CZ's Bear Market Plans

Every company is handling the bear market differently. CZ and Binance are no different. What are they up to? Has their overall strategy changed? How have they been affected? Hear answers to all of these questions and much more in the livestream. ------ 📣JUNO | Crypto Friendly Banking https://juno.finance/bankless ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 🚀ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool ⚖️ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ❎ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🦁BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 🌴MAKER DAO | DECENTRALIZED LENDING https://bankless.cc/MakerDAO 🔐LEDGER | SECURE STAKING https://bankless.cc/Ledger ------ Topics Covered: 0:00 Intro 3:15 How Binance is Holding Up 5:54 Binance's Opportunities 8:40 Bear Market Positioning 11:56 How Long Will the Bear Last? 17:09 Hiring at Binance 19:56 CZ Meme & His Future 23:36 Binance's Future 29:38 Binance is Worldwide 37:00 The Future of BNB Chain & Use Cases 41:16 $BNB 44:10 Concerns of Binance Centralization 50:58 Why CZ is in Crypto 55:53 What Crypto Looks like in 5-10 Years ------ Resources: CZ https://twitter.com/cz_binance Binance https://twitter.com/binance CZ Photoshop https://twitter.com/cz_binance/status/1537013824666095617 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:06Ryan Sean Adams?

  Hey Bankless Nation, welcome to this special bonus episode and livestream. We're super excited to bring you CZ, the founder and CEO of Binance. He's going to be on in just a second. David, this is perfect timing to bring CZ on the podcast because we are in the depths of a bear market. We want to pick his brain on that, see what Binance's bear market plans are about to be. It's also his first time on the podcast, so I'm super excited about that. I don't have my regular setup, David. You can see the background behind me. I'm in kind of like this cave-type area. I had a power incident at home, but I'm super excited to livestream with you. Any thoughts going into this one?

• 0:42David Hoffman?

  Yeah, Ryan's setup is a bear market down bad, but of course, Binance and CZ have been through bear markets before. So, we want to pick his brain about some bear market wisdom and also see what Binance is up to in this bear market. CZ is one of the few people in this current market environment that is cash positive. And so, I want to see what is in CZ's shopping cart. So, I'm going to ask him all these questions in just a hot sec. We're going to bring CZ on right after we get through some of these fantastic sponsors that make the show possible. Rocketpool is your decentralized Ethereum staking protocol. You can stake your ETH in Rocketpool and get our ETH in return, allowing you to stake your ETH and use it in DeFi at the same time. You can get 4% on your ETH by staking it with Rocketpool, but you can get even more by running a node.

• 1:27David Hoffman?

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• 2:10David Hoffman?

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• 2:54David Hoffman?

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• 3:39David Hoffman?

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• 3:45Ryan Sean Adams?

  All right, guys, we are back with this special bonus podcast. I'm super excited about this one. We've got CZ on the podcast. He is the CEO of Binance, also the founder of Binance, the world's largest crypto exchange. CZ, welcome to Bankless. How are you doing, my friend?

• 4:00Speaker 02

  Hey Ryan, David, thank you for having me on the show. It's great to be here.

• 4:04David Hoffman?

  Well, it's awesome to have you. I gotta start with this question because we are in a bear market. This is all but confirmed. We've got Ether 80% off all-time highs, Bitcoin off 70% plus. How are you guys holding up? How's Binance holding up during the bear market so far?

• 4:18Speaker 02

  We're fine. We don't have any debts. We don't owe anybody any money. We're still profitable even today. And not that many people owe us money. We have pretty good debt control. So yeah, we're pretty good. And yeah, so as David said, this is not the first time we've been through this one of these things. And we, even in the bull markets, we've always had the mentality that Bitcoin can go 80% down over a period of time. And it may last for, you know, months or years. So we're okay, yeah.

• 4:50David Hoffman?

  What did you guys do differently? Because some crypto companies, I'd call them crypto banks maybe, are not faring so well. What was different about the positioning of Binance going into this?

• 5:01Speaker 02

  I think fundamentally, many companies, when we're in the bull market, many companies just sort of expected that the bull market will continue indefinitely. Markets don't do that. Market go bull, bear, bull, bear, just goes in cycles. So we understood that and we just had a fairly large amount of cash reserves during the bull markets. And luckily also for us, our income comes into different cryptocurrencies. And stablecoin is one of those, like, stablecoins accounts to about 25% to 30% of our income. So we're relying heavily on that now. So yeah, I think overall, like, just because we're in a new industry,

• 5:42Speaker 02

  we are quite expectant of the cycles. So just having that mindset really helps, I think.

• 5:49David Hoffman?

  Yeah, certainly. And it's paying off very, very much right now in this bear market. As I alluded to in the intro, I think it's basically like Binance and FTX that are the, like, well-capitalized players right now. And like, FTX is being pretty damn aggressive with like, kind of the fire sales that are going on right now. Like BlockFi is having a fire sale at like a $25 million valuation and FTX is trying to get in on that. I'm wondering, like, what is Binance looking at? Like, with all the, having cash on hand is a very rare opportunity at this moment. What opportunities in the crypto markets are you really looking at at the moment?

• 6:25Speaker 02

  Yeah, I think so. Basically, we're looking at like all the same opportunities come to all of us. In fact, like we look at all the opportunities, probably we probably have first picks on all of those opportunities. So we try to keep it, we try to respect the confidentiality clauses we have with our partners so that we don't really disclose ongoing deals. So if that if there's a deal in discussion, we try not to disclose much of it. And even even after it concludes, we we still try to observe the confidentiality aspects of it. But the same deals that you see in the news that other people look at, we they they typically come to us first. So being the large, I think I'm pretty confident we have the large, by far the largest cash reserve right now.

• 7:08Speaker 02

  And most of this, and so we do have first picks. And but not all deals, well, we like, we like to save the industry as much as possible, but not all the not all projects are worth saving. If the projects are badly badly run, badly designed, other problems that are hard to fix. Then it's generally not good to put bad money after or good money after bad money, right? We you don't want to bail out companies that are mismanaged. So but we do want to help the majority of companies to that have a little bit of a liquidity crunch to go through the cycle. And we're talking with like, yeah, fifty plus of them, yeah.

• 7:48Ryan Sean Adams?

  Wow, fifty plus of them. I think like people are taking bets and who's going to bail out more of these crypto companies is SBF or CZ. I guess that remains to be seen.

• 7:57Speaker 02

  I think we both have to do our part. Whoever has cash right now should do their part. I think FTX is more US focused. Sam is in the US all the time, etc. So so we're more globally distributed. So we're but we're there's a large number of deals in the US. And also during the last couple of years, there's a lot of lending protocols developing in the US.

• 8:21Speaker 02

  Quite a number of them are on the liquidity crunch. So there's more deals happening in the US, but we're looking at that. But we're also looking at the world globally as well. But I think it's not one, it's not us versus them. It's really like, let's just do, let's all do what we can.

• 8:37Ryan Sean Adams?

  Yeah, and what are you, how are you hoping to position Binance coming out of this? So, I mean, bear markets, if you can last, if you can sustain through them. This goes for a retail holder, Bankless listener. If you sustain yourself through the bear market, you come out stronger on the other side. It also goes, the same principle applies to crypto companies and Binance is no exception, of course. So you guys have an opportunity actually to get stronger during the bear market and to come back the next cycle even stronger. In what ways would you like to position yourself during the bear market to come out stronger? What do you kind of, what competencies are you developing? What key areas are you planning to invest in?

• 9:18Speaker 02

  Sure, I mean, there's two aspects, right? So for, for industry players like ourselves, now is actually the best time to hire talent. So there's much more talent available in the pool now. And also you don't have, we have less other companies competing for the same talent with ridiculous salaries, compensation, etc. That didn't make sense. I mean, a year ago, if a university grad out of college, if they knew Solidity programming, they can get an offer for half a million dollars a year. I mean, I think that's kind of, you know, that's a bit overboard, to be honest. So now we're seeing much more reasonable situations in the industry. We're looking at investing more in bear markets. There will be more consolidation. And the guys who have cash and the guys who are left standing, who have very strong business models

• 10:04Speaker 02

  and strong product will benefit. We actually, there will be more consolidation, which means basically more market share, more users. The total number of users may stay the same or even drop a little bit because people, some of bear market push some of the people out. But the, the market share increases and the positions, the influence increases. When the next bull market come, we're in a very good position to take advantage of that. And then the investments, M and As are all tied to that. For retail investors, the first thing, of course, is to survive. So make sure that you have enough money that your lifestyle is not impacted. Um, the second thing, if you have extra money, um, now is actually not a bad time. Well, different people use different uh strategies.

• 10:48Speaker 02

  I don't want to recommend any specific strategy, but some people like, you know, micro seller. Um, our server or they're they're they're buying now so that the average cost actually comes down. Um, and if they can last for a few uh uh through this beer beer market on the next bull market, they'll have more holdings. So now it's actually a a very cheap time to buy. I uh, well, uh, uh, if if we're in a bear market. Um, I want to be careful uh uh giving financial devices, not giving financial devices. So, but uh for retail investors, uh, it's the same, like, you know, focus on uh my advice is always the same. Focus on a small number of projects that you know well. And if you know that the project's gonna survive, you've uh and you can tolerate the risk by all means.

• 11:30Speaker 02

  Um, and but understand that tomorrow the market may go down even further. Um, we don't, it may go up, it may go down, nobody knows what's gonna happen tomorrow. But longer term horizon, the industry is staying, the industry is not going away. Um, there's more apps being developed, there's more people in the industry. So, um, the industry is gonna get bigger if you look at five, 10, 20 year horizons.

• 11:51David Hoffman?

  CZ, you put out a tweet talking about how many positions that you're hiring at Binance. I want to actually go into that a little bit, but but but first, before we do. Uh, a little bit more on the bear market, because like I said in the intro again, like. You've been through bear markets before, Binance has been through bear markets before. This is nothing new under the sun, a lot of us have been through bear markets before. And historically, in the crypto space, bear markets last about two, two and a half years. Uh, we have this like two-year bull run, we have this two-year bear market, and these things just perpetuates. However, this time it does feel a little bit different. We have like this macro story of just like there's there's war in in Europe. Uh, we have unprecedented inflation in the United States, like we're super indebted. The global reserve currency is super indebted. And so there's a lot of murmurings about like this time it might be different.

• 12:36David Hoffman?

  So I'm wondering, how have you positioned Binance and Binance's cash position? And your investments with this like uncertainty as to how long this bear market really lasts? Like, do you have an opinion about how long this bear market is gonna be?

• 12:51Speaker 02

  I don't really have no opinion. It's very hard to predict the future, but historically, we've seen very accurate four-year cycles. But there's also many things in the world that are four years. The Bitcoin halving is every four years. The United States President's election is every four years. The stock market goes through a four-year cycle as well, if you look at it historically. So it doesn't mean that the next cycle will be exactly four years. But I think there is a pretty decent probability that that might happen. And but if we look at all the other different things that you just mentioned, that you said are different. The inflation, the war, everything else. Those things should really help the crypto industry.

• 13:33Speaker 02

  Those things which really push people to want, the inflation should push people to want to hold a limited supply asset. So the war and the more the world is divided, the more that the Bitcoin is a very global currency that actually shines. So the more the more those issues happen, the more people should need, well, the advantages of crypto blockchain is actually more clear. So yeah, to be honest, to be very frank, I was kind of surprised that Bitcoin only made an all-time high at 68,000. I thought it was going to go much higher. But again, I was wrong. So I'm never good at predictions. But all of those things in theory should help crypto.

• 14:17Speaker 02

  But the fact that right now we're going through a winter is kind of surprising to me. But again, no one can predict markets. I can't. But logics do work in the long run. So that's my experience.

• 14:29Ryan Sean Adams?

  Well, what if, CZ, it takes a long time for crypto to repair, right? It's like, as you said, we're used to these like four-year cycles. And so I put out a tweet the other day and I just asked people, what do you guys think? How much longer will the bear market go? One year, two years, three years, or five-plus years, right? Eighty percent of crypto Twitter people said two years or less. That's what everyone's expecting. But as David was saying, this might not be the case this time. What if we're in for, and I'm optimistic that it is, of course, you know, the spankless, we're perma bulls, we're never going to be bearish on this space. But what if it lasts a bit longer? What if we're talking about like?

• 15:11Ryan Sean Adams?

  Four years, five years, and we're still not back to Bitcoin and ETH all-time highs. What happens to the industry? Does it wither away and die? Or are we gonna be okay?

• 15:23Speaker 02

  I think we're gonna be totally okay. There are a group of people, there are very large group of people that I know that is not going away. So there are some, you know, new investors that gets, you know, shocked, surprised, fear, and they go away for a while. But pretty much of all the people I know who are here since 2017, those guys is gonna stay. And as a business, I would recommend most businesses have at least 10 years of runway, 10 years of cash, if they have zero income. Very few traditional companies can achieve that. But in the blockchain world, it's actually not that hard to achieve. You know, Binance, we had, like, the Binance coin is about $40 billion market cap.

• 16:06Speaker 02

  We have the team portion we never used, and we do commit to, you know, burn that.

• 16:12Speaker 02

  But we also have income, like even the team portion was, you know, double-digit billion dollars. So most crypto companies sit on this, if they manage well, they could be sitting on this really large cash reserve. So, and even if we don't touch that, we actually still, that aside, we actually still have very healthy reserves that will last us many years. So, and also in the business, in the crypto business, they are very clear, very simple business models. You should have revenue. And because we're dealing with crypto money, we're dealing with this industry. It's actually not difficult for good businesses to make money.

• 16:53Speaker 02

  So I think just sustainability-wise, many businesses in this industry can sustain for a very, very long time. So I'm not too worried about it.

• 17:05David Hoffman?

  CZ, I want to go back to that tweet where you talked about how we have 2,000 open positions at Binance, which is a crazy number. We're seeing layoffs at Coinbase, we're seeing layoffs at BlockFi, but you're saying that Binance has 2,000 open positions. Can you tell me a little bit more about just the general sectors that these open positions are for? Like, is there anything in specific that there's like, I don't know, maybe the world of staking, and staking assets is really popular right now, or there's like other protocol developments? Like, in what areas are you hiring the most?

• 17:38Speaker 02

  I think we're basically hiring across the entire spectrum of every position we have. That typically comes down to, you know, about half of them are engineering positions, and that's always one of the hardest places to hire. Luckily, we can hire globally, so we can tap into different talent pools all around the globe, which is fantastic. The second thing is a large number is customer support. So as much AI we do, as much automation we do, we still actually do need quite a large number of people talking to people. So we're actually offering phone support in six languages now. So people can call, people can, in the app, they can do a voice call.

• 18:19Speaker 02

  The other roles are marketing, legal, compliance, other back office roles, there's many of them. So we cover a fairly wide spectrum. We also are, in the technical side, we're also looking for different type of developers, like mobile developers, web developers, blockchain developers, all of this type of different roles. So we actually see this as the best chance to hire people. And then the people we hire today can scale up our system, so that when the next world market comes, hopefully in a couple of years, or even maybe sooner, we're ready. So we always want to be ready for the next peak, which is really important in our industry.

• 18:59David Hoffman?

  And how many people does Binance employ currently? Because 2,000 is a crazy number. What number are you at currently?

• 19:05Speaker 02

  We're just around 6,000 right now. So we want to get to about 8,000 before the end of the year. That's the target.

• 19:11David Hoffman?

  Amazing, amazing. And where does the revenue come to support, like so many people at this company? I think that makes you like the largest crypto company by far, right?

• 19:19Speaker 02

  I think today by employees, we are probably, we are, we should be the largest now.

• 19:25Speaker 02

  Our revenues are pretty simple. We, we, we charge, we charge a fee when people trade and that's it. That's the bulk, the bulk of our revenue. We have some other stuff like, you know, we have M and A, which done pretty well. We have other staking, et cetera. We have like margin lending that generates a little bit of income, but those are very tiny compared to the trading fees.

• 19:49Ryan Sean Adams?

  CZ, I gotta bring this up because it was just hilarious with, with your tweet. You had this picture of yourself, which is great. And then Kobe tweeted out, wait, I just realized, did you Photoshop your own head on a stock photo of someone waiting to shake hands? And I'm not even sure if you did or not, but the fact that this photo exists is pretty hilarious. And I really love your interplay on, on crypto Twitter, but is this photo real or what is this?

• 20:14Speaker 02

  This photo, this photo is a Photoshop photo. I thought it was clear. And I didn't Photoshop it. I was like, there was some discussion in our internal, in our internal chat groups. The previous photo was the US Army hiring photo. They also photoshopped my face like we want you.

• 20:33Speaker 02

  That photo. And we're saying that that photo is like a couple of years old. And then one of the designers just posted this photo in the group, in the internal chat group. I was like, damn, can I, can I post it right now?

• 20:44Speaker 02

  So I just took that photo and just posted it. And so, yeah, it was like a very organic, our team photoshopped this. I didn't. I thought it was pretty clear with, you know.

• 20:53Ryan Sean Adams?

  No, it, it, it's just like, it almost could fit. So if you're just a passerby, you kind of see it and it takes a second look to be like, oh my God, this is a stock photo. But this is part of what I think people love about crypto and what I love about crypto is it doesn't take itself too seriously. You know, it's somewhat still irreverent and that's, that's something that's special about this, this industry. But I want to ask about you because you are, you're definitely a figure at Binance, being sort of, you know, the founder and the guy who gets photoshopped into meme stock photos and that sort of thing. What are your plans? Are you going to like ever retire at some place, at some point? Or is this, you know, CZ plus Binance forever?

• 21:33Speaker 02

  Okay, so let me address the first part first. I think I love the meme culture in the crypto space. And I think one of my friends told me the best. He says, CZ, I like the fact that you take work very seriously, but you don't take yourself very seriously. So I think that's the mentality I encourage people to adopt. Just know, we're just normal guys. And a designer photoshopping your head onto something else, etc. If you just embrace it. And it's fun, like there's nothing, nothing wrong with that.

• 22:07Speaker 02

  For for myself, I do really want, I do want to retire sooner or later. I've been CEO of Binance for five years. I don't think a CEO should be, should be longer than 10 years. I think any CEO that stays in one role for 10 years. We get older, we get more stale. Our thinking gets molded in a certain way. The organization becomes more fixated on a certain structure, which may or may not, which usually maybe good for the company in the short term. But long term, I think companies these days should be more dynamic, more adjustable and more change fast, fast changing with the times. So I think somewhere between now and five years later, I should retire.

• 22:49Speaker 02

  So we are looking at succession plans, how to train the next set of talent. That's actually what I spend most of the time, my time doing is dealing with the talent pool, people, training, coaching, making sure that we have the right organizational structure. I actually don't do any specific operational stuff. I look much more at the human side of things. So yeah, I do think CEOs should not be more than 10 years. So somewhere between five to 10 years is a perfect time for for CEO to transition out, get a new blood in. And so like when I transition out, I may become a chairman for a couple of years and then retire completely. And then I'll be busy with other stuff. There's so many, so many other interesting stuff to do as well.

• 23:32David Hoffman?

  At what point, what do you want Binance to become? When you know that it's ready for CZ to take a step back? Like where is Binance today? And where does it need to be before you are comfortable giving the keys to the kingdom to somebody else? What's left to do?

• 23:47Speaker 02

  So Binance should become that, should become, should becoming such as, such a situation where it does not need me at all. And today, I'm taking steps back, I'm taking more and more steps back, I'm delegating a lot more. So today, the operations of Binance, I can go on vacation for, like, I can turn, I can turn off my phone for like a week. Binance will be completely fine, even a month, I think Binance will be completely fine. There's some strategic decisions, they still come to me and ask for my opinions. I'm stepping further and further back, I'm like, you guys decide, you guys decide. Those decisions should not be made by me. So, and I think, to be honest, today Binance is already very strong. I mean, even if I retire today, it's not a, probably not a big deal.

• 24:29Speaker 02

  Binance will continue, but I would like to see Binance shape up as we're growing really, really quickly. Our organizational structure is not very, is not very fixed. In fact, we are experimenting with a lot of different structures, etc. We, the, the structure inside Binance is very dynamic. So I think, you know, in a couple of years, Binance will be at a point where Binance does not need CZ, which is a perfect place for Binance to be. And that's probably a play, a time that I will say, hey, look, I can, I can chill out and do other things. Yeah, and for Binance, but Binance itself, I think, this, this I want to explain as well. Different companies in this industry are different, it's clear that they have different goals. Binance wants to provide tools for people to access crypto.

• 25:13Speaker 02

  So we want to be the infrastructure tools provider. Whereas other, even other exchanges, we can tell that, you know, they go into stock trading, they just want to be a trading house. They want, they want, they want to trade and they want to charge, they want to, they want to make money on commissions. Whereas we, we have a lot of tools that have no revenue. You know, we have a decentralized wallet, trust wallet. That zero, zero income, no, no revenue. We have CoinMarketCap, they used to rely on advertising revenue, we removed all advertising from CoinMarketCap. So we just provide access to crypto information. So we want to be the tools provider for crypto. This is the reason why we're not, we're not going to stocks. We're not going to provide stocks trading tools. We're in the web three crypto world.

• 25:57Speaker 02

  So there are some subtle differences between different companies that at least from my, from my perspective, I can, I can see. Nothing wrong or right with any of the approaches, but Binance is more of a web three tools provider.

• 26:08Ryan Sean Adams?

  Yeah, okay, that's interesting, the visions. We had Brian Armstrong on the podcast a few months ago. We also had SBF. We asked kind of similar questions of like, what do you want your companies to be when they grow up? Right? And with, when we were talking with Brian, there's kind of this dichotomy of, do you, do you want to be more like kind of a bank? So are you trying to get Binance larger than JP Morgan? Let's say, I mean, two, 2.5 trillion assets, something like this. Or there's this other path, because you're in web three, you're in technology, where you could become more like a Silicon Valley company, like a Facebook. Are you competing with the banks? Are you competing with like the Facebooks and the Silicon Valley companies of the world? Is it a combination of both? Or is it something net new?

• 26:52Ryan Sean Adams?

  How would you answer that question, Caesar?

• 26:55Speaker 02

  Yeah, okay, I think, I think sure, we definitely don't want to become a bank. That's very, very clear. And we actually also don't want to become Facebook. We, we don't want to hold people's cash, money. We also don't want to hold people's data.

• 27:06Ryan Sean Adams?

  You don't want to hold people's cash because you hold a lot of cash right now, right?

• 27:10Speaker 02

  Today we do, but I think in five, 10 years, this, the centralized exchanges will be bigger than centralized exchanges. So this is why we, this is why we invest very heavily in blockchain development, wallets, cross wallet, cross wallet, ISF PEL, which we invested as well. We invest in multiple wallets. So I do believe that in, I will say maximum in 10 years, De, Dexys, DeFi is going to be bigger than C5.

• 27:34Ryan Sean Adams?

  So there's a world for Binance where you guys still exist, you're still a market leader, but you have no custody of, of anyone's assets and private keys. You're just kind of a conduit, a Brit, like what does that look like?

• 27:47Speaker 02

  I don't think it's like, uh, I think, okay, I think it would take a long time for the centralized exchanges to go to zero. But I think it will take five, in ten years, this DeFi is going to be bigger than, uh, decentralized exchanges is going to be bigger than centralized ones. Uh, but the centralized ones will continue to play a role for many decades to come, I think, because there's still many people who are much more comfortable using an email and password. Um, if you like my parent, if you ask my parents' generation, they will much prefer that instead of using a USB stick to do encrypted backups of their private keys in a distributed manner, all this other stuff. But I think the technology will improve to a point where the decentralized stuff will, will, will be much more usable. It's actually easier to use. Uh, because you don't have to do KYC, you don't have to do AML, all of those are very tedious processes

• 28:32Speaker 02

  um, that you can have on your own control of your wallet. Um, uh, and also Binance is not fixated on the centralized exchange. Um, you know, many, uh, so I didn't like, um, I typically don't use, uh, banks or Facebook as analogies for companies that we want to mimic. Actually, there was one other company I often do, which is Google. So Google provides a number of infrastructure services, a number of tools for people to use the internet. We do search, email, maps, all this other stuff, right? Uh, many of them are kind of free, not super free, but you know, the web two is based on, on, on, on, on ads model. But Google provides a number of tools for the, uh, for the web two, for the web world. Uh, we want to be the company that provides a number of tools in the web three world.

• 29:16Speaker 02

  So, uh, it doesn't have to be the centralized exchange. Many, many people thought of Google as a, as a search engine. But Google, Google is way more than just a search engine. Um, so, um, that's kind of how I visualize things and how I try to, uh, position Binance, um, sort of a future, future, future direction.

• 29:34Ryan Sean Adams?

  One thing that's interesting is we had, um, Vitalik on the podcast not too long ago, and he was just coming back from a trip to Argentina. And he asked us the question, he said, guess the number one crypto app that people are using in Argentina? And we were like, uh, I don't know, you know, is it, is it Tron? What, what is it? Uh, Binance, that's what he said. And I think that people outside of the US don't necessarily, or you know, outside of Europe, don't understand the breadth that Binance actually has, and particularly some of the, you know, developing world. And I'm wondering if you can kind of comment on that with the context of Binance being kind of like Google

• 30:15Ryan Sean Adams?

  and providing tools and services and like Google provides you a way to index, like see the internet, search the internet. What is, what is Binance providing, say, a community or a country like Argentina that they're not getting from their existing financial infrastructure?

• 30:33Speaker 02

  Yeah, so, yeah, I think this is a very good point, actually. Binance, so many players focus on US, and US is the top priority. And US is the largest single market by far, you know, 4% of global population with 20% of the global GDP. It's very established financial economy, etc. So US is by far the biggest market, but Binance is not, we're doing pretty good in the US. But we, at one point, actually, when Coinbase IPO'd last April, Binance US's trading volume reached about 35% of Coinbase's global trading volume, just Binance US. So that was pretty, and then since then, we have, Binance US been down, downed for like three or four months

• 31:17Speaker 02

  due to some personnel changes, and we since reversed that. But Binance US is not, Binance does not lead in the US market, but we do lead in most non-US markets. So even Europe, in most countries, we're the leading, we're the leading app that people use to interact with crypto blockchain. And we also spent a lot of effort focusing on non-developed nations like, you know, Africa, Latin America, etc. And the per-user income in those countries are very low. So people, we have a large number of users, each one have fairly low number of coins, etc. So the revenue is not that high, but we can help millions and billions of people.

• 31:58Speaker 02

  Today's hundreds of millions, hopefully by the next bull run, we should be able to expand to billions of people. So we provide people access to financial tools they don't have access to. This is something that's very hard for US people, developed economies to imagine. Historically, I talked to one guy in person. Historically, it would take him three days to pay a bill. He had to walk to a city, sit in a bank for half a day and then pay a bill. With blockchain now, he can do that in three minutes. There are other countries that are the local currency going through hyperinflation. And people, it used to be people, as soon as people get a paycheck to prevent from inflation, they go buy milk.

• 32:44Speaker 02

  Milk holds more, holds value more steadily than fiat currencies. And milk will go bad in a couple of weeks, but you know, they go out and buy milk. But now with a blockchain, with Bitcoin, with crypto, they go buy crypto and we are the platform that let them do that. So we spent a lot of effort in different regions, so we optimized for different parts of the world. So we view that the world is one place and we want to provide our services globally to everybody on earth.

• 33:14David Hoffman?

  CZ, I want to get into this whole how DeFi is going to get bigger than C-Fi and also therefore your plans for BNB Chain and how BNB Chain is going to develop in this bear market as well. One quick question before we go to a quick sponsor break. There is roughly like 500 people asking me about this Luna Classic Burn in the YouTube chat. What's going on with the Luna Classic Burn? Why are people, why are people asking about this? Do you know anything about this?

• 33:40Speaker 02

  In fact, actually, I did ask my team because I also saw a bunch of messages about that. What is this Luna Classic Burn? But no one's clear what exactly that burn is supposed to be. Is the team burning it? Is the exchanges burning it? Is there somebody else burning it? Should we charge a fee of like 1.3% for every deposit and burn 1.2% of it? No one knows, like, should we burn that? Should we burn that, the revenue we make? Should we go zero fees on Luna? So it's not clear what exactly that proposal is.

• 34:14Speaker 02

  It just says the community support anybody burning 1.2% of their own Luna. Great, so should we just burn all of our users' Luna? If we, I think if you take a poll of asking specific users if they're willing to burn 1.2% of their Luna they hold. Most people probably say no. So I'm not sure what that means exactly. So I did ask our team, but we'll figure it out. I think as long as there's a common, consistent way, a fair way that applies to everybody, we're more than happy to support whatever the community agrees on.

• 34:45David Hoffman?

  Amazing. Go for a run.

• 34:47Ryan Sean Adams?

  Anytime someone says Luna, I still get PTSD. So I just like.

• 34:50David Hoffman?

  This is classic. This is Luna classic.

• 34:53Ryan Sean Adams?

  Oh, okay. Different story.

• 34:55David Hoffman?

  I don't even know what that is. Okay, CZ, I'm going to ask you a bunch of questions about BNB Chain right after we get through some of these fantastic sponsors that make this show possible. There is a brand new staking feature in the Ledger Live app today. We all like staking the assets that we're bullish on. And now you can stake seven different coins inside the Ledger Live app. Cosmos, Polkadot, Tron, Algorion, Tezos, Solana, and of course Ethereum. With Ledger Live, you can take money from your bank account, buy your most bullish crypto asset and stake that asset to its network, all inside the Ledger Live app. Through a partnership with Figment, Ledger also lets you choose which validator you want to stake your assets with. And Ledger is running its own validating nodes, offering a convenient way to participate in network validation. And it even comes with slashing insurance. Ledger Live is truly becoming the battle station for the bankless world.

• 35:40David Hoffman?

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• 36:25David Hoffman?

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• 37:09David Hoffman?

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• 37:30David Hoffman?

  All right, guys, we are back with CZ from Binance, and I want to turn the conversation to the DeFi side of the world. CZ, you talked about how it's your opinion that DeFi will eventually come and eat C-Fi. And I think you've known, you've had this idea for a while. I think it's one of the main motivations for spinning up BNB Chain, which has, I think it's like the number-two blockchain that's generating revenue after Ethereum itself. And so it's got, obviously got a ton of usage. And I kind of just want to pick your brain about the future of BNB Chain, because there's so many different research areas in the world of crypto. You've got things like Cosmos that are doing the application-specific blockchain. You've got things like Ethereum that are doing the roll-up-centric roadmap. You have things like Solana that are trying to be this hyperscaleable monolithic chain.

• 38:15David Hoffman?

  I'm wondering, what is the path for BNB Chain? Where's BNB Chain going in the future?

• 38:22Speaker 02

  To be honest, I'm not sure where BNB Chain is going. And I only get told afterwards where.

• 38:30Speaker 02

  So I'm not, I'm not that involved in the BNB chain development, to be honest. The developers, I do talk to a few of the key developers on, you know, random ad hoc basis. They do ask me for some, for advices from time to time, or, you know, opinions, etc. But we want BNB chain to be community driven. So we, we are more, we are much more on the sponsorship side of things. We want to sponsor more projects to, to, to, to develop a BNB chain. We want to invest more, we want to promote it more, but exactly where it's going is a very community driven thing. I know that people, I've always recommended them to look at scalability. So, you know, I, I view Ethereum as sort of the blockchain that proved that smart contracts work.

• 39:15Speaker 02

  But it's not very scalable, they can only do like twenty, thirty transactions per second. So we need millions of transactions per second, so we don't have, we don't have quite had that yet. But we need to take steps in that sort of scalability front. That's my suggestion, but you know, I didn't come up with the idea of the solidity compatible EVM, EVM, etc. It was basically the, the few developer, the number of developers in the community, they come up with those. So for me, like, we just want to support it. We can, we can support it by funding, by marketing, by branding, etc. But it's really up to the community on what they want to develop.

• 39:52David Hoffman?

  How are you seeing Binance, BNB chain being used? What would you say are like the most dominant use cases that people are using BNB chain for?

• 40:01Speaker 02

  I think today, based on a report I saw yesterday, or analysis I saw yesterday, most people, the, it's DeFi and Gamify, which are two of the largest use cases on BNB chain. So BNB chain actually has by far the largest number of active users on the blockchain. So the total TVL is smaller than Ethereum, like the total value locked is smaller than Ethereum and, but the, if you look at the number of active addresses on a daily basis, it's about like, I think if you put all the blockchains together, BNB chain probably has somewhere around sixty to eighty percent of the active addresses on a daily basis. So it's, it's a pretty majority in terms of users, which is great, because I've always,

• 40:43Speaker 02

  anybody I talk to, whether it's internal Binance or community developers, I always say focus on the users, just get the users in. Make sure that people are using your product. They may or may not be paying for it, or paying very much for it, but as long as they people use your product, this value. So that's really good to see. So today, those two are the biggest use cases. And then I really, I really want to see other use cases, you know, NFTs, Metaverse, all of those things being built on top of, or in relation to BNB Chain.

• 41:13David Hoffman?

  The topic of the BNB, the asset, I think is actually particularly interesting. And it's something that I actually use as a frame of reference when Ethereum goes through the merge. The BNB as a, as a token and a crypto asset is the only crypto asset that has like meaningful revenue behind it due to the buyback and burn from the Binance fee exchange. And as a result of that, I think I would like to say as a result of that, like the BNB chain token has some of the most astounding returns in all of crypto. I think it like ICOed in 2017 for something like three cents, five cents or something. And now it's at a cool $218. And so that's a fantastic return.

• 41:56David Hoffman?

  Would you credit that the amazing price performance of BNB is from the, the buyback and burn model of Binance? Or what would you credit to the success of the price?

• 42:06Speaker 02

  I think today, definitely not. Today, I think the burn is actually a very small part of the BNB ecosystem value. I think BNB's most value actually is derived from the DeFi world today. There are so many different use cases that people can use BNB for. And this BNB is taking on pancake swap. There's Venus, which is a stablecoin. There's many different things that people, people can also use BNB to buy airline tickets,

• 42:38Speaker 02

  even coffee, et cetera. There's the minus card. People can use BNB to pay for things. So I think the burn is only a small part of it now. At the beginning, the burn maybe like the, the burn may be a big part of it. And we have since changed the burn protocol to depend more on the activities on the BNB chain instead of revenues from, from Binance, et cetera. So that change was, was adopted. So today, I think BNB is, including Bitcoin, et cetera, they're much dependent on utility value. How many, what people use it for? If there are use cases for it, then, then it has value. So I think this is different from like traditional stocks or securities where it depends on a company's revenue.

• 43:23Speaker 02

  BNB is way, I think BNB is way beyond that now.

• 43:27David Hoffman?

  You said that BNB was, you could be, use it for airline miles. Is BNB being adopted as a medium of exchange currency in some instances?

• 43:37Speaker 02

  It is, to some extent. So we have a portfolio company called Travella, which you can go and buy airline tickets, book hotels, etc. And you can, of course, use, BNB is a very heavily promoted currency there. We're partnership with, you know, large shopping malls that have like 29 shopping malls, 13 building, mega buildings, etc. So we're tapping into this type of different use cases. So I think there's a lot of value BNB derive from that.

• 44:10Ryan Sean Adams?

  So CZ, I want to ask you a question about, you know, BNB chain and kind of just overall centralization, your philosophy on centralization versus decentralization. Because there are some skeptics who would say BNB chain is too centralized, some that would even say that it's maybe it's co-opting DeFi, that it's not really DeFi. And we've seen some, you know, concerns with, I think, chains co-opting DeFi in the past. Like maybe Terra was not as centralized as people thought it was, or not as decentralized as people thought it was in the beginning. And I will say, like for bankless, for David and myself, we have concerns about this too, right? Because the core mission of crypto to us is peer-to-peer,

• 44:56Ryan Sean Adams?

  is to go without banks, is to go bankless. Like that's the name of the podcast, right? That's why we care about this stuff. And on one hand, I see all of the incredible things that BNB chain and Binance has done for crypto, which is like you guys have on-boarded millions of people, tens of millions of people. You've made the world better in various places than it was without Binance entering. And the decentralized chains wouldn't have gotten there in the way that you guys have. And yet at the same token, I worry about centralization vectors. I worry about our industry and our chains becoming much more like the traditional banking system that we just left.

• 45:37Ryan Sean Adams?

  And if that's what we end up with, I will feel like the crypto experiment will have failed. What do you say to this, to concerns about centralization on BNB chain? Or about like, you know, Binance having too much influence? Or these sorts of concerns that people have?

• 45:55Speaker 02

  Yeah, so. So, yeah, I think this is a very, uh, thank you for what you said. I think the way you described it is actually very objective and those concerns are very valid.

• 46:05Speaker 02

  Um, in the decentralized world, well, it's first of all decentralization, centralization is not black and white. It's not one or the other. There's a spectrum of different, this number one is a spectrum if you look at any particular aspect and there's multiple aspects we've got to look at. So each one of them is a gradient scale. Um, and so, uh, for example, if we look at any cryptocurrency or blockchain, Bitcoin, uh, Bitcoin, I, I do think is by far the most decentralized blockchain cryptocurrency, etc. But if you look at Bitcoin mining, um, it's quite centralized, like, you know, the top two miners will, will, will top two or three mining pools will control more than fifty one percent of the mining power. Um, and, uh,

• 46:47Speaker 02

  if you look at Ethereum or B and B chain, uh, you can still associate a founder with those two blockchains and many other blockchains. So Ethereum, in that sense, if Vitalik suggests some changes, most likely the community will go with his suggestion. Um, uh, for B and B, uh, it myself, um, we can, we can still identify that even though I'm not, I'm less technical, much less technical than Vitalik. But if I suggest something, the community most likely will, uh, was supported. So that's centralization as well. So, uh, Ethereum and B and B having the identifiable founder is actually a less decentralized mechanism. And then this, you know, how many nodes we, uh, each blockchain has.

• 47:29Speaker 02

  Um, and also if you look at balance.com, yes, balance.com is a centralized exchange. And how many users do we have? We probably do have the largest user base in crypto now. Um, and also we probably hold custody of the largest funds of any single platform in, in crypto today. So all of those are centralization, type of centralizations, uh, where there is a line, where it's good or bad, it's very, very difficult to tell. Um, and if a, uh, and as, as you said, so for example, the most decentralized manner would be like everybody working for themselves. Um, no company, no organization. Um, in a decentralized world, any two people can choose to work together. When they choose to work together, that's centralization.

• 48:10Speaker 02

  Um, if you and I work together, then, um, we're more centralized than David. Because David is working alone. Um, so, uh, but if we all work independently, are we able to achieve the maximum impact that we can achieve today? Probably no. If if we didn't start a a organization, if if we didn't hire people to work on common goal, then the balance would not be able to onboard so many users into into crypto. Uh, we will not be able to provide the kind of tools we we could provide today for for hundreds of millions of people that that I I use them today. Are those centralization? Yes. Are those bad or good? Uh, I think so far we've we've done good. Um, and but if someday, uh, I turn evil and then do something bad, then that's not good.

• 48:53Speaker 02

  So decentralization prevents, uh, a single person turn or a single entity turning evil, uh, which is a good prevention measure. So, um, but in a, uh, but in a decentralized world, you cannot prevent people from working together, right? So you're not supposed to interfere with other people, uh, uh, unless, as long as they're not harming you or not harming themselves. So, um, centralization will naturally form. So I think, um, as long as we're centralized, we just got to be very cognizant of the fact that we're not, the centralization is not a goal. Um, also, to be honest, decentralization itself is actually not really the goal. The goal we want to, we want to achieve is give people the freedom. We want to develop technologies that give people freedom, ease of use, low fees.

• 49:35Speaker 02

  Um, so freedom, including permissionlessness, uh, meaning that if you if you want to send some money to somebody to somebody else across the world,

• 49:45Speaker 02

  um, that's legit activity. Um, you're not doing something dodgy. You should be able to do it.

• 49:50Speaker 02

  So we we want to, we want to protect the fundamental properties that we want to achieve through decentralization. In the process, there will certainly be certain levels of centralization groups working together, et cetera. Uh, but we don't want that to be the ultimate goal. Uh, it should not be ultimate goal for a single organization to control all the world's crypto, et cetera. So, uh, when a single organization is too big, we should look at what what's how to diversify that. To the extent that we actually investing other crypto exchanges, centralized exchanges, we investing our competitors so that we want, we actually, we actually want other exchanges to exist in, more exchanges to exist in the, in the, in this, in this industry. This way we can grow the industry faster. Right now, we not being arrogant, but we're doing

• 50:34Speaker 02

  the lion's share of the work on, on, onboarding users into crypto. So we want to see more people doing that. So, yeah, so it's a very tricky question. There's no right or wrong. And but I, I'm, I'm actually very much agreement with you. It's, we want to be careful that we don't, we don't become overly centralized, overly big, overly monolithic.

• 50:55Ryan Sean Adams?

  Can I, can I just say, so David, David and I talked very much on Bankless about this layer zero, which is the social layer of crypto and very important layer, right? It's all of us collectively. And you have a lot of influence as a layer zero participant who is running a major exchange, right? And so I totally agree with you that decentralization even of itself, it's anti-corruption technology, basically. It's a means to an end and that end is, is freedom. And I'm curious, maybe like personally CZ, why are you in crypto? Because like for me, look, everyone's in crypto to get wealthy, right? That's part of it. That's part of freedom as, as a matter of fact, right? You have some wealth, you have some financial freedom, you're no longer a wage slave. That's fantastic. That's one reason to be in crypto.

• 51:39Ryan Sean Adams?

  But that's not the only reason I'm in crypto, right? And I think there are many, many others who are believers in this concept of freedom, right? Actually getting out from under like the structures and institutions that have controlled our lives for, for too long. Why are you in crypto? We asked this question of Brian Armstrong, you had a different answer and SBF of, you know, FTX, why is CZ in crypto?

• 52:03Speaker 02

  So I think crypto is a technology that can increase the freedom of money for billions of people around the world. And um and in throughout history, any time we can increase the freedom of something without sacrificing other aspects, you know, security, compliance, ease of use, fees, etc. If we can increase the freedom of something, our civilization advances. So if you look at freedom of speech, in some countries only today, uh, freedom of press, again, only in some countries. Um, freedom of information, freedom, uh, freedom of education, freedom from slavery. Anytime those things happen, um, and those things happen over a number of years, they all didn't just happen like that. They all took multiple decades or even centuries for those changes to to uh to come.

• 52:47Speaker 02

  Um, but when those things happen, our civilization advanced. So today, we have the new technology for money that can significantly increase freedom. Today, our money is not that free, like even after you pay all your taxes. If you wanna, if you like, say, you you're entrepreneur in China, in China, if you move more than fifty thousand dollars, US dollars out of China in any given year, that's called money laundering. Um, so if if you if you're a successful entrepreneur in China and you wanna buy a buy an apartment in Paris, guess what? You won't be able to move the money legally. Um, that this is your after-tax money. Um, so that we don't have the level of freedom there. So I do think this technology will enhance our freedom of money.

• 53:28Speaker 02

  And that they're in Africa, ninety, eighty-nine percent of people don't have access to banking. So um, they they're stuck with using some really archaic um uh methods of fin finances. So um, I do think this is a really, really meaningful thing for us to do. And at the same time, we wanna stay hundred percent compliant. Um, uh, we don't wanna cause any trouble, we don't wanna decrease security um aspects. So we need to maintain those aspects and and and and increase the freedom. Uh, for me, I think this is for like for me personally, this is the most meaningful thing I could be doing with my life. So and I feel very fortunate, I feel very lucky to be in a position to make an impact like this. Um, and if I think about everything else that I could be doing, um, nothing had this level of impact.

• 54:14Speaker 02

  Um, so ha- being uh be- being lucky enough to be in a position where I can make this type of impact is hugely rewarding. And this comes back to, um, I fundamentally think the most, um, we're genetically engineered to want to help others of the same kind. So if you look at animals, any animal that does not want to help this same kind, like their own species, they don't have, they're usually not very competitive and they usually don't last and genetics evolution evolves them out. For humans, I think we are genetically engineered to want to help other humans. So we've got to take care of ourselves first. So we've got to, we've got to become financially free, taking care of ourselves, et cetera. After that, the highest, highest sense of fulfillment actually come from helping others.

• 54:59Speaker 02

  So when we are able to help others, when I hear stories, hey, look, CZ, I, I, I become financially free because I was able to access crypto using your platform. That's such a strong sense of reward that I couldn't get anywhere else. This is much better than playing golf all day. You know, drinking martinis, all of those, those things are still, you know, once in a while, still okay. But this, this, this is what makes me tick. So, and this is my life. So I wake up, this is what I'm supposed to do. And if I get tired, I take a nap, I wake up again, this is what I'm supposed to do with my life. So for me, it's not work. It's just what am I supposed to do in this, in this life?

• 55:33Ryan Sean Adams?

  I didn't hear a full night's sleep in there. I just heard a nap. So I guess CZ is just napping.

• 55:38Speaker 02

  I do, actually, I do, I do sleep pretty well. I sleep like six, seven hours a night and sometimes even still have a gap, even still have a nap in the day.

• 55:45Ryan Sean Adams?

  That's better than David, better than your sleep schedule, David.

• 55:48David Hoffman?

  Yeah, no, that's right. And CZ, I definitely align with almost everything you said there, like, and going back to Ryan's talk about the layer zero, the social layer of crypto. One thing about this industry, one of the most bullish things, and my favorite bullish thing about this industry is that the leaders here are largely in it for the right reasons. Like we have our grifters, we have our DoKwans. But we, there are so many people in here that are here for the right reasons and they're ambitious and they're entrepreneurial and they know how to build. And so like that, there are such like, like, such like hungry people that are also here for the right reasons that are supporting this entire industry. And that's one of the reasons why I think crypto has the momentum it needs to take over the world.

• 56:29David Hoffman?

  And so if all of these people who are in it for the right reasons succeed, which I do hope and I do think that they will, where does that take crypto in five to 10 years? If all of like the super ambitious people who are in it for the right reasons, all achieve their wildest dreams, which I totally intend on doing myself, I see you already doing it now. Where does that end up? Where, where does that place crypto at the end of this decade? Like, how big are we as an industry?

• 56:53Speaker 02

  I think number one is not like win or not, is it succeed or not? Like we're all here persistently, consistently pushing forward. Sometimes a bit faster, sometimes a bit slower, depending on overall market conditions, macroeconomics and other factors. But we're all here, we're not going anywhere, we're just consistently and persistently pushing this industry forward. So I think 10, 20 years from now, 20 years from now, people, people be using, like people are using blockchain crypto the way they use the internet without mentioning it. Today, I don't say like, hey, I'm gonna use the internet to message you. We just use it like, no, we just, we just use it. There's many different applications on it.

• 57:37Speaker 02

  So I think 10, 20 years, we will get there. 10 years might still be a little bit tough, to be honest. Even if you look at the internet today, when we talk about video conferencing, sometimes still doesn't work that well. And so, but I think eventually, like people shouldn't be talking about blockchain. People shouldn't be talking about consensus nodes, all this other geeky stuff. People should be like, hey, I'm sending you some money. Hey, I'm doing a fundraising globally. I'm selling my art globally. I'm gonna, I'm gonna hire some, I'm gonna hire a trainer, fitness trainer in the metaverse. So, yeah, so all of the things should come naturally and without mentioning any technology, we will get there. It's just a matter of time.

• 58:19Ryan Sean Adams?

  Well, CZ, this has been a really fantastic conversation. Want to thank you so much for stopping by Bankless and good luck to you during the bear market. Of course, we will be watching what's next for Binance and what's next for BNB Chain and what's next for you. So thanks a lot.

• 58:35Speaker 02

  Yeah, thanks, thanks for having me. Yeah, cheers.

• 58:38Ryan Sean Adams?

  Risks and disclaimers, everybody, of course, none of this has been financial advice. All of crypto is risky. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless.