A conversation with Lan Yue, Co-Founder and COO of BIT Crypto Exchange: The master developer talks about his journey, his life for BIT and the future of crypto

With celebrity-backed projects receiving a disproportionate amount of media attention, the larger scale of blockchain-enabled technology doesn’t always get the attention it deserves. That’s a shame, as blockchain’s paradigm shifting the focus to transparency, decentralization, and authentication adds irreplaceable value to the financial services industry, digital contracts, virtual reality universes, art, and more.

Regardless of market volatility, these blockchain applications are not only essential to the emergence of Web 3 and the new era of the Internet, but also important resources for people seeking financial freedom. New blockchain-powered decentralized finance platforms are democratizing transformative tools that help people achieve their financial goals. With many high profile stories in the news lately, it’s important for those looking to get into the game to learn about best practices and find a platform that works best for them.

That’s why we spoke to Lan Yue, the co-founder and COO of Fullsuite Crypto Exchange BIT, about his thoughts on the crypto industry and his career path. Below is our interview with Web 3’s visionary entrepreneur and investor.

I: Can you explain the story of your entry into Matrixport, how BIT was founded and what the original motivation was?

LY: I joined Bitmain in 2018, and then Bitmain launched Matrixport in 2019. The trading department was missing a product lead, so I came from Bitmain to be responsible for this trading product. At that time we thought that the future development of the transaction line should go three ways.

First, by building relationships with customers, we wanted to focus on the transaction itself and create a product that would allow us to do large transactions like OTC. Second, we wanted to bring something innovative to the market, so we started developing a dual-currency investment product. Eventually we wanted to build an options exchange – although the options product was relatively unpopular in the market at the time, we saw tremendous potential in it from a traditional finance perspective.

We started with these three directions with the first two products, so we continued to iterate in terms of large transactions. Throughout the process, I led the team to cohesive R&D and realized the dual currency investment product.

We launched BIT in November 2019 and launched it in August 2020, which means it took us about 10 months to build a fully homegrown futures exchange. In addition, we’ve added the ability to add options and futures, as well as offering Unified Margin and Portfolio Margin…all in 10 months! I would say that’s pretty impressive considering the most difficult derivatives in the crypto world are options.

In the first two months of BIT’s launch, we received a good response, became the second largest options trading platform and accounted for 20% of the trading volume of the entire market at the peak. I am very proud of what we have achieved.

I: Can you explain BIT’s unique selling propositions and features in more detail?

LY: BIT has carried Jihan Wu’s DNA since its inception. Although relatively private in person, he has a very high impact on the industry and a unique approach to creating an exchange. Its deep understanding of what clients and traders want is built into every part of the user experience, making it one of the most professional and sophisticated trading platforms in the crypto industry.

In terms of the strengths of the team as a whole, we have a very cohesive approach, supported by a strong focus on research and development. The team has a clear sense of responsibility and our ability to execute is at the highest level.

In terms of the exchange itself, there are a number of unique selling propositions – we support spot and futures markets where we can make options for spot delivery products. In addition, we offer Unified Margin and Portfolio Margin, which are unique in the market. Additionally, we are the only exchange that supports USD margined options.

With our current infrastructure, we will continue to innovate in options trading.

I: Which BIT capability do you think has the greatest potential to disrupt the industry?

LY: I think it would be our insights into market trends, teamwork, product development and infrastructure, in short. I: Where do you see BIT next year? What about the next 5-10 years?

LY: Our goal is to build one of the best exchange platforms in the world. This is an ambitious goal that will take time.

The overall goal of this year is to lay a solid foundation, consolidate the foundation and do a good job in terms of liquidity, products and client relationships.

Next year we will continue our efforts to expand our offer in the options market. We will list altcoin options and expand our partnership with high quality project teams, funds and institutions in both crypto and traditional finance.

BIT offers USD margin options and also has compliant USD deposit and withdrawal features, so I think the next year will be a year of vigorous development exploring this path.

In terms of my long-term development, I hope that in 5 to 10 years, BIT will be an exchange with more impact on the industry, and we hope that we can help steer the industry in a better direction.

In terms of the industry, we think it is crucial that more regulation comes into the market and exchanges react accordingly. At BIT, myself, Jihan Wu and our entire team are honest individuals with integrity in everything we do. As a result, our business practices reflect this attitude and we look forward to seeing the industry evolve into a more trusted place to do business over the next 5-10 years.

I: What do you think the future holds for crypto exchanges and altcoin options? Short term? long term?

LY: My take on exchanges is that the model of a future exchange should include a wallet where users can manage their own private keys, using a combination of Centralized Exchange (CEX) and Decentralized Exchange (DEX) features. Currently, the existing DEX is difficult for users to access, which puts people off, while the CEX model is much easier to use.

Recent news on FTX and other exchanges shows that this will be a necessary trend. Not only does it provide the ability to centralize processing speed, but it also has an element of decentralization, so user resources can be protected.

Regarding altcoins – I have no doubt that there is a market for altcoin options.

There are many project teams with their tokens listed on the spot and futures market. If they also have it in the options market, they can offer more structured products that help the market grow.

I: How did your previous work experience at Bitmain, CITIC Bank, Yipay and others prepare you for your role at BIT? And your role at Matrixport?

Yipay has a company culture that encourages people to take more responsibility, which I’ve carried with me in every role I’ve had. I am willing to take on more responsibility since the beginning of my career and I also encourage the BIT team to go one step further. If each of us goes one step further, together we can make BIT a great platform.

I: Do you have any personal anecdotes or life experiences that you think shaped you and your attitude towards business?

LY: I think it’s more in my nature, just my nature, because I’m a person who doesn’t give up. I hope to do my job well, and whether I do it well on my own or bring everyone together to do it well, in short, it’s our business, so we will do well. I was born with this mindset. I don’t want to lose any time, otherwise I and my team will be sorry.

I: Finally, what are the benefits of portfolio management as you see it?

LY: It’s quadruple.

First, the PM model tends to reward hedgers by providing greater capital efficiency to their well-managed, low-risk portfolios. However, for speculators with directional portfolios, lower margin is not always guaranteed with PM enabled.

Next, the calculated PM requirement allows for effective risk coverage while maintaining capital efficiency. The final output of the margin model is used to directly collateralize the margin requirements to secure members’ positions.

Third margin components for PM are Scenario PnL and Floor Margin. Scenario PnL represents the core risk analysis of the PM model by simulating the hypothetical profit and loss of the portfolio under specific market conditions. And the minimum margin will be set for both outright and options, which to some extent will help reduce margin procyclicality for low-risk portfolios.

And last but not least, the new USD PM upgrade will include USD perpetuals and options with all currency pairs under the USD margin account. The USD initial margin required is aggregated from each currency pair according to the PM method.

Note on UM & PM:

UM FAQ:

https://helpcenter.bit.com/hc/en-us/articles/10787928169369-1-Brief-introduction-on-Unified-Margin-System

https://helpcenter.bit.com/hc/en-us/categories/10681534254489-Unified-Margin

PM FAQ:

https://helpcenter.bit.com/hc/en-us/articles/10888006436121-What-is-Portfolio-Margin-

https://helpcenter.bit.com/hc/en-us/articles/11451779091097-What-is-Bit-com-Portfolio-Margin-USD-M-Derivatives-

https://helpcenter.bit.com/hc/en-us/articles/10788242182041-What-is-Bit-com-Portfolio-Margin-Coin-M-Derivatives-