there, but what I’m hoping is that there’s new innovation in the technology is and I’m hoping that’s what comes out of this. But I’m afraid we’re probably gonna get a lot more regulatory scrutiny from this, as well. So it’ll be interesting to see how it plays out.
Lennix Lai – OKEx.com
Yeah, you’re you were there. You cannot deny that every new maybe new technology or new money or new new way of thinking has to be crazy from chaos. So So these kind of define chaos, this might not be sustainable. The river market corruption. Now were they there Painful correction to their way might be a rousing, regulatories good knee, as you mentioned, but eventually these kind of token distribution method would be an interesting insight for the upcoming define development. So people will actually think about, hey, that’s going to work. But if we want to do it sustainably, I think we have to change it to certain matter. And that will become a healthy growth order for the industry.
Rob McNealy – RobMcNealy.com
Totally agree with that? Um, so where do you see crypto changing in the next couple of years? What What do you think will be the next big innovations coming out and say the next three to five years?
Lennix Lai – OKEx.com
Wow, that’s Sir, I would. I would, personally Personally, I would the very exciting dad’s similar model as in Filecoin, that people can actually share data on chain and tray, that data on chain with the development of fire codes so far gone, it just might be a spark of the entire fire. So, so similar project lifelike on even what your tablet data privacy, your personal data that can be exchangeable, or, or your physical might be stuck with storage, you can just tray, or buy, or sell your own personal storage within every kind of computer that can be traded or transact, via on trading. But these economic and trading mechanism would be an interesting insight or interesting. Hence, for the other data driven industry. So people can sell everything if they carry a data. So fire icon might be the success of the fire gone, hopefully, would become a very interesting development for crypto for the next three and a half, three and five years because right now, if I can sell my idle storage, either virtual drive online, like like a cloud based server, but but so that I can basically sell everything I can using the exact similar mechanism, or similar blockchain or similar token omics to say everything that have data currently available. That’s might be the beauty the very first through adoption for blockchain technologies.
Rob McNealy – RobMcNealy.com
I think that’s very interesting. And, and I think there’s gonna be a lot of interesting use cases. For instance, I really have a library, you know, library credits, I like bat is doing the brave browser, where you actually are developing ecosystems that are using the crypto. And I think that’s important. And even with our TUSC project, that’s what our focus was, is is, you know, getting people to use the coin, not just speculative hype. And and I think that will be the future. And I think the big or most, I think some of the the products that are most likely to be mass adopted in the future are going to be ones that you don’t even think about right now. They’re they’re going to be ones that just slowly start building up an ecosystem where people are using their coin for a practical purpose. And to me, I think that’s really important. So I guess that one last question for you kind of wind down? Do you think there’s too many assets? Do you think that there’ll be more assets in the future, like more blockchains more coins? More tokens? Or do you see that that over time, that’s going to consolidate down?
Lennix Lai – OKEx.com
Um, I would say, bro, for To be frank. So I think the the barrier of cause of issuing or maintaining or creating tokens for hype or speculations, whoo, still be there is this part of the crypto ecosystem, but but when you when you get speculate more people will lose money. And people getting smarter and smarter, when it gets smarter. And when they get the a lot, a bit more cons cautious, a lot a bit more conservative, they were looking to they would be tend to be looking for the true nature, the true adoption of certain tokens. So that money will be will be really concentrating back into 1% of top 1% of the token to actually bring the value of the world that we’re starting to look at fundamental. So I think I would say New token was still there. There were a lot more, getting a lot more sizes. But but growing, so going from yours, right took about one two years or more. I think the capital, or the capital that all catered to crypto access will be mostly or heavily concentrated to a real project eventually.
Rob McNealy – RobMcNealy.com
Yeah, I think so as well. I think what I’ve said I’ve said this in my circle of friends is that the first kryptos does start getting a real adoption even, you know, Nish adoption, not even mass adoption, but just niche adoption are gonna eventually change the way the speculative part of the market values those projects
Lennix Lai – OKEx.com
Right , correct.
Rob McNealy – RobMcNealy.com
How I see it is you have billion dollar market cap projects that don’t have any customers.
Lennix Lai – OKEx.com
Correct. You’re right. You’re actually you absolutely right. I think people right now is like looking for answer right. If you can save a spark to fire and you provide true answer. You got all the you got everything. You get all everything that’s pay people for speculate money. We’re just crunching and advice to your own projects.
Rob McNealy – RobMcNealy.com
Exactly. Linux Ly, where can people get ahold of you? Sorry, how can people find out how can people reach you?
Lennix Lai – OKEx.com
So I think you can basically reach out now traitors and my email is Linux at okay yes.com You can find my traitors that us as well. So you can reach out anytime. I’m happy to answer all the questions.
Rob McNealy – RobMcNealy.com
Thanks. Thank you so much for coming on the show today. I really appreciate your time and I’ve learned a lot.
Lennix Lai – OKEx.com
Thank you, Rob appreciate, talk to you again. Thank you. Thanks so much,
Rob McNealy – RobMcNealy.com
You have a great day.
Lennix Lai, Director of Financial Markets for the OKEx Exchange, talks with Rob McNealy about the global crypto trading and exchange industry.
Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos may be present.
Rob McNealy – RobMcNealy.com
Hey folks Rob McNealy here. And today I am super excited. I am talking to Joe Rhodes he is one of the founders of Dragon and coin. They are project been around for some time and i think it’s it’s gonna be a really fun show. So make sure you listen to the whole show because I know you guys out there. He listened for five minutes and then you shut it off. You got to stop doing that stuff, because I can tell that you’re doing that stuff. All right, I really can’t. I’m just guessing. But anyways, Joe, welcome to the show. How are you today, sir?
Joe Roets – Dragonchain.com
Thank you. Thank you very much. I’m great.
Rob McNealy – RobMcNealy.com
So, let’s let’s just jump in here, man. You know, typical questions for a podcast like who is Joe rotes? Tell me about yourself.
Joe Roets – Dragonchain.com
Okay, um, I’m..I’m I grew up in the Midwest. I’m a 25 plus year, software architect. I’m all about software all about open source all about scaling software. And I’ve worked for Lockheed. I’ve worked for Disney. I’ve worked for a lot of interests. firms that that had interesting projects that attracted me. And I came across Bitcoin, one of my guys brought it into the team in 2010. And we looked at it started playing with it, experimenting with it, doing a lot of different interesting things, some stupid, some fun, you know, we’re really early stuff. And this is the only time of namecoin and and you know, way before aetherium and way before much else was out there and ended up jumping around between a few different startups, you know, because I was very interested in the tech and and specifically in its philosophical value, you know, where, why, where it came from, why it was even there. And then ended up at Disney to build what became dragon chain and the Disney released from you know, from in its its own in in enterprise to the world and You know, after that we commercialized.
Rob McNealy – RobMcNealy.com
So tell me about that. So it was initially a Disney projects that got spun out. So did they just open source it? Or was it you know, something that was always kind of that open source community kind of thing? What’s the relationship there now?
Joe Roets – Dragonchain.com
We originally built it, it was very much an experiment is very, you know, very much a bunch of us that were interested in the tech and how we could use it inside of Disney. Um, but I, I knew because we were in, we were working inside a W three, see their blockchain group two, you know, basically explore enterprise applications, and you know, what can be standardized and everything else and we, we ended up realizing that, you know, all these other entities, you know, IBM, Microsoft, a lot of the other groups, some of the banks that were in there, were interested in how we were doing it because what we were describing was stuff that they hadn’t been able to do Because we started from scratch, we didn’t work, Ethereum we did aetherium didn’t exist when we started. We didn’t work Bitcoin or Litecoin, or anything else, we literally started from the beginning. And we had you know, I’m, that’s the reason I even say that I’m primarily a software architect, I’m a software guy. And these things that are patterns in all systems, that’s that’s what I focus on. So I find the, the abstractions inside of a software system that can either make it more flexible, make it more scalable, make it more secure. And I applied that across the board to know basically blockchain and crypto that’s what dragon chain is. And when they realized that we were using devs, that that weren’t blockchain devs they were the devs we already had and that they were able to come in and just build stuff. When we were able to show them that we could actually scale in a radically different way than what they had seen. If I was able to then take some of their questions that we couldn’t answer, because it was all in the inside back to Disney and say, Hey, can we, you know, go through a process and you know, try to source this and you know, they had they already had a process in place. And so it just, it made sense. It made sense for Disney, it made sense for the project, and it made sense for, you know, our working with these other groups. So, that’s how it kind of ended up and yeah, they basically we went through and it’s, it’s now you know, we’ve made it public the process we went through, but it’s, it was a pretty intensive and interesting process that was involved legal involved patents, trademarks and involved the code itself security. And you know, making sure we pulled out proprietary code and things like that, but they just open sourced it and part of that they have a really interesting process that they they have to hand over the code To the person on the outside, and typically, it’s somebody who’s still working at Disney, and who, whose manager or VP sponsor has basically said, Yeah, you can spend every Friday working on this or, you know, something like that. And with with our team, we had a team that was cross a whole bunch of different business units. And so our sponsoring manager didn’t have anything on my time. So we had to, like broker deals between the groups and stuff like that and on Viet on the way out, when they’re going to hand it over to me personally. I asked them, Hey, can you guys approve me to create a foundation so we can, you know, say that will own the IP will own the code? So won’t be Joe, you know, and it worked out. So it’s pretty interesting.
Rob McNealy – RobMcNealy.com
So what did you intend for your blockchain to do was there like a specific problem you’re kind of trying to solve with it?
Joe Roets – Dragonchain.com
Um, enterprise adoption. If that were the Specific because core capabilities of blockchain and cryptocurrency being proof that something happened at a particular point in time, you know, and that being the core of what even Bitcoin actually gives, is used to, you know, in Bitcoin is that is used to prevent double spend to, you know, to provide scarcity, but it’s all related to the fact that that block can with with a measured amount of security, you know, that’s an actual measurable amount of security that’s been applied to whether you trust that these transactions occurred between these two points in time. And so, you know, we basically were looking okay all of the core, abstracted cases capabilities of the technology itself blockchain. We wanted to to leverage in ways that you know, you couldn’t do with time with Bitcoin and you couldn’t do when aetherium came out, which is, you know, any any reasonable business is not going to put customer PII on chain. They’re not going to, you know, there’s HIPAA data, there’s, there’s all types of things they can’t do. And we wanted to make all of that possible. And to make it much, much more straightforward for a real business to use.
Rob McNealy – RobMcNealy.com
So how did it end up working out?
Joe Roets – Dragonchain.com
Um, we did. We also want on the inside. I mean, we did over 20 different use cases. We did a lot of different things. Some of them were, you know, internal hackathons and things like that. But there were a lot of groups that were that were using and building and when we open sourced, we went for a year, fully on just straight open source. You know, managing Community Education trying to, you know, figure out what we needed to work on most. And in that year, we realized that the actual rollout and scaling, you know, it was, it was missing, the ease of use factor, the, you know, the architecture is very simple, it’s easy to code to, but to deploy it on, you know, the model that came out of Disney was a large, very large organization that can run all of the nodes themselves if they wanted to, because they have enough business units that you have the diversity, you know, so that all of the enterprise can see, okay, these are the transactions going through everywhere and all that. But we very much needed it to be a situation that if someone wanted to build something, they didn’t have to worry about the verification network, right? That that it would be provided for them. And so that’s why we commercialized and we, you know, created an entity and, and really decided to, you know, build an network and to build the infrastructure to allow people to deploy more easily.
Rob McNealy – RobMcNealy.com
So you build something from scratch which you know which in blockchain is kind of weird right everybody just kind of forks an existing code base that’s been vetted and beat up a little bit. How would you say dragon chain is different than say the base the code base for a theory amor, the code base for you know, Bitcoin or some of the, you know, graphene based block chains.
Joe Roets – Dragonchain.com
Um, it is it’s an interesting thing because like all of the pho policy would have for saying, Okay, I’m going to create my own are not necessarily clickable because we are definitely not coding our own encryption or coding or you know, any any of the cryptography is all, you know, used for outside. So I wouldn’t want to say that it is more than anything a structural peace, where we, for one thing, there are a lot of different things about it. That it is primarily just software and that at every level of our consensus process, we are actually working with independent nodes where every node has its own blockchain. And the consensus is not it’s a hybrid network. So the consensus is not universal. That is, I own my own business I haven’t I have a business node that I’m either ledgering transactions on or I’m running smart contracts on and I can keep that you know, by default is fully private on and the only thing that moves up through consensus is the the protocol elements, which are the you know, basically the wrappers. So my payload itself is fully controlled by me I can expose it publicly if I want, but I’m for a regular business. It’s very fitting all the the same models apply that it’s as if I’m working on a on a server, and I’m storing my stuff there. I’m using it but the difference is that the wrappers around what I’m doing are all going through a six six separate dragon that nodes and then a combined security of aetherium and Bitcoin and aetherium Classic and whatever else we’re entertaining with the time on, which is for the proof so now I can basically show vendor or you know, later the courts if I’m getting sued, I can show somebody, this is exactly what happened and you don’t even have to trust me, you can actually you can actually do the math all the way up to Bitcoin and aetherium. And, and, you know, we we really, from the early days, knew that we wanted to leverage the tremendous hash power of Bitcoin and at any other network, but also the utility that is, um, you know, especially early on when we knew that You know, the ability to entertain with stores or with saya coin or any, you know, any of any of the other important utility networks that we could add as well as traditional that, you know, we’ve done plenty of integrations with RESTful API, very traditional systems that because of our model, it’s remarkably easy. And they are our time to market or most of the projects we’ve been on are really short, really fast build outs. So it’s pretty cool. And it also help with scaling. Because then the fact that every node has its own chain means they can all be independently scaled. They can they can run in with full cloud environments. And Gosh, yeah, is this a really long answer, um, the good the other. The other side of that is when you get into that, one of the other very unique pieces that most people Don’t don’t get yet is our actual scaling is based not on hardware because we’re, we’re cloud based. So we already knew that we could have ended up if we’re trying to incentivize people to run nodes that we have diversity there, that you could have a race to the bottom. Because, gosh, I’m just going to deploy it to Amazon, I’m going to throw up enough nodes to handle 80% of network and undercut everybody on my, my, what I’m going to accept you charge for fees, right? And in order to prevent that, we flipped the scarcity on its head and said, okay, instead of saying hardware scarcity, where you know, most blockchains out there, if you have more transactions coming through, there’s hopefully more fees usually, and therefore more people will procure hardware and put it in place and build a network, right. And you hope that it’s sustained traffic, so that If the person doesn’t know, the fees continue and the traffic continues. And the issue is the time between the traffic start, and when people can actually deploy hardware, which, you know, if it’s in cloud, it can be pretty quick. But, um, it’s not immediate, right? And in particularly, you know, if it’s not something that’s easily done in cloud because of your requiring hash power or anything else, it’s even more difficult. So, what we did is we took what was called DDS s, which was a slumber score, which is a time based component to our token. So if you hold a one dragon for one day, you get one time. If you hold a million dragons for one day, you get 1 million time for that day. And we take that time and that’s the scarcity. So all the nodes in the network competing based upon how long they’ve held how many dragons And they get more of the cut but on the other side the the the radically in at least to me interesting part for for adoption of scalability is the fact that the more time I have as a business that I want to apply to my node, the lower my fees are right and so it but it’s a deterministic fixed price fee for every transaction I sent through and the token price inside the system adjusts every month based upon market but to the general business user, they don’t really care they’re basically I’m gonna pay my you know 5000 10,000 a month for my node or nodes and I know that I have at least this many transactions and I know that the transactions will not go up in price that I won’t have trouble getting a transaction on chain or anything else no matter who else deploys on network right the you know, crypto kitties comes out, it doesn’t kill me. You know, defy comes out. Kill me right cuz right now it’s it’s really hard on aetherium to do business um, and it’s really unpredictable you know minute to one minute to next but with with Dragon chain you know that if you lock in the feed the fees and your lowest fee right now is 2510 millions of $1 per transaction and so you can lock in that number and you know when you have these you know you have the 500 million transactions you’re going to have this month that is absolutely going to be at that fixed price you don’t have to worry as a business you don’t have to worry about getting lunch chain all that’s cooked so..
Rob McNealy – RobMcNealy.com
So would you say it’s so can you launch a token on your your platform on dragon is there is that part of that or are you do not do smart contracts the same way.
Joe Roets – Dragonchain.com
Um, we do smart contracts and we do have tokens and we have something that we’ve termed a wormhole tech. It’s basically Consider something as, consider a theorem as a different, different universe and a theorem classic is a different universe. And maybe I don’t know what other preferred, you know, maybe EOS or somewhere else that I might have a token that we can map them back and forth. We do that with Dragons. That’s how dragons operate already where we use aetherium for its ecosystem, its token standards and security, right. And it means that we didn’t have to build our own hardware wallets. We didn’t have to do a lot of things. We were leveraging Ethereum for that utility. And you can do that already. We’ve had quite a few people do it. And we’ve we’ve helped out a lot with that. But it’s a it’s a, it’s a scaling question for that right where, you know, there’s no reason instead in many cases for every single transaction to be on aetherium instead If you put it on dragon chain it’s secured to a theorem and secured a Bitcoin and so you can prove all that but then when you’re actually integrating like say is a game that you know the game can be played you could you could roll this into a normal game where there’s no blockchain sold as part of it, but when people realize, Oh, I have this, this device this sword this, you know something that that I have accumulated enough of and maybe I don’t need this one or something else that I can realize at that point. Oh, this is crypto. You mean I could sell this somewhere? How do I do that? And they say it’s an adoption question because then you can get people to play your game without them already being crypto people which is such a you know, nice have a nice have a nice to get normies to play it but then to attract normies into your token, where they’re like, Oh gosh, I’m gonna I was already having fun. Now I realize I can make money doing this right where that At that point, that’s when you integrate with the crypto side and the others cost involved where people pay fees or whatever else. But at that point, it’s it sets its own threshold. Right that you know, right now, you’d have to have a lot more value in a theorem to exit in order to make it worth the fee. Right. But kind of depends on how much is sitting there.
Rob McNealy – RobMcNealy.com
Well, I know I’m going back to when with our project with TUSC. When we started out, we weren’t eath token and it for us the nail in the coffin to build our own blockchain and move away from a theory was the F coin debacle two years ago, where they were just spamming the Ethereum blockchain and like it is right now. The cost to move tokens costs more than the tokens people wanted to move because of the transaction fees, which makes no sense to me and I have a lot of strong opinions but because I’ve been in as a project for a couple of years now as well, and, and I just It doesn’t make sense to me the way his theory was designed From a usability standpoint, and it’s like it, there’s, it’s baffling to me how they came up with the system the way it did. But, you know, it’s, it’s fascinating. So I always like to talk about what I when I talk to people that are developing projects and stuff and how, how do you get adoption? What is your strategy to get people to use dragon chain to build things on?
Joe Roets – Dragonchain.com
Um, well, we’ve gone through a number and some of them were, you know, you can get into libertarian side of things with, you know, we our initial piece to the engine was to have what we call the incubator or early on became dragonscale, which was supposed to be a very clean way to get incentivized input from people on the outside as to which projects should be moved forward. Right. And so there’s some funding to that, but there’s some selection to that and attention and and had a lot of really key features where it would have flatly solved a lot of the problems that the SEC is concerned about or other regulators were, you know, how do I avoid people? You know, how do I avoid exit scams? How do I avoid you know, and we had all that cooked in where it’s very clean way to be fair on both sides, where you know, early information, if, if it is correct, could be well rewarded, right. So, you know, people are incentivized to not lie, people are incentivized to end in on the other side, the projects are incentivized to actually deliver, because they don’t deliver, they don’t get their, their distributions of, you know, whatever the funding is on. And we had to pull back for some of that for us based on which was sad because that was clearly an advantage for adoption between a lot of interested parties. And we’re trying still to find we have a new take on it, that we think we could launch in the US but It’s not a top priority right now. And we we, we are actually actively looking actively looking for partners to do it internationally, you know that whether it’s for grants or other selection, but you know, VCs would be kind of primary. But right now what we’re working on is simply scale, you know, to be the the the system that can actually compete against traditional systems for scale. And definitely Trump them on security, and various other features that, you know, blockchain makes, you know, it’s pretty obvious and in that world, and so, you know, we’re really focused there and you know, we just launched a new pricing table where you know, we’d wanted it updated for quite a while. We’re now at transaction fees anywhere from $1 on the high end to, like I said, the 25/10,000,000 of a dollar and we’re getting a lot of interest because of that, and a lot of people are starting to realize what’s possible. And we’re also trying to do a lot of things that might to some seem a little bit you know, like they might not understand but you know, we launched launched on den den dot social and that’s basically a community forum that is native blockchain. So everything on the back end and there’s mining, and we really are trying to build out stuff that people can use both normal people and enterprises, right. So, you know, we just launched dragon factor my five which is a decentralized identity system that the back end has been operational for over two years. And you know, we’re just now Okay, we want to productize this now. We want other people to be able to use this like we have and and we have some really interesting aspects that we found a partner that could help us with some of the integrations that, you know, frankly, were more, you know, banking focused, you know, the typically things that banks do with identity were needed. But we were rolling in the ability to do it in a decentralized way where the user holds their own identity factors and can’t expose them as they wish, right? They don’t have to expose everything, they can expose just the smallest bit of information that passes whatever the business wants needs. And, um, you know, we’re basically, I mean, our strategy overall is very fundamentals based where we build and build and build and we figure out, you know, what does someone need we build it, we figure out okay, what would be a good demonstration of that capability, we build it and we’ve done it enough. I mean, we have a couple of systems that really are well used. You know, we get a lot of Transactions on eternal as an example people saving tweets and saving out various arbitrary information that they want to be able to prove later, you know, make some prediction on bitcoin price. I’ll put it there. And I can prove to you that is not just a screenshot that I photoshopped, you know, it’s this is literally data proven to, you know, hundreds of millions of dollars worth of security, you know, so interesting stuff like that. I don’t know. It’s hard to cut through noise though. There’s so much noise out there right.
Rob McNealy – RobMcNealy.com
And it’s only getting noisier isn’t it?
Joe Roets – Dragonchain.com
Yeah. Yeah. And all the all the speculation and all of the that that I you know, sometimes that’s a big complaint that I have.
Rob McNealy – RobMcNealy.com
Right, I hear ya. No, opinions, right? What do you think of DEFI?
Joe Roets – Dragonchain.com
I don’t want to, I don’t want to say anything early. Right. I mean, I saw the Fenton. We always played the Fenton thing yesterday on our show, because it’s so well done. If you haven’t seen it explain DEFI, you know, but my take is I think that there has to be, and I’m too busy to really research projects, like I used to, I used to know everything about everything coming out, but, you know, there weren’t as many then either. There have to be, I would make, I would put money down that there are at least a handful of amazing projects in that space, right. And stuff that’s really needed. That’s really well done. And it’s an amazing future. But somehow, they get cut, you know, they get they, they lose attention to, you know, 10 Ds and yams and stuff, and it’s just, it’s crazy, and it’s not good for the industry. I don’t think that stuff, right. Um, and, you know, it’s always the thing where money is such a powerful driver to all of this. And the reason I even got into this, I’m a software guy. So the reason I got into this is this was frankly, the most exciting place to be in software forever, right? That’s the next near the next closest would have been, you know, Linux and open source itself. And you know, that’s very general thing but it’s funny because Linux is very much about liberty. Right? And whether you talk to Stallman or you know, it’s very much about Liberty This is such a key component. And basically Bitcoin embodies that Bitcoin is radically so you know, I’ve talked before about how the fact that it has I say this it basically enslaves humans it incentivize humans to such a level that it’s the most massively focused on processing in on earth is Bitcoin mining it you know, blows away supercomputer metrics and everything else because there’s a money driver. And so the key that, that the world missing is at least that this industry is missing is keeping a balance between that and the fundamentals. Because it’s so easy for something like defy to come along with like, Oh, it’s a way to make money, it’s going to go up next week. All it matters is a green bar. It doesn’t matter what it does at all. And there’s, there’s, you know, there’s value to that, because it can drive people to be interested. But the problem is when people are lazy, and they don’t actually research or they buy tokens, and don’t actually try to, you know, the real incentive should literally be if you hold a token. And based upon your holdings, really, you should be focused on how can I help those projects? Because literally, that is the best thing. It’s not good to say I bought this token or what are you guys doing? Right? Why is this token not for real? Why is this token price not going up? as well? It’s so backwards. It’s like, people shouldn’t be lazy. You You hold it,in our case, our tokens, our software licenses, literally they are modeled from the beginning. We even have a patent on that, on that the token model as a software license that it was supposed to be the answer the licensing answer to what happens right now with commodity compute, you know, with Amazon, you shouldn’t be paying monthly still, you know, it you should be paying as part of and you know, the fact that you are paying for however much CPU use on fits, and we just tokenize that and so if you’re holding dragons, you should be actively seeking integrations business, even marketing, whatever your talents are, right? Um, but a lot of people get lazy and you know, it happens on all projects, you know, where people just want it to go up and you know, it’s, yeah.
Rob McNealy – RobMcNealy.com
Well, I always say you can’t bank on people not being lazy. In fact, I think the reverse I think you have to build systems. That is assumes that and then tries to figure out how to incentivize those people. Because I mean, we’ve run into the same thing right telegram group, why not go up or whatever it’s like it’s it’s pretty interesting. I do agree with you, I think, you know, people should do their research should do homework and, and should be more active and supporting. I’m just I’m not sure that’s realistic.
Joe Roets – Dragonchain.com
It’s like, I could see that, um, it’s the weirdest thing though, because you think about it. Most businesses, they have customers and the customers have their products and they don’t care otherwise. Right. But, um, you know, Apple and a few other few other companies have had something where it’s almost like a cult where people will actively promote for for no money, right? So there’s some there’s something psychological there on the intent, though, of, of crypto is that the the incentive is built in you hold that you actually own the token. Nobody can take it away from you. You You should literally be as incentivized as possible to actually try to promote, and sometimes you can see it, but it’s not maybe fun. focused, right, anyway.
Rob McNealy – RobMcNealy.com
Well, it’s interesting because, you see, I say success breeds success, right? Like if it’s starting to become popular that people want to be a part of that and talk about it. It’s that’s that tribal mentality, I think, and even with us when you know, our project, I mean, we’re not anywhere near where you guys are, but it’s like, you know, we can see when we have an announcement or you know, something cool really happens. It just gets people excited and they talk more about it when things are boring or low or not going the right direction. People get quiet about it. And I think part of that with crypto, you know, it’s it’s about that tribal identity and people want to associate with the winning team. They don’t want to they want they don’t want to associate with losing teams. That’s why it’s like you know, Bitcoin maximalist right I mean, you know, I’m not a big fan of Maxis on any project but if you look at Bitcoin maximalist it’s like okay, well you just like went to the number one football team and then you signed up for them and you’re there chiller. Well that’s that’s lazy, you know that, you know, it’s just like, okay, just sit there yay, yay great number one team keep going, you know and it’s like there’s more to it than that. But I do I mean I do appreciate your time and I think this is it’s good stuff and I and I you know I I’m gonna be doing a little more research and dragon I haven’t, you know, you in you know, inspired me to kind of do my own research here and and spend a little more time looking at what you guys are doing because you are doing some different things. And I think I hope the listeners here will take a look at dragon chain as well and see what you guys are doing. And you know, I hope in the future, you guys can come back or you can come back on and let me know when you got some cool, you know, projects happening or some cool announcements. I’d really like that. So, Joe, where can people find out more about you and dragon chain
Joe Roets – Dragonchain.com
Dragon chain.com primary we also do various things on den Deus social. And you know, you can reach out to us on telegram. I mean, there there are multiple official and unofficial telegram groups and multiple languages we have. We even have multiple language layers now and dim dot social so people can at least read about and ask about dragon chain in their own language with their own, you know, people that can answer directly so it’s pretty nice. And there are a lot of places I guess.
Rob McNealy – RobMcNealy.com
Joe, thank you so much for coming on the show today. I appreciate your time.
Joe Roets – Dragonchain.com
Thanks Rob.
Joe Roets, Founder and Chief Executive Officer of Dragonchain, talks with Rob McNealy about the Dragonchain ecosystem.