Editor | Wu Blockchain
In this interview, Han Lin, the founder of Gate Exchange, shared his entrepreneurial journey, platform strategy evolution, and industry insights with Colin, the founder of Wu Blockchain. After graduating with a Ph.D. in optoelectronics in Canada, Han Lin returned to China to start a business. In 2013, he tried to buy 100 Bitcoins but was scammed and lost $2,000. In the early years of his startup, he almost single-handedly completed all the development work. While compliance has high short-term costs and low returns, it is necessary in the long run. He is very interested in the Hong Kong market and is considering reapplying for relevant licenses. He is investing in related fields, such as supporting ZK chip companies, to improve computing efficiency. The company's asset reserves are mainly BTC and ETH. There is no obvious cyclical pattern now, and he is relatively optimistic about this year's trend. He spends most of his time on technology and product. The corporate culture is pragmatic and innovative, hoping that everyone will be down-to-earth and not too impulsive, and not always looking for shortcuts or overtaking on curves.
The audio transcript was completed by GPT and may contain errors. Please listen to the full podcast:
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Ph.D. in Optoelectronics in Canada, Scammed When First Encountered Bitcoin
Colin: I remember you were originally from Shandong University for your bachelor's and master's, and then you went to Canada for your Ph.D. What was your major at that time?
Han Lin: I studied electronics, majoring in Electronic Science and Technology for my bachelor's and master's, and then went to Canada to pursue a Ph.D. in the field of optoelectronics.
Colin: Did you start your business right after completing your Ph.D.?
Han Lin: After finishing my Ph.D., I did a one-year postdoc in Canada, and then returned to China to start a business. At the time, I had some research results that I thought could be applied to the industry, so I founded a company to develop optoelectronic simulation software, and later shifted to high-performance computing.
Colin: What was the trigger that led you to enter the virtual asset industry? I heard you were scammed in the early days?
Han Lin: When doing high-performance computing, we needed to use graphics cards, and I found that many people were mining Bitcoins with graphics cards, so I started to study the Bitcoin whitepaper. Due to my technical background, I quickly understood the technical value of Bitcoin and developed a strong interest in it. Later, when I tried to buy Bitcoins on forums (such as Bitcointalk), I was scammed and lost about $2,000.
Colin: How much were 100 Bitcoins worth at that time?
Han Lin: At that time, the total price was about 3,000 Canadian dollars (equivalent to more than $2,000).
From Chips to Exchanges: Limitations of Asset-Heavy Model, Trading Platforms are Asset-Light and Self-Controlled
Colin: Given your electronics background, did you also participate in mining? Why didn't you continue to develop in the mining or chip field?
Han Lin: I did participate in chip design and mining machine manufacturing. In 2013, we purchased a batch of Avalon chips and tried to design mining machines, but later realized the problems in the chip industry: the asset-heavy model is limited by the supply chain, with long procurement and production cycles, and high uncertainty. In comparison, trading platforms are asset-light, with all aspects (such as wallet deployment, trading system, deposit and withdrawal functions) can be implemented through software, and have strong autonomy. Therefore, I shifted my focus to the trading platform.
Colin: When did the Gate trading platform start?
Han Lin: It was officially launched in April 2013. At that time, there were few global trading platforms, mainly concentrated in Taiwan, China, Japan (such as Mt. Gox), and Russia (such as BTC-e). There were very few teams in mainland China, and I remember only one, which was BTC China.
Colin: What was the reason for Gate's name change in 2017? Was it related to regulatory policies?
Han Lin: In 2013, the domestic policy was relatively friendly, and CCTV had reported on Bitcoin payment scenarios (such as buying coffee and clothes). But as the Bitcoin price soared from $20-30 at the beginning of the year to over $1,000 by the end of the year, regulatory policies tightened, so we moved the entity overseas and began global operations.
Spot-Centric Strategy: Early Bet on Innovative Assets, Conservative Approach to Futures Business Due to Risk
Colin: Gate's feature is the prominence of spot business, and the futures business is not a focus compared to other exchanges. How did you consider the overall strategy?
Han Lin: This is related to the historical background. When I first built the trading platform, I personally preferred new technologies, so we listed a large number of innovative assets. For example, in 2013, we were the first to list "Dogecoin" and other innovative varieties, when there were almost no platforms as aggressive as us globally. This strategy formed our cultural advantage - to screen high-quality assets through keen insight. For example, during the DeFi Summer of 2020, we were the first to list DeFi projects (such as UNI), when most people were not yet aware of the value of such assets.
Now the importance of DeFi assets has become a consensus, but we started promoting them early. Last year, many out-of-circle projects (such as Pepe and other MEME coins) were also first listed by us. As for the futures business, we have been conservative about it for a long time, as the leverage risk is high and easy to cause liquidation. Although futures are hedging tools with clear demand, we prioritize user safety. It was not until last year, when the futures trading volume surged (now 5-6 times that of spot), that we started to increase investment.
Controversy over Coin Listing Quality: Acknowledge Screening Difficulty, Emphasize User Education and Risk Control System
Colin: Gate has indeed listed a large number of coins, but does the large quantity lead to uneven quality? The community sometimes questions that some projects may have "data rooms", how do you see this?
Han Lin: Screening high-quality assets is indeed extremely challenging, and almost no platform can completely solve this problem. We have always used keen insight to select assets. For example, during the DeFi Summer, we quickly listed SushiSwap (SUSHI), while other platforms were relatively conservative. After the SUSHI listing, it soared from $1 to tens of dollars in ten days, and only then did other major platforms follow up.
I admit that asset screening is an extremely challenging task, but we have a risk control system to select high-quality projects as much as possible. At the same time, we cannot completely make decisions for users. Experienced users usually have their own judgments, and we encourage them to conduct independent analysis and evaluate project prospects and risks before investing. Therefore, we have invested a lot of effort in user education to help them improve their discernment.
Responding to On-Chain Asset Competition: Balancing Security and Early Opportunities
Colin: In recent years, on-chain trading has become increasingly competitive with centralized exchanges. In the past, platforms created wealth effects through very early coin listings, but now this effect seems to have shifted to on-chain. Facing this trend, how do you view and respond to this challenge?
Han Lin: This question is very critical. Early users could indeed gain wealth effects by selecting assets through centralized exchanges. But now, more assets are issued directly on-chain, with about 10,000 to 20,000 new tokens being born every day, totaling over 15 million. Although there are early opportunities on-chain, it is very difficult for ordinary users to screen high-quality assets.
Experienced players can manage their own wallets and protect their assets, but ordinary users find it difficult to do so. In addition, the quality of on-chain assets is uneven, and many projects disappear within a few hours, with extremely high screening costs. Therefore, we have launched products like Winbox, setting up an innovation zone to re-screen high-quality projects from on-chain assets. Compared to the listing standards of centralized exchanges, the rules of Winbox are slightly more relaxed, but we still use technical means such as smart contract detection to exclude high-risk projects and ensure user safety.
For example, Trump-related MEME coins and some other projects were discovered by us in this way. After these projects were issued on-chain, we quickly listed them on the platform to help users capture early opportunities.
Completed All Development Work Independently in the Early One or Two Years
Colin: You mentioned that in the early days, the entire website was developed by you alone. Were you starting a business in a rented house at that time?
Han Lin: At the time, there were very few people who understood blockchain development, so I could only teach myself. Because I had a technical background, after studying the Bitcoin whitepaper and wallet code, I quickly mastered the relevant technologies and began writing trading platform code.
Colin: How long did you develop on your own? Do you still write code now?
Han Lin: Now I'm mainly involved in core architecture discussions. In the early days, one or two years, I almost single-handedly completed all the development work, and later gradually cultivated a team to share the tasks.
Colin: In the early days of the Bitcoin or crypto currency circle, which people were you more familiar with?
Han Lin: I was more inclined towards technology, and I didn't have much interaction with the OGs in the circle in the early days. Later, I got to know some of the people who entered the industry early, but at the time they were in Beijing and I was in Jinan focusing on development.
Why increase compliance investment and market exposure starting in 2023
Colin: Last year, I felt that Gate's strategy underwent a major change. In the past, you were relatively low-key and focused on your own development, but last year there were significant changes in compliance and market exposure. What was the impetus and thinking behind this change?
Han Lin: Your observation is accurate. At the beginning of last year, we did indeed make a strategic adjustment. Previously, we had always focused on technology and products, but later we found that this alone was not enough. Users may have misunderstandings or distrust us due to some rumors or misinformation. For example, in 2020 we called on the industry to pay attention to the reserve fund issue, but many people did not understand it. Old users (who have been following us since 2013) have a high level of trust in us, but new users have limited knowledge of Gate.
Therefore, we decided to show ourselves more, and to enhance user trust through brand building and market activities. We started to increase brand exposure, strengthen interaction with the community and industry partners, sponsor sports teams, hold music concerts and other activities. These initiatives have helped more people understand Gate's values and strengths.
Colin: Your personal Twitter has also become more active, and Gate has sponsored a lot of events, such as team collaborations. Such investments are difficult to see direct returns, how do you weigh them?
Han Lin: I used to think that this type of investment was difficult to quantify the return, especially as a person with a technical background, I was more used to looking at data and specific results. But later I realized that brand building needs to attract attention and let users know who we are and what we are doing. For example, the collaborations with Inter Milan, the Red Bull F1 team, and the music festival have made more people aware of Gate. Although these endorsements and exposures are difficult to quantify directly, the improvement in brand trust is significant.
The cost of compliance: high short-term costs, optimistic about the potential of markets like Japan in the long run
Colin: Over the past year, Gate has made a lot of moves in terms of compliance, but compliance may mean having to withdraw from some offshore markets, such as Japan. Is this a dilemma? Will short-term profits be sacrificed?
Han Lin: It does require sacrificing short-term profits, but we are more focused on long-term interests. I entered this industry in 2012 and have witnessed its rapid development. In 2013, the global user base was only about 1 million, but now it has exceeded 500-600 million. Although compliance is costly and low-yielding in the short term, it is necessary in the long run.
Our group has been investing in compliance for many years, applying for licenses and making compliance arrangements in countries and regions such as Europe (such as Malta), the Middle East, Asia, and the Americas. Last year, we acquired Japan-related (crypto service provider) businesses and communicated with local regulators to clean up user data to meet compliance requirements. The Japanese market has huge potential, with a population of 120 million and strong user investment demand, occupying an important position in the global asset markets such as foreign exchange and stocks.
Colin: Will compliance put financial pressure on the company in the short term?
Han Lin: The pressure is indeed great, mainly reflected in labor costs and infrastructure investment. The demand for compliance personnel and security personnel has increased, and processes such as wallet storage, KYC (Know Your Customer), and KYT (Know Your Transaction) also require separate management. These basic expenses are very high.
Colin: You have also spent a lot of time in Hong Kong recently. Are you particularly focused on the Hong Kong market?
Han Lin: Hong Kong has an advantageous geographical location and is a financial center where East and West converge, with frequent trading and in/out cash activities. We are very interested in the Hong Kong market and are considering reapplying for relevant licenses.
Colin: Is the current progress smooth?
Han Lin: We initially encountered some difficulties in applying for licenses, as the regulatory authorities were quite strict. But this year, the Securities and Futures Commission has proposed a new roadmap, with a more open and pragmatic attitude. They are starting to delve into the industry and gradually relaxing restrictions, which is a positive signal for us (referring to Gate.HK).
Focus on technical routes: blockchain scaling and efficiency/cost optimization
Colin: As a technical background, how do you view the development of blockchain technology? Which technical routes or ecosystem technologies do you currently recognize?
Han Lin: We have always been focused on ecosystem-related technologies, especially blockchain underlying scaling technologies. The current blockchain capacity is limited, but as the user base grows and industry applications expand (such as payments, cross-border e-commerce, online games, NFTs, etc.), the demand is growing increasingly. The existing throughput, transaction speed, and cost are difficult to meet the demand, so scaling technology is an urgent problem to be solved.
The emergence of technologies such as Layer 2 and Layer 3 has indeed brought great improvements, but there is still a lot of room for optimization. We are very focused on these technologies, because if the underlying technology is done well, the construction of upper-level facilities (such as trading and payment systems) will be easier, and it will be easier to integrate with the traditional market and promote real-world applications. However, the cost is still relatively high at the moment.
Colin: Which scaling technology do you think is performing better currently?
Han Lin: Optimistic Rollup is currently the most widely used solution, but zero-knowledge (ZK) technology is also attracting a lot of attention. ZK has advantages in speed and experience, but the cost is higher. We are investing in related fields, such as supporting ZK chip companies, to improve computing efficiency. These issues will be gradually solved in the future.
Colin: How do you view solutions like Solana, which sacrifice a certain degree of decentralization to improve speed?
Han Lin: This type of solution is indeed efficient and can quickly solve problems, but people will also think about whether a higher degree of centralization may bring security issues. After all, it is not that decentralized.
For many applications, cost is the main problem, and reducing fees is the priority. If the application scenario does not have high requirements for asset security, or does not require long-term asset storage, this solution is feasible. For example, Memecoins are very suitable to run on Solana. But for mainstream asset storage, users may be more inclined to choose more solid chains, such as Bitcoin and Ethereum.
Prediction of the Meme Coin craze: community-driven + celebrity effect driving out of the circle, may become a long-term cultural phenomenon
Colin: Speaking of Meme coins, do you think the current Meme coin craze is a short-term phenomenon, or will it become a long-term cultural phenomenon in the industry?
Han Lin: Initially, Meme coins were just a flash in the pan. At the end of 2013, Dogecoin appeared, which was a clone of the Bitcoin code with a Shiba Inu as the avatar. At the time, we called it "Dogecoin", which was the earliest form of a Meme coin. Many similar coins appeared at that time, but most of them disappeared, and only a few survived.
The early Meme coin craze passed quickly, but the situation is different now. Meme coins have become a community-driven phenomenon, and as long as people like it and form a consensus, a coin can be issued. This has been particularly evident this year, with celebrities also starting to issue coins. Even if they are not from the crypto circle, as long as they have fans, they can issue coins. Last year and the year before, some celebrities started trying to issue coins, but they had a lot of concerns, such as whether it would damage their reputation or involve legal issues. After Trump issued a coin this year, these problems seem to have been resolved, and many people also feel that "I can issue a coin too".
Colin: Would you mind sharing your personal asset allocation? Is Bitcoin the main one?
Han Lin: I don't have much time to think about asset allocation, mainly assets related to the company.
Colin: What about the company's asset allocation? Is stablecoin and cash the main focus?
Han Lin: The company needs stable operations, so we adopt a low-risk configuration, mainly Bitcoin and Ethereum. In addition, platform tokens also need to be stored securely.
Industry Cycle Outlook: The Impact of Bitcoin Halving Weakens, Traditional Finance and Geopolitics Become Key Variables
Colin: You have experienced multiple industry cycles. How do you view the current market stage? Will the bull market continue for the rest of this year, or will there be signs of a bear market?
Han Lin: In the past, people often said that the bull market comes every four years, related to the Bitcoin halving cycle. At that time, the crypto industry was small in scale and not too affected by external factors, and the industry development mainly depended on internal events. For example, when Bitcoin was halved, the market discussion was very hot, which was easy to trigger a bull market. But the situation is different now. Cryptocurrencies are more and more closely linked to traditional finance, and the influence of traditional financial markets is very large, and even geopolitical events (such as the outbreak of war) can lead to violent market fluctuations.
I think there is no obvious cycle rule now. From the end of 2013, the market began to heat up, until 2022 and 2023, the market fluctuations are very large, many people feel that the bull market may be over, but in fact the market has quietly warmed up again. From last year to this year, we feel that the market is still doing well.
Colin: Is your company also relatively optimistic about this year's and the future's trends?
Han Lin: Yes, relatively optimistic. The main reasons are: First, the craze for Meme coins is still continuing. Although the initial speculative enthusiasm may have declined, it is gradually turning to a broader movement, and more celebrities are starting to participate in issuing coins.
Another important point is that after Trump took office, he encouraged the use of Bitcoin as a reserve asset for the United States. Other countries may also follow suit. Bitcoin's characteristics are very good, with a fixed total supply (21 million), and no additional issuance except for mining output. This scarcity makes it a high-quality reserve asset. More and more countries and companies may use Bitcoin as a reserve asset, which will drive up the price. If other countries do not do so, the future cost in the financial field will be very high. So I think this trend will continue, and the market is still relatively optimistic.
Colin: This cycle seems a bit like "The Emperor's New Clothes", has the valuation of VC-backed tokens become more stringent?
Han Lin: The main change is in the form of token issuance, now the community can issue tokens directly without the participation of VCs. In the past, projects needed to go through multiple rounds of financing, and VCs played an important role in this, and finally brought the tokens to the retail investors through IEO. But now the community can issue tokens directly, bypassing the intermediate links, and the role of VCs has been weakened.
However, projects invested by VCs still have many good ones, especially those that require a long development cycle. These projects cannot be accomplished overnight, they need time and patience, and VCs can still play an important role in this process.
Colin: Finally, I would like to know what areas you are mainly responsible for in your work? What do you spend the most time on?
Han Lin: I spend most of my time on technology and products, because I think this is the foundation. Although we also do brand sponsorship and marketing, if there is no technology and product, everything is just a castle in the air.
Exchange Technology Barriers: Building High Thresholds with Underlying Security, Multi-Chain Support, and Ecosystem Service Construction
Colin: There was a view that the technical barriers of the current centralized exchanges are very high, and it is difficult for new entrants to imitate or replicate quickly. There are also some specialized cloud technology service providers. What do you think?
Han Lin: Yes, the technical barriers of exchanges are indeed very deep. This is mainly reflected in two aspects: First, the underlying technology needs to be very solid, especially in asset protection. To support multiple currencies and blockchains, a lot of investment is required, such as we have thousands of servers to support these chains and data collection. This is already a very high threshold.
Second, the complexity of the upper-layer ecosystem services. The exchange is the traffic entrance, and users need various services after entering, such as spot trading, wealth management, copy trading, quantitative trading, etc. These all require a lot of technical investment, and the threshold is both deep and wide. The team size of centralized exchanges is usually very large, with thousands of people being the norm, while some projects may only need dozens or even one person to do it.
Colin: As a technical person, won't you be envious of those small and precise projects? For example, like some DeFi projects, they can make very high profits with just a dozen people. Do you feel that your current work is very tiring, and you envy them instead?
Han Lin: I do envy them, but I think this is the advantage of decentralized technology. Blockchain technology has solved many problems, such as asset security, transaction confirmation, and so on, without the need for centralized institutions to intervene. So you can see that many people say that the trading volume of centralized exchanges (CEX) is shifting to decentralized exchanges (DEX). We are also exploring in the Web3 field, and we will adopt the technology with technical advantages, and will not stagnate.
Core Corporate Culture: Pragmatic Solving Real Problems, Opposing Restlessness and Reinventing the Wheel
Colin: Finally, what do you think is the most important value of Gate? Or in other words, what is the corporate culture that you most recognize and hope employees will unite around?
Han Lin: I hope everyone will be more down-to-earth and not too restless. Don't always think about taking shortcuts and overtaking on the curve, never mention these things. We still need to do things steadily and really solve problems, especially solve the problems that others cannot solve. Only in this way will users recognize you and the market will need you.
In addition, don't reinvent the wheel. The corporate culture we encourage is pragmatism and innovation, not futile efforts.
