Wang Feng in Conversation with He Yi: How to Face Today's Web3 Dilemma?
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Wang Feng in Conversation with He Yi: How to Face Today's Web3 Dilemma?
The success of any enterprise or project hinges on improving efficiency, reducing costs, or discovering new application scenarios.
Navigating Web3 tides with focused insightsOn January 10, the "POW'ER Hong Kong Web3 Innovators Summit," hosted by MarsBit and co-organized by Hong Kong's Cyberport, G-Rocket Global Accelerator, and Element, took place in Hong Kong.
At the event, Wang Feng, founder of MarsBit and core founding team member of Element, held a video dialogue with Yi He, co-founder & CMO of Binance and head of Binance Labs, discussing topics including Binance's recent developments and market investment trends.
Wang Feng: Binance has always been the most watched company in the crypto industry. In 2022, two major events involving Binance drew widespread attention from the industry.
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First, news emerged last summer that Binance co-founder Yi He began directly managing Binance Labs, overseeing a $7.5 billion venture fund. Previously, there had been continuous rumors about high-level personnel reshuffling at Binance, making it difficult for outsiders to understand the rapid changes within the company.
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Second, the year-end showdown between Binance and FTX ended in FTX’s total collapse, triggering massive market turmoil and culminating in criminal charges against its founder, SBF. This incident sparked an ongoing debate over whether cryptocurrency exchanges need stricter regulation and greater transparency.
Therefore, our discussion today will cover both Binance and investment. Thank you, Yi He, for joining the POWER Web3 Innovators Hong Kong Summit and participating in this live dialogue with me.
In one sentence, what are you currently busiest with?
Yi He: The Binance management team is currently focused on building a sustainable long-term organization. We’re addressing two core issues: business health and organizational health.
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If the business is healthy, even amid intense controversy, the platform won’t collapse.
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Secondly, organizational health: Binance now has around 8,000 employees. We need to ensure everyone understands our corporate culture and shares aligned behaviors and goals, so that Binance can operate effectively regardless of who serves as CEO or COO.
Wang Feng: You simultaneously lead marketing at the world’s largest cryptocurrency exchange—where you hold at least two-thirds of the market share—and manage a multi-billion-dollar venture capital fund. Both roles involve managing money, people, and operations. Excelling in either is challenging enough.
In my view, the former requires being on the front lines of battle. The external environment and internal market dynamics of digital asset trading platforms are full of volatility and risks. It demands deep understanding of users and competitors. The latter, venture capital, involves long-term vision—VCs use telescopes to spot trends and opportunities, studying entrepreneurs. Crypto investment opportunities mainly lie in foundational tech architecture and next-generation applications, requiring significant time analyzing technological trends. So, how do you balance your time?
Yi He: Holding 16 to 17 meetings a day is quite common. I focus my time primarily on problem-solving and engaging with the community to understand user needs. As responsibilities grow, not everything requires personal involvement. We adhere to the principle of “letting professionals handle professional matters.”
Binance continues to expand in two directions: globally recruiting top talent to manage teams, and identifying young individuals with potential who align with Binance’s values. The fundamental requirement is integrity, followed by competence, passion, and mindset. Only by building a complete leadership pipeline can we ensure organizational health and long-term growth.
Wang Feng: Do you split your time evenly between Market and Labs, or does one take priority?
Yi He: These two areas only take up about one-sixth of my time. With a sufficiently professional team capable of making sound decisions, I don’t need to spend excessive time on them. I dedicate more time to mentoring young talent.
Wang Feng: How do you and Zhao Changpeng divide responsibilities? Are there things you don’t touch? Things he doesn’t touch? Any critical matters neither of you handles?
Yi He: CZ and I essentially focus on the same core concerns: organizational health and business health. As the CEO, he naturally engages with more people and deals with broader operational matters.
Wang Feng: For the crypto market, 2022 was extremely difficult. From both institutional and individual investor perspectives, few could have predicted so many exchanges and institutions collapsing. Did you foresee this downturn, or were there early warning signs?
Yi He: Not really. Sometimes people see us as lone wolves because Binance treats itself as its main competitor, constantly challenging and improving internally. Every industry has cycles—just like the internet sector—which go through phases of explosion, bubble, trough, and recovery. Binance aims to find the right direction within the industry and help more ordinary people.
Wang Feng: Before FTX completely collapsed, did you anticipate its outcome?
Yi He: I didn’t expect FTX to be so reckless. Initially, we saw CoinDesk’s report, which painted FTX in a very negative light, but I never imagined they would misappropriate user funds. Then I recalled a friend mentioning that the very nice CEO of FTX US abruptly resigned—an ominous sign. Because blockchain data is transparent, when we started reviewing our assets, people on Twitter immediately asked, “What is Binance doing?” At that point, CZ felt a warning was necessary, so without much hesitation, he posted that tweet.
Wang Feng: I think Binance is a conservative company.
Yi He: Binance has strong risk awareness. Although regulations vary across regions, we practice self-regulation. For example, Binance employees are prohibited from trading cryptocurrencies. After purchasing any asset, they must hold it for 90 days before selling.
Internal audits at Binance are extremely strict—from top to bottom—with consistent standards regardless of seniority.
Wang Feng: “Too big to fail” clearly doesn’t exist in the crypto market. For those coming from the internet industry hoping to enter Web3 entrepreneurship, what advice would you give?
Yi He: Return to first principles—I believe one must understand the essence of business. Ultimately, any successful enterprise or project comes down to three factors: improving efficiency, reducing costs, or discovering new application scenarios.
For instance, Uniswap’s success stems from inventing the automated market maker model, dramatically increasing efficiency and lowering costs. Therefore, if you bring sufficient innovation, improve efficiency, and reduce costs, you stand a chance of success—you need to solve real problems grounded in business fundamentals.
Many believe making money in Web3 is easy. In reality, whether through public fundraising or attracting users to buy tokens, it essentially means leveraging personal credibility—trading reputation for capital.
Some only see short-term gains, missing the vast horizon ahead. Burning cash using Web2 models won’t work; retiring off funding rounds won’t work either. Success in this space requires long-term conviction, solid product development, innovation, and solving real problems—the more substantial your foundation, the more traditional success you’ll achieve.
Wang Feng: Last year, a popular term emerged: “Rug,” meaning “run away.” I’ve observed this typically refers to small companies. Recently, however, “FUD” (fear, uncertainty, doubt) has increasingly targeted large enterprises. For example, there was “Binance FUD,” causing users to worry about their asset security. I wonder—does Binance have a mirror in its own world? How do you see yourselves?
Yi He: One key word in Binance’s corporate culture is “Humble.” Looking back at business history, some global giants suddenly collapsed overnight—often due to poor management, strategic errors, or excessive pride. Our team remains focused on self-improvement, staying humble, respecting the market, embracing new ideas, and maintaining self-reflection.
Another core value is “User-focused”—truly listening to user feedback. Through the FTX incident, we also reflected based on market sentiment. Currently, three groups oppose Binance: first, traditional finance players who saw Sam as a “good kid,” and since even he fell, they label Binance as the “bad guy”; second, anarchists who oppose any centralized protocols or projects—Binance, as a leading CEX, naturally becomes their target; third, SBF supporters.
Overall, Binance remains committed to learning and growing from events like these, believing time will prove everything. Binance has never misappropriated user funds. I once joked suggesting, “All exchanges should take turns undergoing market scrutiny—users are welcome to withdraw funds,” or perhaps establish fixed withdrawal days. That way, users can clearly identify who among us violates market rules.
Wang Feng: To outsiders, Binance has had an incredibly smooth journey—growing into the largest exchange in five years. The BNB Chain ecosystem is also thriving. You’ve won battles repeatedly, securing two major territories. I once read in *The Innovator’s Dilemma* that some large companies win every battle yet still fall. Could this happen to Binance?
Yi He: Your example resembles Kodak. Kodak dominated the film market and actually invented the digital camera—but failed to promote it, ultimately losing the entire market. This highlights the tension between sustaining innovation (incremental improvements) and disruptive innovation.
For Binance, whether in CEX, DEX, or non-custodial wallets, we’re actively investing. Our logic is simple: we believe in the industry. If we believe in it, we must participate across major tracks—through investment, acquisition, or building in-house. When launching new services, Binance uses an internal “racing teams” mechanism, encouraging teams to compete, innovate, and challenge themselves—ensuring sustained innovation.
Disruptive innovation ties back to investment. Take FTX—we viewed it as a competitor, yet we still invested. We recognize that only when the entire industry rises (“rising tide”) can we all benefit (“lifts all boats”). That’s our overarching decision-making logic.
Wang Feng: Binance’s ability to embrace innovation is widely recognized. I’d like to discuss regulation. Do you think regulation could become a “fatal” threat to Binance, given your lack of a central headquarters and distributed management structure?
Yi He: If you review Binance’s public statements and stance, you’ll see we’ve embraced regulation in recent years. We believe regulation can help the industry grow. We engage with law enforcement agencies worldwide to help them understand what virtual currencies and exchanges truly are—not all exchanges are “bad actors.” In fact, Binance has moved away from its earlier “digital nomad” remote-work model, establishing offices in multiple regions to comply with local regulatory requirements.
If you examine Binance’s public records, we hold more licenses than any other platform—currently licensed in 14 jurisdictions including Abu Dhabi, Dubai, South Africa, France, Italy, Spain, Poland, Lithuania, Cyprus, Kazakhstan, Australia, and New Zealand. We’re far ahead of others in this regard. However, licenses aren’t the end goal—we aim to operate according to regulatory standards. Binance’s compliance team now has 750 members, responding to AML requirements globally, handling over 47,000 law enforcement requests, and conducting more than 70 law enforcement training sessions.
Wang Feng: Regarding regulation and compliance, to what extent can Binance’s ideal transparency plan go?
Yi He: Binance wants to make user funds highly transparent. Users can already verify whether their assets reside in Binance’s corresponding wallet addresses. We’ve publicly shared proof-of-reserves for nine cryptocurrencies and aim to publish on-chain addresses for most assets within the next two to three months.
Wang Feng: We know that disclosing audit reports is the best form of transparency—like public companies subject to market oversight. Binance’s past stance was, “We’re not a public company,” which we understand. But times change. Can Binance accept audits by the Big Four? I saw CZ respond on CNBC, but many people seemed unconvinced.
Yi He: In that interview, the host conflated two different concepts: on-chain reserve verification versus financial auditing for public companies. Coinbase undergoes financial audits because it’s a listed company. Binance is open to third-party firms verifying our on-chain assets. But the issue isn’t whether Binance is willing—it’s whether audit firms are technically capable of verifying exchange reserves on-chain. Let me drop a quick ad: If any of the Big Four audit firms are interested in verifying Binance’s on-chain assets, please reach out to us.
Wang Feng: After FTX collapsed, market sentiment turned extremely fearful. Binance established an “Industry Recovery Initiative.” What concrete actions have been taken so far?
Yi He: It’s not an investment or charity fund—it’s a recovery initiative. Binance is currently evaluating two exchanges and two major projects. Beyond Binance, other third-party participants in this initiative have collectively committed around $130 million. These funds are not deposited into Binance accounts but held in public addresses. If a project submits a request for working capital, we share the information with other participating institutions.
I dislike the old narrative of “whoever steps up becomes the savior.” Binance still evaluates each deal carefully—we need to fully understand what we’re paying for: is it the team, market share, or licenses?
Wang Feng: Will Binance’s investment strategy become more conservative?
Yi He: Binance has always been relatively conservative. We evaluate investments based on three criteria: the team, the innovation, and the long-term market potential. Even if a project is good, if valuation is too high, we usually pass. If the team isn’t strong, we won’t invest—even if the project looks promising. Still, Binance isn’t constrained by fund size and maintains a holistic approach across the entire industry.
Wang Feng: Could this be too conservative?
Yi He: Binance Labs runs related incubation programs. Early-stage founders can apply—if the fundamentals are solid, we consider them, taking into account pricing, as we have our own market assessments.
Wang Feng: How do you view market cycles?
Yi He: Every industry has cycles. Stock markets typically follow four-year cycles, and crypto is similar. When stock markets fluctuate, digital assets are often seen as “safe-haven assets.” As traditional financial institutions enter crypto, the two markets move closer in sync. But during global financial downturns, digital assets are often the first to be sold off.
Wang Feng: Many people want to enter the Web3 market, but opinions on Web3 vary. Who do you think will adopt Web3?
Yi He: Data shows that 43 out of the world’s top 100 corporations have already entered Web3.
Web3 may seem niche now, but major corporations are increasingly joining. This is reminiscent of the year 2000—back then, only a few knew how to use the internet. Today, everyone is an internet user. Web3 will become infrastructure. The only question is what form it will take. In 2000, no one could imagine attending meetings via smartphones. Similarly, the future of Web3 will be shaped by the collective efforts we make today.
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