Hello and welcome to the cryptobe. My name is Kelvin Sparks. This is my co-host Tim Copeland, head of growth at the block. Joining us today, we have Ben Zhou, co-founder and CEO of Bybit. Welcome to the show. How are we all doing, guys?
Very good. Thank you. Thank you for having me on the show.
Yeah. And thank you for taking the time to join us today, Ben. So before we get started, our crypto IQ test is now closed and the finals will be competing for a shot at 20,000 USD. Be on the lookout via our official channels for more in the coming weeks. Now, let's get into today's episode on building Bybit with Ben. So, for background context, Ben, you have built significant risk management systems. So, I'm curious in your own life, what's the biggest risk you've ever taken?
Wow. I think people take on risk all the time. Life-changing decisions, getting married, having kids, starting a startup, especially in crypto. I think those are all critical choices and decisions that, you look back, end up where you are today.
And so as you think about risk, how do you weigh that against what the potential payout may be?
Well, if anyone is considering doing a startup, probably blockchain or crypto is the best industry because the risk-to-reward ratio is very much in favor of entrepreneurs. The industry is constantly growing. There are new opportunities. And I think especially for exchanges, the track that we pick, you do see exchanges make mistakes here and there sometimes, but because the industry is growing, it tends to be quite forgiving. So again, the reward ratio is very high. I think it's definitely one of the best industries to do a startup.
And so as you were building Bybit, what was the thought process behind building such a derivative-heavy exchange?
Well, I wouldn't say we're derivative-heavy; we just started off as a derivative exchange. Back in the days, we started in 2017. My previous background was running a forex exchange, so my background was really focused on derivative and margin trading. I looked at what choices we had, who the exchanges offering similar products were. Back then, BitMEX was dominating with perpetual contracts, and there were only a few other exchanges providing similar products. After testing the product, I felt like I could build a better product. So that's how I started it. But now, Bybit is really spot, everything, earn, Bybit card. People don't really look at us as a derivative exchange but as a whole overall ecosystem.
Yeah, we're definitely seeing that with exchanges seeming to offer everything these days. Sorts of products integrating this, that, and everything. Is it hard to keep up with the zeitgeist? I know it's like launchpads one day, prediction markets these days. We saw Coinbase integrating prediction markets. How do you keep up with all of it?
I think everyone is moving in one direction: you want to be the one-stop shop that keeps clients' wealth or AUM. The reason exchanges keep releasing new products is to grab clients from the new flow of new users. The concept is once they come into your ecosystem or have your app, they can find pretty much everything they need. If they need an earn product, a crypto card, they don't end up leaving. You want to build a product so comfortable with so many choices that they can't be bothered to move. We observe that most clients have a similar mentality: once the product has almost everything they need, they don't have incentive to move. Most clients actually don't compare prices and other things that a lot of people think critical. For example, most people still buy stock with their bank simply because the money is in the bank, and they don't compare the price because typically you would buy it cheaper separately from Interactive Brokers, but people are lazy to move.
Yeah. And how important is the card as a product? We've recently launched rating pages where I've reviewed nearly 30 cards across different companies. Obviously, there are a number of big exchanges going quite heavy into the card. Do you think that's a key loyalty driver?
Not only loyalty, it's becoming our new user acquisition tool, one of the best. Especially in countries that are very used to cards, like the EU, also Brazil, Argentina. We've issued over three million cards in the past two years. What we observed is a lot of clients apply for the card because we have so many benefits: we give 10% cash back, and for the balance you're not spending, you earn a yield. For us, it's a user acquisition channel. If you only look at the card business, it's probably a cost center. But if you analyze the overall client flow, the clients are attracted to the card business, and if they do any other product consumption on the platform, you end up with a positive ROI product. Also, by nature, the card is a very day-to-day use behavior, so it increases your client's behavior. They open the app all the time. We realized that people using the card, because they open the app to check what cash back they have, what points they earn, typically have incentive to make a trade or check out what we offer at the same time, whether it's Launchpad or Launchpool today. So it increased the activity a lot. A lot of times when people think about crypto exchanges, they only open it up when there's something interesting from a token or a new token they want to understand. But if you combine it with a card or a daily behavior, it increases their click point to the app and that increases business. So I think that's why the card is a very good product to launch.
So as you think about introducing new product lines, what kind of validations do you look for from either the users or markets to say this was a success or no, this isn't something we want to pursue any further?
I think that's the same with any business, right? But the beauty of crypto is you can pretty much think of a product, write a PRD, send it to developers, release, test water, do A/B testing within three months. That's the speed we have. We always do A/B tests. For example, we recently launched RFQ, a product that clients can send RFQ doing arbitrage between options, spot, and perps. We just released it and gave it to certain institutions to see how they like it and if there's any market feedback from our VIP clients. The opportunity cost for not launching is so high that you pretty much, whenever you have an idea, you want to build it, launch it, and see how it works because the industry is still growing so much. I always tell the team the opportunity cost from not trying is the highest.
Do you think you're going to get into prediction markets?
We're looking into it and we're actually talking to a few big players. Obviously everyone knows Polymarket, so we're talking to them, seeing what angles we can introduce, and also checking heavily on the compliance side. I'm not sure that's one thing I'm worried about: is it legal, is it compliant to do it? If the legal opinion is fine, then we can definitely try it. I think in the last three months, a lot more people have been asking me about prediction markets, and my team is getting excited about it. So we're definitely looking into it.
Okay. And what do you think of Coinbase getting into ICOs at this point of the market? They bought Echo, acquired Sona, but also seem to have built their own ICO platform at the same time, which went live with the Monad sale. What do you think about Coinbase getting into launchpads at this point in time?
Well, I think it's really trying to be... First of all, Coinbase and Bybit are very different animals. They are predominantly US, and we don't touch the US, so we hardly ever compete. In the market that we are in, we mostly see Binance; we don't really see Coinbase. But I do understand why they want to do this launchpad thing. When a project wants to go global, they will typically give more preference or budget to the international exchange. If they want to focus on the US, they will give the budget to Coinbase and maybe do a dual listing on Coinbase, Binance, or Bybit. I think by acquiring this ICO platform, it will give Coinbase a better edge to get better projects that even have a global presence, and maybe from that way they can penetrate more from their global exchange. But honestly, we don't really see them where we are.
So I was curious, Ben, you spoke to prediction markets and there being a lot of interest on your team side of things. This obviously is a bit speculative, but in your opinion, if there's a sign too big to ignore, like compliance works out hopefully, what would that sign in the market be that we need to jump into this right now?
No, I think it wasn't a sign. If everyone is asking, we can definitely just launch a product and test it out. I don't mind trying it. I'm not sure what my clients would react, because people who are buying tokens and doing derivative trading on the existing Bybit platform might not be the prediction market clientele. I'm not sure. But again, I do think it's quite event-driven now, the prediction market. So maybe it's good, especially when things like elections come. But again, I wouldn't mind trying. So yeah, we can see.
Understood. So going back to the core business, or what at least originally Bybit started with, which is derivatives, specifically perps, they've been booming all of 2025. I'm curious, do you see any differences between behaviors of onchain perp traders versus centralized exchange perp traders?
Yeah, that's a good question. To be honest, I don't see DEXes as really competition. I do see a place for DEXes, especially in the next few coming years, because everywhere is getting more regulated. For example, all the global exchanges, at least with high leverage trading exchanges, have to exit multiple markets. We're exiting Europe, we exited Japan, we exited Thailand. With regulation comes typically fiat and spot first. The derivative license will take some time. For the EU, there is MiCA right now, which we are getting. With that license, you can offer up to 10x leverage. I don't think for the EU there is a proper license to make retail trade high leverage. So I think the existence of DEXes is really for people who cannot trade high leverage; they lost the venue, and that's when they move into DEXes. To be honest, I don't believe people are moving to DEX because liquidity is better, because it's not, or the user experience is better, because they typically have to use a centralized exchange to do the on- and off-ramp and then move their tokens to the DEX. But I do see the gap will be closing if derivative licenses start to become more popular. Then, just like how CFD commodity markets are, when the license framework is ready, a lot of the existing users will most likely come back to centralized exchanges because we are ready to offer them a compliant leverage product. So that's my view.
Understood. Thank you for illuminating. And I'm curious, since we've talked about the onchain side of things, I really want to talk a little about Mantle and Bybit. So what's the symbiotic relationship between Bybit and Mantle?
Mantle is a project we supported all the way since very early, I think four years ago. Initially, Bybit committed half of our revenue to the BitDAO treasury. So if you look at today, Mantle still has one of the largest onchain treasuries, like 2-3 billion existing treasury. The initial goal was to use this DAO to deploy funding to different projects, but eventually this didn't work out because we figured there wasn't a correlation between how big the treasury is and the token price of BIT. We were pumping money into the treasury, but the token was not moving. So this assumption that the bigger the treasury, the token price would reflect that was actually debunked. So I think Mantle evolved gradually from BIT and is now focusing more on the layer two. Now, Mantle is really focusing on being the RWA chain and using the exchange as the connector between the real world and the token and the onchain part of Mantle.
Understood. And I guess it seems like these disconnects that you spoke to don't really exist in traditional markets. Why is crypto so wonky even though it's having its coming-of-age moment right now?
I think crypto, at least for projects, the pricing is not really determined by the treasury size. There are many factors people consider: is the team active, are they constantly building things, what is the utility of the token? I think the team didn't focus so much on utility of the token initially. But in the last six months, we have been focusing more on utility. So BIT is now again empowering Mantle by accepting Mantle token as the VIP tier, as trading fees, as many things. On top of that, there's going to be more utility coming into the token. So hopefully that will give some confidence on the price.
So at the time when BitDAO was deploying funds into all these projects, why did you choose to go heavy into the L2 route versus making your own L1?
Well, I'm not a decision maker in Mantle. Mantle has always been running quite independently. But if I share my observation, at the time L2 was the biggest thing; it was quite popular. But people also say L2 is kind of nothing much happening here, and again most people are focusing on L1 now. I think projects can evolve as long as the team is active, and the Mantle team is definitely active. They are looking into what is the future of L2 versus L1. Even if we launch L1, for what reason? Do we launch a higher performance L1 like Hyperliquid and launch a DEX on it? Or do we keep it? For now, the positioning of Mantle is really RWA, so keeping it on an L2 on Ethereum is fine. We don't see any issues with that.
Bybit is really a project we incubated. At Bybit, we tell our staff if you have an idea, we will help you build it. It was really coming from one of my managers, and she loved the idea of a DEX on Solana. So we said, okay, go ahead and do it. We'll give you the support. So it's actually an independent project launched by one of our employees. I think the project is doing quite well. The unique point is trying to make a real DEX with real liquidity focusing on real projects. Memes are not going to be able to get on Bybit, but projects that the team believes in. So again, this is something quite independent, but we're helping it. So hopefully this project will go well, but currently it is a DEX on Solana doing quite well.
Cool. And then looking at the markets with Bitcoin back down to nearly 90k, what do you think of the current market dynamic?
If I'll be honest, I think we look at a few signals. We look at the liquidity. The liquidity on all coins is really drying up. I think we're going to suffer a little bit probably until next year, maybe March. Maybe things will pick up a little bit, but for the very short term, maybe the next four or five months, I don't think this is going to get too excited because so much liquidity has been lost post-October 11th. What's kind of alarming is that, at least from an exchange perspective, the liquidity has not come back due to a number of reasons. So yeah, that's my take.
And what's it like running an exchange during this period? Because something I've been chatting about for a while is it seems to be in the space a lot of there hasn't been a real altcoin season, and a lot of the projects in this space are funded through that. I've always thought it seems like the only profitable businesses are exchanges. So is that true, or is it much more complicated than that?
I guess which part of your question you want me to focus? Is it the exchange part or the altcoin part?
