Interview with Babbitt | Matrixport, Trading, Lending and Hosting, How to build a bank in the digital currency world?

On July 8th, Matrixport, a new project jointly established by the founders of Bitcoin Wu Jihan and Ge Yueyu, was officially launched. The project is positioned as a one-stop digital asset financial service platform.

Currently, from the trial version of the Matrixport web version, trading, lending and hosting are the three main lines of business.

Recently, Babbitt interviewed Wu Mengxia, senior vice president of Matrixport and head of the custody business. Previously, she was the investment director of Bitland, responsible for investment in the blockchain finance sector.

In the conversation, Wu Mengxia answered a number of heavy questions, including why Matrixport has to do transactions, lending and hosting three businesses? How will Matrixport work with Bitcoin and its sister companies? Does the birth of Matrixport mean that digital currency is heading for a bull market? Where are the challenges and opportunities for Matrixport?

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▲Matrixport Beta main page

Matrixport, originating from the mining ring, targets the digital currency sector

Briefly introduce the three business lines of Matrixport.

In terms of trading, Matrixport provides currency trading pairs between BTC, BCH, ETH, LTC and USDT. Unlike the exchanges in the combination mode of fire currency and coin security, Matrixport uses the inquiry mode, the user enters the number of transaction tokens, and the system automatically gives the transaction quotation and completes the transaction.

According to Zhan Chaoyang, director of trading operations at Matrixport, the inquiry trading model provides sufficient trading depth, reduces the impact of large purchases on the price of coins, and is more competitive in price.

In terms of lending, Matrixport currently supports BTC, BCH, and ETH pledge tokens. Users can lend USDT at a certain percentage. Different loan terms correspond to a comprehensive annual interest rate ranging from 12% to 16%. Lin Biao, head of Matrixport Lending Business Introduction: "Matrixport lending products are mainly security transparent, low interest rate, asset delivery or trusted third party security custody, the price of encrypted assets is taken as the average price of the mainstream exchange to ensure the transparency of the liquidation line, and the funds are submitted immediately after submitting the loan application online. Account."

On the hosting side, Matrixport provides only a business introduction that provides secure and compliant digital asset custodial services to a variety of digital monetary institutions or high net worth individuals.

Why are these three businesses? Wu Mengxia said that the business of the three can be compared to banks.

“Save, exchange, lend, invest, these are the basic financial needs that have never changed. Microscopically, these businesses are interrelated and we hope to provide one-stop digital currency financial services. From a macro perspective, emerging asset classes are generated. To mature, there needs to be diversified financial services and products to accommodate more demand, generate greater market size, and ultimately drive the market to mature."

According to the disclosed news, the Matrixport team is partly from Bitcoin. Its CEO is Ge Yuezhen. Wu Jihan is a major investor, but currently does not participate in the direct management of the company.

It can be seen that the “mineral circle” surrounding Bitcoin is the starting point of the Matrixport business. Today, in the specialization of miners, its demand is not just to buy mining machines. Matrixport fills the financial needs of miners in digital currency deposits, trading, loans, and investments. This is a positive feedback to the miners’ ecology of Bitland. We have a strong synergy with Bitcoin in different stages of serving customers in the same industry chain.”

According to Wu Mengxia, Bitcoin, BTC.COM, Antpool and Bit Deer are currently using the hosting solution provided by Matrixport. But its vision clearly does not stop there. It is reported that the iterative 2.0 version of the web-side products is expected to be launched in the third quarter, and will be open to all types of digital currency corporate customers and high-net-worth individual customers in the market. At the same time, hosting also provides API access options, and now customers of exchanges and trading platform types can also access Matrixport's hosting services via API access.

“These are very traditional business types, but we apply it to digital currencies. We will continue to introduce more products in the future.”

Perhaps the interesting part is that the so-called bank metaphor is actually a huge ambition. Chen Lei, the founding partner of Bit Blue Whale, once said that if Matrixport did it, it would have a great influence on the coin-issuing cost and depository interest rate of Bitcoin.

Digital currency hosting

Wu Mengxia is the head of the Matrixport hosting business, and we talked about the things about hosting.

Digital currency custody has long been recognized as an infrastructure and prerequisite for large-scale funding. For example, the Bitcoin ETF, which can make Bitcoin into a mass asset, but its delay in landing is related to the immature hosting market.

Earlier, US SEC Chairman Jay Clayton said in an interview that the prerequisites for the approval of the Bitcoin ETF are the hosting plan and the second is the market manipulation strategy. This is tantamount to announcing that the market is not ready for institutional entry and that there is no infrastructure for the organization's configurable assets.

"We have seen many hedge funds, family funds, proprietary traders and other institutions in Europe and the United States have already entered because they are relatively lightly regulated. Where are the larger financial institutions? For example, banks, pension funds, trusteeship can be Early in the market, the obstacles to the entry of some institutions were cleared."

Hosting solves four levels of problems. First, security issues in digital asset custodians and corporate financial functions. Second, regulatory issues. Third, the channel for the entry of financial institutions has been established. Fourth, expand the asset scale and enrich the asset class.

Wu Mengxia analysis, at present, the digital currency market scale of 250-300 billion, the value of the next round of bull market is likely to be 5-10 times now. At present, institutional trust funds should be between 5% and 10% of the current market size. In the next three years, this ratio is likely to reach 40%-50%.

“As the market matures and market value grows, market stratification will be clearer. They need specialized services, and the market space for custody is very large.” Wu Mengxia said.

No benefit, no early. This golden track can already be described as congestion. In foreign countries, Coinbase, Xapo, BitGo, and Kingdom Trust are all head players. Coinbase claims to host a $1 billion digital currency, and the latter three have more than $5 billion in custody. In China, although it started late, institutions like Invault and Cobo also have extensive market influence. Invault also recently announced that its custody funds have exceeded $100 million.

"We are definitely not limited to the Chinese market. We hope that we can achieve the top three in the world. So it is not easy to say that we have a bit of the mainland, we are under great pressure, and our efforts are endless."

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Safety and regulation, uncertainties in the custody market

According to Wu Mengxia, the imagination of digital money custody is not only affected by the market value of digital money, but security and regulatory compliance are challenges.

In terms of security, in 2018, the amount of stolen funds in the digital assets field was 2.2 billion US dollars, of which the exchange of stolen funds totaled about 1.35 billion US dollars. Yu Yu, co-founder of Slow Mist Technology, said that more and more professional hackers have entered the blockchain world. They are organized, tactical, patient, and attack-engineered, knowing how to choose and advance and retreat. “The world is very insecure.”

"Security is the foundation, there is no security to talk about hosting." Wu Mengxia said.

On the regulatory front, she believes that digital currency will have a long-term regulated market and an unregulated market. There will be some intermediate areas between the two, and there will be relatively different positioning and customer groups. There will be some market uncertainty in this.

The current situation is that digital currency is a global market without borders, and regulation has borders. Wu Mengxia said that supervision is indeed fragmented, and there is no specific explicit regulation for digital money custody. The United States, Singapore, and Hong Kong are all the same, but the regulatory authorities are thinking and exploring. " The trend we see is that it will come, so we are doing early compliance. Compliance is a requirement and guarantee. It is not only external pressure and constraints, it is a capability, and it can often achieve long-term stability. "

In terms of security, we must fight against hackers, and we must balance innovation and compliance in supervision. “It’s hard to say that hosting can make money. It may not necessarily make money for a while, but it needs it in the development of the industry. It provides the cornerstone of trust in the digital asset era.” She said, “Because of our background, we hope to have The things that are done, the promoters of the development of the industry, to help more companies succeed. They will go up and we will benefit, and this is a benign process."