Fireside: Bybit's Ben Zhou

At Breakpoint 2024, Bybit CEO Ben Zhou sat down for a revealing fireside chat that explored how one of the world's largest cryptocurrency exchanges is evolving its strategy amid a rapidly changing regulatory landscape—and why the company believes decentralized exchanges aren't competitors but rather the next step in users' crypto journeys.

Summary

The conversation between Ben Zhou and a Solana Foundation representative offered a fascinating window into how centralized exchanges are positioning themselves for crypto's next wave of mainstream adoption. Zhou revealed that Bybit has pivoted significantly over the past two years, shifting focus from pure product innovation to aggressive licensing and regulatory compliance across multiple jurisdictions.

What emerged was a nuanced view of how centralized and decentralized infrastructure can work together. Rather than seeing DEXs as existential threats, Zhou described them as complementary products that serve users once they've "graduated" from the more curated centralized exchange experience. This philosophy led Bybit to incubate Byreal, a DEX built on Solana, which Zhou views as infrastructure rather than competition.

The discussion also highlighted the massive opportunity in emerging markets. Zhou identified Latin America, the CIS region, and Africa as Bybit's biggest growth areas in 2024, with licenses secured in Brazil, Argentina, Turkey, and South Africa. In these markets, unbanked populations are treating crypto exchanges like traditional banks—using features like crypto cards and structured products for their daily financial needs.

The Solana Foundation representative provided counterpoint perspective on how blockchain foundations differ from traditional companies, describing their role as "a human interface for a GitHub repo" that focuses on developer attraction, institutional engagement, and policy advocacy rather than operating businesses or seeking licenses.

Key Points:

Bybit's Regulatory Pivot and Global Licensing Strategy

Ben Zhou explained that Bybit's strategic focus has fundamentally shifted since the exchange launched in 2018. The first three years were devoted to product building and innovation—what Zhou nostalgically called "really good fun time." However, the past two years have been dominated by licensing efforts as global regulatory frameworks have matured.

The exchange has secured significant regulatory approvals including a license in the UAE (Abu Dhabi), MiCA compliance for Europe, and authorizations across Southeast Asia including Thailand, Vietnam, and Indonesia. Zhou emphasized that the exchange's role has evolved into connecting local banking infrastructure with crypto rails, enabling mainstream users to make their first crypto purchases easily. This represents a fundamental shift from serving crypto natives to onboarding the masses who haven't yet entered the ecosystem.

Emerging Markets as the New Growth Frontier

Bybit's biggest growth story of 2024 came from regions often overlooked by Western-focused exchanges. Latin America, the Commonwealth of Independent States, and Africa emerged as primary expansion targets, with licenses now active in Brazil, Argentina, Turkey, and South Africa.

Zhou revealed something particularly interesting about user behavior in these markets: populations with limited access to traditional banking treat crypto exchanges like banks themselves. This has driven Bybit to expand beyond trading into payment infrastructure, including crypto cards that users can spend in daily life, earn programs, and even structured financial products. This banking-like positioning in emerging markets represents a significant strategic departure from the derivatives-focused trading platform Bybit originally built.

The Centralized-Decentralized Relationship

One of the most thought-provoking segments explored how centralized exchanges view decentralized competitors. Zhou's perspective was surprisingly collaborative: rather than seeing DEXs as threats, Bybit views them as the natural destination for users who have matured in their crypto journey.

Zhou explained that centralized exchanges serve as infrastructure for the "crypto curious"—users just entering the space who need curated experiences, careful UX design, and hand-holding through their first transactions. As these users become more confident and native to crypto, they naturally progress to self-custody wallets and DEXs that offer more freedom, privacy, and choices. The relationship is complementary rather than competitive, with centralized exchanges continuously onboarding new users from the uncrypto world.

Byreal: Bybit's DEX on Solana

Zhou discussed Byreal, Bybit's DEX built on Solana, and the challenge of establishing it as an independent project rather than simply "Bybit's DEX." The team present at Breakpoint is working to attract projects in a completely decentralized manner, deliberately not leveraging Bybit resources as part of their value proposition.

The Solana Foundation representative offered pointed advice: the incubator association has a half-life, and Byreal must "earn its way out" of that characterization through product excellence. Zhou noted that liquidity is Byreal's primary competitive strength, with orders already being routed to the platform due to superior spreads. The team's next focus will be on real-world assets (RWAs), which both Zhou and the Foundation see as crucial for the industry's future.

Why Bybit Abandoned Its Wallet Project

In a candid admission, Zhou revealed that Bybit spent two years developing a wallet product before abandoning the effort. Despite significant investment, the team couldn't achieve meaningful stickiness. Zhou's analysis: users don't choose wallets based on wallet features—they choose based on what the wallet enables them to do, whether that's accessing airdrops, specific projects, or particular chains.

This insight drove the strategic decision to build Byreal instead. Unlike wallets, DEXs are essential infrastructure where trading actually happens, and liquidity creates natural competitive moats. Zhou sees the DEX investment as building infrastructure rather than competing with wallets or other centralized exchanges.

Scaling Challenges for Blockchain Infrastructure

Both speakers acknowledged that scaling remains the critical challenge for onboarding billions of users to crypto. Zhou posed the question directly: can Solana handle tens of billions of transactions as more users onboard? This is the bottleneck that keeps centralized exchanges relevant—they can handle massive throughput while blockchain infrastructure continues maturing.

The Solana Foundation representative acknowledged the complexity, noting that permissionless systems create inherent fragmentation. Using Bitcoin as an example, there are at least five or six different wrapper tokens on Solana, fragmenting liquidity. The ecosystem must decide between maintaining maximum permissionlessness (leaving arbitrage opportunities for solvers) or implementing coordination mechanisms to unify liquidity for better user experience.

Facts + Figures

• Bybit launched in 2018 and spent its first three years focused purely on product innovation before pivoting to compliance
• The exchange has secured licenses in the UAE (Abu Dhabi), Europe (MiCA), Brazil, Argentina, Turkey, South Africa, Thailand, Vietnam, and Indonesia
• Latin America, CIS region, and Africa represent Bybit's biggest growth markets in 2024
• The Solana Policy Institute is the first blockchain-focused policy organization, with approximately six staff members based in Washington DC
• Bybit spent two years developing a wallet product before abandoning the project due to lack of user stickiness
• Byreal, Bybit's Solana DEX, focuses on liquidity as its primary competitive advantage
• Real-world assets (RWAs) are identified as a key future focus for both Byreal and Bybit
• The October 11 cloud outage served as a major test of centralized infrastructure, motivating both centralized and decentralized systems to improve disaster recovery
• Bybit is implementing multi-disaster recovery strategies to ensure exchange availability
• At least five or six different Bitcoin wrapper tokens exist on Solana, fragmenting liquidity

Top quotes

"The exchange space since we launched in 2018, I think the first three years, we were focused on building product, doing innovation. It's really good fun time. And I think for the last two years, it's really about licensing."

"We joke that Solana really is just a GitHub repo and we joke that we as foundation are a human interface for GitHub repo."

"If people ever only see Byreal as Bybit's Solana DEX project, then it hasn't really done its job. It has to earn its way out of that."

"People don't just choose a wallet. They choose what the wallet can do, whether it's the air drop it offers through a project, or they want to get on to Solana to do certain things."

"The relationship between a CEX to a DEX, I think, is not really competition. It's part of the journey as being an infrastructure."

"We at least still play that part of curating that, make them more confident. So that's our job."

"Our job is to steal the uncrypto people, which is even bigger. I think the world is still [mostly uncrypto]."

"If you really want to scale for a billion users, is it really reasonable to expect those people are going to dewire on the technical intricacies of this wrapper versus that?"

"Countries are ecosystems too."

"The October 11 big massive drop was a test of centralized infrastructure. And even with that, we see the downtime of a single cloud can crash a lot of the centralized exchange."

Questions Answered

How is Bybit's business strategy changing in 2024?

Bybit has fundamentally shifted from its original focus on product innovation and trading features to prioritizing regulatory compliance and licensing across global jurisdictions. CEO Ben Zhou explained that while the first three years after 2018 launch were devoted to building competitive products, the past two years have centered on obtaining licenses in key markets. The exchange now sees its role as connecting traditional banking infrastructure with crypto rails, enabling mainstream users—not just crypto natives—to make their first investments. This includes licenses in the UAE, Europe under MiCA, and multiple countries across Southeast Asia and emerging markets.

What regions are driving crypto exchange growth in 2024?

Emerging markets have become Bybit's primary growth engines, with Latin America, the CIS region, and Africa leading expansion efforts. The exchange has secured operational licenses in Brazil, Argentina, Turkey, and South Africa. What makes these markets particularly interesting is user behavior: populations with limited traditional banking access treat crypto exchanges like banks, using features such as crypto cards for daily purchases, earn programs for savings, and structured products for investing. This has pushed Bybit to expand beyond pure trading into comprehensive financial services.

Why did Bybit build a DEX instead of focusing on wallets?

After spending two years developing a wallet product, Bybit abandoned the effort due to fundamental stickiness problems. CEO Ben Zhou explained that users don't choose wallets based on wallet features—they choose based on what activities the wallet enables, such as specific airdrops, project access, or chain compatibility. If a popular project only supports one wallet, users will simply use that wallet regardless of alternatives. DEXs, however, represent essential trading infrastructure where liquidity creates sustainable competitive advantages. This insight drove the decision to build Byreal on Solana instead of continuing wallet development.

How do centralized exchanges view decentralized exchanges?

Rather than seeing DEXs as competitors, Bybit views them as complementary infrastructure serving different stages of users' crypto journeys. Centralized exchanges serve "crypto curious" newcomers who need curated experiences and careful UX design for their first transactions. As users become more confident and crypto-native, they naturally progress to self-custody wallets and DEXs that offer more freedom, privacy, and choices. Zhou described this as a "maturing phase" where centralized exchanges continuously onboard new users from the mainstream world, then "ship them off" to decentralized infrastructure as they advance.

What challenges does Solana face in scaling to billions of users?

The primary challenge involves balancing permissionless design with user experience at scale. The Solana Foundation representative highlighted that open, permissionless asset issuance creates inherent liquidity fragmentation—for example, at least five or six different Bitcoin wrapper tokens exist on Solana. The ecosystem must decide whether to maintain maximum permissionlessness and let developers build solver networks to handle arbitrage, or implement coordination mechanisms to unify liquidity. For mainstream adoption, expecting billions of users to understand technical differences between various asset wrappers is unrealistic, making this a critical UX decision.

What makes Byreal different from other Solana DEXs?

Byreal's primary competitive strength is liquidity, with Zhou noting that orders are already being routed to the platform due to superior spreads. However, the team faces a unique challenge: establishing identity independent from Bybit's brand. The Solana Foundation advised that Byreal must "earn its way out" of being seen as simply Bybit's DEX project through product excellence. The team is deliberately not leveraging Bybit resources as part of their value proposition and plans to focus on real-world assets as their next major differentiation.

How does the Solana Foundation interact with regulators differently than exchanges?

The Solana Foundation describes itself as "a human interface for a GitHub repo" rather than an operating business, which fundamentally changes its regulatory engagement. The foundation established the Solana Policy Institute with approximately six staff in Washington DC—the first blockchain-focused policy organization. Unlike exchanges seeking licenses, the foundation cares about issues like whether developers might be prosecuted for writing code. When engaging with countries, discussions focus less on specific regulations and more on talent formation, capital formation, and growing economies through "internet capital markets."

What lessons did the crypto industry learn from the October 11 cloud outage?

The October 11 cloud infrastructure failure served as a stress test for both centralized and decentralized systems. Zhou noted it demonstrated how single cloud provider downtime could crash multiple centralized exchanges simultaneously, motivating Bybit to implement multi-disaster recovery strategies. For decentralized infrastructure, the Solana representative noted it shifted people's trade-off perspectives—demonstrating that decentralized systems could actually perform well under stress while providing more transparency, particularly around oracle data feeds. The event may have moved industry perception toward favoring decentralized resilience.