"We are not in competition with decentralized exchanges, but rather working together to expand the market size."

Written by: TechFlow

In this current cycle, driven by favorable policies and an influx of institutions leading to a surge in trading volume and user numbers, competition among exchanges has become more intense.

At the recently concluded industry event TOKEN 2049 in Singapore, we witnessed a higher level of exchange activity than ever before, with everyone putting in great effort in brand visual innovation, promoting differentiated advantages, and attracting new users, including this event's platinum sponsor, WEEX, which has nearly 7 million users globally, with a daily average trading volume of over $15 billion in contracts and over $2 billion in spot trading.

At the event, the splendid WEEX booth located at the center, along with the young and handsome co-founder and Chief Security Officer Ethan, easily captured everyone's attention. Taking this opportunity, TechFlow also had an in-depth face-to-face conversation with Ethan.

When discussing technical expertise, Ethan elaborated on WEEX's core advantages:

Through designs such as full in-memory operation and sharding, WEEX has largely overcome the "low latency, high concurrency, consistency" triangle that exchanges face, achieving a TPS in the millions, with core link latency around 6 milliseconds, entering the industry's top tier standards.

Regarding how WEEX attracts users, Ethan, who has over ten years of frontline trading experience in quantitative trading, provided profound insights from a user perspective:

What users really want is to trade what they want in a safe trading environment. WEEX strictly adheres to the highest safety standards in the industry and has established a 1000 BTC protection fund to ensure users can trade with peace of mind. At the same time, WEEX also boasts unique advantages such as low latency, high liquidity, extensive coin pair support, and up to 400x leverage, providing a more user-friendly experience.

Finally, when discussing the impact of Hyperliquid's strong rise on contracts and the entire CEX contract business, Ethan stated:

We are not in competition with decentralized exchanges, but rather working together to expand the market size. Compared to DEX, CEX has advantages such as richer coin pair support, lower barriers to entry, and more stable and efficient performance. For users, the choice between CEX and DEX essentially comes down to different needs being met.

In this issue, let us follow the wonderful sharing of WEEX co-founder and Chief Security Officer Ethan, delving into the continuous technological upgrades and global brand exposure behind WEEX's rapid growth over the past few years, as well as WEEX's differentiated advantages in the increasingly fierce competition among exchanges.

Quarterly contract trading volume increased 4 times: Four core reasons users choose WEEX

TechFlow:** We are very pleased to have the opportunity for an in-depth exchange with you. Some Chinese-speaking users may not be familiar with your background, so please start with a self-introduction?**

Ethan:

Hello everyone, I am Ethan, co-founder and Chief Security Officer of WEEX.

At WEEX, I mainly oversee the trading sector, including the development and maintenance of the second-generation trading systems for contract Pro and spot Pro, some design aspects of security architecture, and the group's strategic growth. I have a background in computer science and worked as a quantitative trader in investment banks and hedge funds for over ten years.

Since joining the WEEX team, we have entered a rapid development phase, with both customer numbers and market growth accelerating quickly, and we support many spot and contract-related coin pairs. However, we encountered system saturation issues, and lagging performance affected user experience, so my role primarily focused on upgrading WEEX's second-generation trading system.

My long-standing experience in frontline trading has given me a deeper understanding of how to optimize trading links, and as a high-frequency trading user myself, I know what product features users need. I am also very happy to contribute to WEEX's growth. In recent years, WEEX has indeed become one of the fastest-growing exchanges, with our quarterly contract trading volume increasing fourfold.

Currently, WEEX's system performance has significantly improved, with TPS reaching the millions, approximately a 100-fold increase, and core link latency around 6 milliseconds, now meeting the standards of the industry's top tier.

TechFlow:** If you had to introduce "why use WEEX" to users in one or two sentences, what would you say?**

Ethan:

I think there are two important dimensions: one is the safety and compliance of funds, and the other is user experience.

In terms of safety, we have 1000 BTC as a guarantee. Many large exchanges set up protection funds for user compensation in unexpected situations, while smaller exchanges have poor compensation capabilities. We genuinely have 1000 BTC, and users can verify this on our official website, which greatly assures our risk-bearing capacity for users; they can trade with peace of mind.

In terms of coin pair support, whether for spot or contracts, WEEX's volume is among the industry's top tier, including many hot and new projects that we list, allowing users to trade almost all coin pairs on our platform.

At the same time, our trading depth rivals that of top exchanges: for some major coins, trading tens of millions of dollars is no problem; for smaller coins, the market cap might only be tens of millions of dollars.

Additionally, we support leverage of up to 400 times. We focus more on contract trading, and we do not have coin-based contracts; we only do USDT-based contracts, concentrating all liquidity in USDT. If users want to trade new contracts with high leverage and high multiples, WEEX is the place to be.

Whether it's coin pairs, liquidity, latency, or safety, we have optimized them well, all of which are very user-friendly.

For users, what they really want is a safe trading environment where their money won't be hacked, the platform won't run away, and they can buy and sell what they want. WEEX can meet these two points very well.

Full in-memory operation and sharding design, system performance improved by 100 times

TechFlow:** As a rapidly growing exchange, could you share some important milestones or data that WEEX has achieved since you joined?**

Ethan:

Our growth has been very significant over the past few years. For example, WEEX currently has over 6 million, nearly 7 million users, with a daily average trading volume of about $15 billion in contracts and around $2 billion in spot trading. In CoinGecko's contract trading rankings, we have successfully entered the top ten, with various metrics having multiplied several times since I joined.

Our BD team has been working very hard, and our partners have brought us a large number of users, but in the past, due to system architecture limitations, the user experience was not ideal. Now that the system has been upgraded, the situation is completely different.

If you don't mind a bit of technical detail, I can elaborate. Our original system had a relatively singular and independent architecture, making it difficult to support high concurrent processing. There exists a "triangle of impossibility" in trading systems:

• Low Latency

• High Concurrency

• Consistency

It is challenging to balance all three. For instance, to allow users from different countries to trade simultaneously, servers need to be deployed in multiple regions, but to maintain data consistency, time must be spent achieving eventual consistency, which affects the goal of low latency. In fact, every exchange is striving to balance these three aspects: ensuring low latency for user trading, supporting a large number of concurrent operations, and guaranteeing data consistency.

The technological upgrades we have made mainly include the following aspects.

First, the second-generation system has achieved full in-memory operation, eliminating reliance on databases throughout the trading process.

Second, we have designed an optimized sharding mechanism. For example, sharding by user, assigning different users to different servers; additionally, sharding by coin pair, allowing different coin pairs to be distributed across different shards. The system also employs a highly modular architecture, which is very conducive to horizontal scaling. This means that as the number of users or coin pairs increases, we only need to add more servers, which is superior to the previous vertical scaling method, where increasing CPU or memory always has a physical limit.

Of course, the sharding mechanism has its limitations; for example, the same coin pair can ultimately only be processed on one server. Therefore, we have also made extensive optimizations for trading instructions, where my high-frequency trading experience has played a significant role in optimizing how to match trades faster and more efficiently.

After these upgrades, we can currently process a trading volume (TPS) of up to millions per second, entering the ranks of first-tier exchanges.

TechFlow:** I want to extend the question a bit; for instance, you mentioned earlier that you handle processing through memory. Is WEEX unique or leading in this aspect? What is WEEX's technical performance position in the competitive landscape of exchanges?**

Ethan:

These technologies themselves are not mysterious. Anyone who has worked in trading or underlying systems basically understands that the key lies in how to implement them effectively, as well as the engineering capabilities of the team and the evolution path of existing systems. We cannot start from scratch; we need to continuously iterate and steadily upgrade on the existing framework, which involves many engineering techniques.

Nowadays, many core members of exchanges come from traditional stock market exchanges, high-frequency trading, or hedge funds. I primarily focused on high-frequency trading in US and Japanese stocks. At that time, we would place trading servers right next to the exchange's data center to minimize latency to the nanosecond level.

Essentially, everyone is migrating traditional financial technology methods to the crypto space. However, there are differences; in traditional financial markets, such as the Nikkei exchange, servers are concentrated in Japan, while crypto trading users are distributed globally. Therefore, our latency requirements are relatively not as high; traditional finance pursues nanosecond levels, while we currently pursue millisecond levels.

For those who have experience in stock high-frequency trading, these technical ideas are not secrets; the difference lies in how you optimize the entire link: where users are primarily located, the condition of terminal devices and networks, etc., all details require skill.

Our technical team has a diverse background, with some coming from other exchanges, some from traditional stock trading systems, and others from large IoT companies. Overall, I believe our technical strength has entered the industry's top tier. Of course, there are many peers who are stronger than us, and we are continuously catching up and learning. In terms of current progress, I think our technical pace is now basically in sync with the leaders.

From the 1000 BTC fund to strict prevention of price spikes: WEEX adheres to the highest safety standards in the industry

TechFlow:** Your main responsibility is security. Can you introduce the efforts WEEX has made in terms of security and what advantages it has?**

Ethan:

We fully adhere to the highest industry standards in security.

For example, we strictly implement the separation of hot and cold wallets: we only keep a small amount of funds in hot wallets, while cold wallets use a multi-layer management mechanism. It is not a single cold wallet managing all funds; instead, the funds are distributed across multiple wallets at different levels.

In addition, all cold wallets have MPC protection, meaning that any operation requires the participation of multiple third parties and must be independently audited and confirmed before funds can be transferred from the main cold wallet to the secondary cold wallet. When withdrawals are needed, funds are then transferred to the hot wallet, and all these processes are completed offline.

We have also invested heavily in third-party audits and set up a bug bounty program, while collaborating with white-hat hacker teams to conduct penetration tests, continuously enhancing system security.

Most importantly, we have established a 1000 BTC protection fund, which sets us apart from many exchanges. Other platforms often take a portion of user profits or fees as a protection fund, while our fund is entirely contributed by management and investors, with these 1000 bitcoins stored on-chain specifically for user compensation. This is a crucial guarantee for the confidence we can provide to our users.

TechFlow: In special market conditions, there seems to always be a phenomenon of "price spikes" for certain trading pairs, which has occurred on multiple exchanges. Why do you think this happens? What ways can be taken to avoid it?

Ethan:

Price spikes in major trading pairs are usually due to system errors or a sudden large order that causes significant market fluctuations. For example, a large fund with a volume of $1 billion could lead to a 3% - 5% price spike in Bitcoin in a short time.

Price spike issues are more common with smaller coins, and even top exchanges find it difficult to completely avoid them. The reasons mainly include the following aspects:

First, it could be an issue with the exchange's system. For instance, if the system crashes and cannot process user orders in a timely manner, once it recovers, a large influx of sell orders can easily trigger a price spike.

Second, insufficient liquidity is also a key factor. If the number of third-party market makers is limited or the liquidity itself is weak, even if a user places a relatively small order, it may lead to significant price fluctuations due to a lack of sufficient market depth. Sometimes unreliable market makers may even withdraw orders temporarily.

Additionally, if the project team itself engages in rug pulls or large-scale cash-outs, it can directly trigger price spikes. For example, if the entire market's liquidity is only $10 million, and the project team suddenly sells $2 million worth of tokens, a price spike is almost inevitable.

To mitigate such issues as much as possible, we have implemented several measures.

First, we continuously optimize the system architecture to ensure low latency and high stability, avoiding anomalies caused by technical issues. We have also introduced AI to monitor liquidity changes in real-time and do not rely solely on a single market maker. WEEX connects multiple liquidity providers for each coin, ensuring that even if one party encounters issues, the market still has sufficient liquidity.

At the same time, we conduct strict reviews of listed projects, making every effort to screen teams with malicious tendencies. While we cannot eliminate risks 100%, we carefully examine project backgrounds, financial strength, and other aspects to reduce risks from the source.

Finally, if such situations do occur, we have a protection fund. When users incur losses due to our system issues, we will compensate them accordingly.

Focusing on contracts: After refining the product, we begin global brand building

TechFlow: The competition among trading platforms is also fierce. From your perspective, what are WEEX's competition and growth strategies?

Ethan:

Since its establishment in 2018, WEEX has begun its global layout. Our business is not limited to Asia; we also hold a considerable market share in regions such as the Middle East, Europe, Africa, and South America.

Many exchanges pursue a broad platform that covers every aspect, while we are currently more focused on contract trading, which is why our performance in this area is more prominent. This includes the safety, liquidity, richness of coin pairs, and leverage that I just shared, all of which have advantages compared to our competitors. Of course, we are also actively expanding into spot trading, wealth management, and other diversified businesses, gradually building a more comprehensive trading ecosystem.

In addition, we have a fantastic community. We place great importance on community building and brand communication. For example, recently at TOKEN 2049 in Singapore and the previous Dubai event, WEEX was a platinum sponsor. We hope to increase exposure and strengthen interaction with users through these opportunities.

As you can feel from today's event, our position is very central and prominent, and our marketing team has put a lot of effort into the setup. Our team is working very hard to promote brand building. We mainly want to convey a message to our customers: previously, we focused on refining our product; now that our product is nearly polished, we believe we can start focusing more on brand building.

Personally, I also value communication with users. I have opened an X account and will participate in AMA activities from time to time. If anyone has questions, they can reach out to me, and I will respond to comments I see. Our customer service team is also online 24/7 to answer questions. In the future, I will continue to share WEEX's latest developments and plans through the X platform.

TechFlow: It seems that WEEX participates in the Singapore event every year, but there is relatively less exposure in events in Korea and Japan. What is the consideration behind this? Does WEEX have different growth strategies for different regions?

Ethan:

As I just mentioned, WEEX is actually globally laid out, with a good share in Asia, the Middle East, Europe, Africa, and South America.

We have always supported and participated as a platinum sponsor at TOKEN 2049 in Singapore, which has a strong global attribute and is also Singapore's largest crypto event, gathering partners from all over the world.

In other regions, we mainly hold some side events or smaller activities. Since brand building has just started, we are currently focusing on large international events to enhance brand exposure. In the future, we will gradually expand into markets like Japan and Taiwan. In fact, we already have many events taking place around the world every month.

To be honest, we are still primarily focusing our efforts on refining our product and cannot participate in all events, but we will continue to work hard to increase exposure and let more users who are not yet familiar with WEEX know about our existence and understand that we are a trading platform that is always dedicated to serving customers.

TechFlow: This year, many trading platforms are integrating or promoting AI-related features. Do you have any related plans? How will AI be integrated with the WEEX platform?

Ethan:

I am actually quite interested in AI, as I studied computer science in college.

As early as when ChatGPT started to gain popularity, we were already paying attention and trying to introduce it into the exchange's business. Currently, we are mainly applying AI in our internal systems, such as risk control systems and liquidity monitoring modules, which have fully integrated AI technology. At the same time, we have launched AI customer service, and in the copy trading section, we have also introduced some traders who provide AI strategies for users to choose from.

As for the features mentioned earlier, such as users clicking on a trading pair and receiving investment advice from AI, we are indeed developing this and expect to launch such services in the near future. However, since we are a trading platform, we need to maintain a firm and neutral stance. We mainly provide trading services for users; they have their own trading strategies, and they execute them while we support, rather than directly advising users to buy or sell a particular coin, so we will be particularly cautious in this regard.

Providing investment advice and operating an exchange inherently involves certain conflicts of interest, so we must be very careful to strike a balance, being particularly cautious in function design and user feedback.

Hyperliquid VS WEEX: Different users' needs met

TechFlow: In your view, what impact has the rise of Hyperliquid had on your contract trading or the entire centralized exchange contract market? Do you plan to launch an on-chain contract platform yourself?

Ethan:

I believe the growth of on-chain contract trading is positive for the entire industry. The path for users to enter the cryptocurrency space is usually gradual; they may first see market information or be recommended by others, starting to learn about mainstream assets like Bitcoin, then trying spot trading, and gradually getting into contract trading.

Therefore, we are very pleased to see the trading volume growth of contract DEXs like Hyperliquid, which indicates that more and more users are beginning to recognize and accept contract trading. This is actually a win-win situation. We are not in competition with decentralized exchanges, but rather working together to expand the market size.

In terms of specific differences, most decentralized exchanges still support a limited number of coin pairs. For example, Hyperliquid only offers contract trading for a few dozen coin pairs, while WEEX supports over 600 contract coin pairs. If the coin a user wants to trade is not covered on a DEX, they will naturally turn to centralized platforms.

At the same time, the participation threshold for decentralized exchanges is relatively high. New users need to manage wallets and private keys themselves, which presents certain challenges for secure operations. In contrast, WEEX has a simple registration process that can be completed in a few minutes, allowing users to open an account and start trading, significantly lowering the entry barrier for new users.

Additionally, in extreme market conditions, DEXs often face issues such as sudden drops in liquidity, increased slippage, and skyrocketing gas fees. Although high-throughput solutions like Layer 2, Layer 3, and new public chains are gradually improving these pain points, CEXs still have clear advantages in system stability, trading performance, and low latency.

TechFlow:** You mentioned earlier that the liquidity of coin pairs on centralized exchanges is better, is this due to market makers? And in the future, as more market makers operate on-chain and with Hyper EVM facilitating Hyperliquid to support more coin pairs, do you think the series of issues faced by DEXs will be well resolved?**

Ethan:

To be honest, I think Hyperliquid is more like a CEX. For example, the speed of Hyperliquid's HLP price spike rollback was even faster than that of a CEX. Therefore, in my view, for Hyperliquid to achieve lower latency, faster support for more trading pairs, and a better market-making experience, it will definitely need some Gasless designs.

Specifically, market makers need to continuously adjust and update orders, requiring a large number of high-frequency operations. If each operation incurs a Gas fee, even if the Gas cost for each operation is low, the overall cost will still be very high. Therefore, Hyperliquid will need to implement a Gas-free mechanism in the future to support high-frequency updates, but this is inherently a challenging technical point, and it will also bring Hyperliquid closer to a CEX. In contrast, centralized exchanges have advantages in these areas.

Additionally, we have a clear advantage in terms of user thresholds. If a newcomer just enters the cryptocurrency space: on one hand, they may find it difficult; directly asking them to manage wallets, private keys, mnemonic phrases, and Gas fees can easily confuse and overwhelm them. On the other hand, they may develop distrust: is it safe to keep my money here?

More importantly, many novice users can easily fall into on-chain security traps when authorizing transactions. For example, there have been cases where hackers created tokens and provided liquidity on Uniswap, then conducted large-scale airdrops. Some users, seeing free tokens, attempted to sell them, and once they clicked "Approve" to authorize, hackers could steal assets from the users' wallets through pre-set traps.

Such risks are hard to guard against for newcomers, while centralized exchanges can effectively avoid these issues, providing users with a lower threshold and a more secure trading experience.

Ultimately, I believe that CEXs and DEXs serve different users' needs:

If you are familiar with on-chain operations and want to have control over your assets, you can choose a platform like Hyperliquid; however, if you seek a more convenient, friendly, secure, and low-threshold trading experience, wish to enjoy fee discounts, participate in community activities, and have 24/7 customer support, then a centralized exchange like WEEX would be a more suitable choice.

TechFlow:** We know that WEEX also has its own platform token $WXT. Can you introduce what empowerment this token currently has and will have in the future?**

Ethan:

Yes, our platform token has been online for about two to three years, and it has already achieved about four times the investment return. If you held our platform token early on, this performance can be considered quite good for a platform token.

Users holding our platform token can participate in platform governance and various community activities, such as having the opportunity to receive airdrops from new projects.

In addition, we will regularly use a portion of our profits for buybacks and burns. We have already conducted one burn in January and another in August this year, and we will continue to promote this mechanism in the future.

At the same time, we hope to expand more application scenarios for the platform token like other exchanges, whether in online communities, new project subscriptions, governance participation, or other areas, we are committed to maximizing the role of the platform token.

TechFlow:** We have seen you state that "you are committed to making WEEX a platform that makes trading safer, more efficient, and more trustworthy." What plans do you have to achieve this vision, and what key indicators will you focus on?**

Ethan:

We mainly focus on two core indicators: customer growth and trading volume growth.

As the number of customers increases, quality projects will naturally choose to launch on our exchange, allowing our users to access more quality assets. For example, if our community size is large, project teams often provide more airdrop tokens, which we can distribute as benefits to users.

On the other hand, an increase in trading volume also represents better trading depth. As trading volume continues to grow, more market makers will be willing to invest resources into our platform, further enhancing liquidity and improving the trading experience for users. These factors promote each other, creating a virtuous cycle.

On the technical side, we will continue to expand the system and optimize performance to ensure that users in different countries and regions can enjoy a low-latency, high-liquidity trading experience, continuously attracting new user growth.

In addition, our user protection fund will also exist long-term, to enhance user confidence. If users incur losses due to system issues, we will ensure their rights through this fund.

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