This episode features KH, Product Manager at Bitget, discussing the concept of the Universal Exchange (UEX), proposed by Bitget's CEO. The discussion focuses on product upgrades, asset diversification, AI and risk management systems, the integration of RWA (real-world assets) and traditional finance, regulatory and compliance issues, and competitive positioning with other exchanges. The views expressed in this article are those of the interviewee and do not necessarily reflect those of Wu Shuo. Readers are advised to strictly abide by local laws and regulations.

The opportunity for CEX and DEX to merge

Maodi: Before we officially start answering these questions, could you please introduce yourself to us, including your current role and your experience at Bitget.

KH: I'm responsible for our products and some of our business here. My current position is CPO. Most of my time is still focused on product development, but over the past year or so, I've also been fortunate to be involved in more business and a wider range of products.

Maodi: Many exchanges have recently been exploring the integration of CEX and DEX and have launched related products. Why did you choose to launch such products or upgrades at this time? In your opinion, what are the most pressing issues that need to be addressed in the current market?

KH: First, we've identified a core issue facing CEXs during this cycle: users' desire to trade a wider range of cryptocurrencies and high-quality assets, including on-chain "million-dollar" assets like memecoin, as well as tokenized traditional assets (RWAs). This demand for these assets collides with CEXs' ability to support spot and futures markets through a traditional coin listing model. In other words, users' desire to trade a diverse range of assets is increasing, while solutions for various asset classes are maturing. This requires CEXs to expand their trading scope beyond the past. This is why many CEXs are integrating with DEXs, driven, in part, by these factors.

We believe this requires a systematic solution, not fragmented functionality. First, we need to ensure broader support for the asset supply. As the number of assets increases, users will face challenges in identifying good trading opportunities, ensuring a good trading experience, and finding more suitable trading tools. Furthermore, with a richer asset base, will there be sufficient security and risk control measures? Therefore, at this point in time, based on major industry trends, we have proposed the new concept of UEX.

The definition of UEX and the improvement of actual user experience

Maodi: So, for ordinary users, especially less professional traders, how should they understand UEX? Besides the name change, what specific improvements have been made to the actual experience? For example, speed, tradable items, etc. Can you elaborate on this?

KH: UEX stands for Universal Exchange. However, unlike CEX and DEX, where the letters C and D represent the degree of centralization, the "U" can have multiple meanings, such as Universal Assets—a broader and more diverse range of global assets; Unified Account—a single account eliminates the need to switch between multiple accounts; and User-friendly—leveraging AI to create a more user-friendly trading experience. We're willing to let time determine which "U" is ultimately most recognized by users and the community.

UEX was originally a concept we proposed internally. Based on the broader trends we saw, we hoped to break the team's inertia in its approach and thinking regarding CEX. Rather than simply patching up the existing product, we instead considered from the ground up how to adapt the product to new needs. We proposed "tearing down the wall and rebuilding a wall-less market," and we hoped that through this new positioning, users and the industry would more accurately perceive the changes we were bringing.

Regarding the improvements that users can feel, and echoing the pain points mentioned above: the first is broader and more diversified crypto assets. Our on-chain trading (Onchain) product completed a major upgrade in mid-September, supporting the full amount of assets on multiple mainstream chains. You can directly use the USDT/USDC in the Bitget spot account and purchase millions of tokens on the chain through our custody and on-chain trading protocols, which is a smooth experience.

Attempts at traditional financial assets: In terms of derivatives, we have launched perpetual contracts for RWA indices of stocks such as Apple and Nvidia. We have now launched stock tokens covering large technology companies such as the "Magnificent Seven" and some popular crypto-related companies. The contracts support up to 25x leverage, and liquidity has also been significantly improved.

In terms of US stock tokens, we are the first CEX to cooperate with Ondo, the issuer of US stock tokens. We have integrated its liquidity on 1 inch and now support more than 100 US stock tokens. Users can purchase them directly on the Bitget on-chain trading market. The liquidity currently provided by Ondo can basically meet user needs.

Another area is the TradFi sector. We are actively promoting cooperation and integration with MetaQuotes. This will be launched in Q4. Through Bitget, you can trade hundreds of TradFi assets, including gold, forex, and stock indices, through the MT5 channel. The underlying CFD contracts are also highly liquid in traditional markets.

Overall, our focus on crypto assets has expanded to include all on-chain assets, RWA U.S. stock tokens and their derivatives, and then to gold, foreign exchange, and stock indices covered by TradFi. This is a major leap forward in asset diversification.

The second question users face is: With the vast expansion of assets, will they be able to better identify trading opportunities? On the one hand, we will focus on product upgrades, such as market trends and fundamentals. On the other hand, we aim to bring about a paradigm shift in trading based on AI—a trend we believe is more long-term. AI can fundamentally bridge the trading gap and help improve trading behaviors and habits. This is why we are committed to providing smarter trading tools.

The third question is, with our vastly expanded assets and trading capabilities, can we provide better risk control systems and user protection? This is also the direction we are taking in each sector by leveraging centralized capabilities to establish secure and reliable risk control systems. This includes our $700 million user protection fund and our global service and marketing teams, all designed to ensure users feel confident using our products.

UEX on-chain risk control mechanism and handling fee description

Maodi: You just mentioned "safety and peace of mind." I personally use both exchange products and on-chain products. Many on-chain tokens are very risky, and some are even "pixiu disks" or fake meme projects. I saw in Bitget's announcement that UEX will use risk control screening and multi-dimensional indicators to check. My understanding is that only tokens that pass the screening can purchase certain on-chain tokens on your exchange. What is the specific mechanism for this screening? Is it public? Also, if users directly use your function to purchase on-chain assets, what are the differences in transaction fees compared to purchasing directly on the chain?

KH: This is a great question. Because there are so many assets on-chain, risks are more pronounced. CEXs previously operated under a permissioned system, with listing teams conducting vetting and approval, a "whitelist" approach. Our full openness of assets on-chain doesn't mean unlimited or unconstrained trading, but rather a "permissionless + blacklist risk management" approach, shifting from a "whitelist" to a "blacklist" approach. Assets that may be blacklisted include those associated with pornography, violence, Pixiu platforms, internal or external manipulation, malicious issuance risks, and Rugpull. To address this, we've made several efforts: First, we've connected with multiple professional on-chain data providers to provide multi-dimensional labels, while also developing our own on-chain multi-factor risk modeling algorithm. This means that even with full open access, users can search for assets by entering a contract address, but trading of an asset identified as high-risk will be prohibited. Second, users will see a risk rating. We're still iterating on this rating mechanism, and the risk factors identified will be gradually disclosed to users, indicating which dimensions carry the highest risk. We hope to use products and algorithms to provide reliable mechanisms and trader protection. This is difficult and challenging, but the right thing to do.

Regarding transaction fees, there aren't significant differences between on-chain trading products, and we're currently pricing them at 0.5%. Our core goal is to provide a smooth trading experience. For example, we've simplified this process for users within our underlying on-chain trading protocol, taking into account different gas requirements, the potential need to exchange native tokens for gas, and cross-chain issues. Users simply hold USDT/USDC in their CEX spot accounts to buy and sell on-chain assets, supporting multiple chains with fast speeds and a seamless experience. This represents a significant change for the product.

Balance between experience, assets and security

Maodi: Both CEX and DEX have always faced the "impossible triangle" of user experience, asset richness, and security. How do you view this impossible triangle and UEX? Can it be expanded under certain circumstances to combine the advantages of CEX and DEX?

KH: I think this triangle is simply a "can't have both" at a certain historical stage. With the evolution of underlying solutions and product forms, there's an opportunity for a better solution. Our goal in building UEX is to offer richer assets, a better experience, and guaranteed security. This is also due to the current cycle: DEX integration and the increasing maturity of RWA issuance capabilities have significantly improved asset richness and user experience compared to before.

Security has always been our top priority and our most revered lifeline, serving as the exchange's baseline. For UEX, the experience, resources, and team we've accumulated over time at CEX give us both the ability and responsibility to ensure effective risk control and security, ultimately delivering a superior product experience to our users.

Maodi: It sounds like you're aiming to create a "super portal," offering both on-chain and traditional financial stocks. Is this a new direction for your transformation? How will you differentiate yourself from other exchanges?

KH: "Super Portal" is the direction of our product upgrade: one-stop, richer assets, better experience, safe, simple and easy to use for users, which is the intuitive product value we want to bring.

Speaking of differentiation, Bitget spent a long time playing catch-up in its early stages. Now, the core product differences among leading exchanges are minimal, and homogeneity is evident. This year, we've seen exchanges experimenting with assets, decentralized exchanges, payments, and other areas. We believe the time is ripe to seize the opportunity to become a "super portal" in this cycle. While people used to remember us for our strong performance in contracts and copy trading, we hope to remember Bitget as a UEX, a super one-stop portal offering the most comprehensive range of trading products and user-friendly trading tools.

Maodi: You mentioned your $700 million in funding. I saw in the announcement that there are unified risk control and protection fund mechanisms. In extreme cases, how are user assets protected? How is the specific compensation or reimbursement mechanism designed? Could you share more details?

KH: The Protection Fund is a user protection mechanism we've maintained and maintained for several years. As the platform scales, the fund has accumulated and now stands at $700 million. We aim to provide users with more comprehensive protection. For example, when using a DEX, using a personal wallet, or participating in certain high-risk protocols, you may not have the same level of security and support as a CEX. At UEX, if system unavailability or security issues cause user losses due to any of the services, protocols, and products we provide, whether on-chain or Tradfi assets, we will follow up and handle customer complaints. This has always been the responsibility and commitment of a CEX, and it embodies the "user first" principle we consistently uphold.

Analysis of the industry prospects of UEX and the user base differences of PERP DEX

Maodi: In your opinion, will UEX be the mainstream direction for future exchanges? There have been some other similar exchange products recently, such as PERP DEX, and Binance is also launching similar routes. What are your thoughts on this track?

KH: PERP DEX is indeed a hot topic and market right now. As industry participants, we greatly respect and look forward to the emergence of more outstanding teams and products like Hyperliquid. Everyone is pushing the boundaries of products and technology, and healthy competition will lead to a more prosperous industry. Derivatives have always been a top trading product line for exchanges and users. DEX has seen more significant growth than CEX, which is why it has become such a hot topic.

Regarding the differences between PERP DEX and UEX, the user bases of these two platforms are still quite different. Compared to PERP DEX, our product is more suitable for today's mainstream users. We've made significant efforts to create a better experience, hoping to make our product more accessible to a wider range of mainstream users. This is currently a significant difference in user base. While this is only true in the short term, I personally believe that decentralization is truly the future of the industry. The vision that everyone had when they first joined the industry, hoping to use blockchain to reform the financial system, is gradually becoming clearer, which is very exciting.

Maodi: Will Bitget launch a product similar to Hyperliquid in the near future?

KH: This is an area and track that we pay close attention to, and we will definitely have our own important layout in this direction.

The positioning of AI functions in Bitget's strategy

Maodi: I see your announcement mentions a lot of AI-related features, including information Q&A and smart money tracking. How do these AI products fit into your overall strategy? Are they just supplementary tools, or are they a crucial part of your core development? Will there be a dedicated AI department working on these products? Could you please describe them?

KH: From last year to the first half of this year, we built an excellent AI product and technology team, which forms the foundation for subsequent product launches. Members include backgrounds from Microsoft and Alibaba's DAMO Academy. AI capabilities are fully integrated across the entire platform. Some aspects are less visible, such as internal AI coding, translation and localization, and translation review and recommendations for content-based products, previously handled manually but now handled by AI. The AI bot for intelligent customer service you use is also our own development. The most user-friendly AI assistant, GetAgent, launched in August, is positioned as a cryptocurrency-based AI trading assistant. It integrates a wealth of foundational models and algorithmic capabilities, along with data and services from within and outside the exchange, including crypto news. Experience it and you'll discover its in-depth market analysis and news search capabilities. More importantly, compared to general-purpose AI products, GetAgent understands your holdings and trading style, enabling you to formulate more effective strategies and even complete orders and trades using natural language. This is an advantage of exchanges operating as agents compared to general-purpose products or third-party tools.

UEX's two core strategies are, on the one hand, significant asset diversification, and on the other, the upgrading of intelligent trading tools. This logic is similar to the evolution of traditional media from print to the internet: as content supply expands, the way users consume content changes, and recommendation systems become central. Similarly, as asset supply expands, trading tools must be upgraded simultaneously. This is why AI is the core of our second product strategy.

We believe in this trend, though it will take time to validate and mature. Currently, people are accustomed to placing orders using a graphical user interface (GUI). Will this necessarily be necessary in the future? Will more and more people interact with agents/chatbots to complete transactions? This is the change we hope to promote.

Exchanges have a real-world advantage in this process. User transactions take place within the exchange, allowing us to deeply integrate trading, truly helping users analyze, manage portfolios, and execute trades. GetAgent currently boasts a leading design architecture, integrating over 50 internal and external MCP tools. We've seen various platforms and startups launch crypto+AI products. After multiple rounds of internal and external evaluations, Bitget's GetAgent is one of the AI agents on the market with the deepest integration into trading scenarios. We welcome everyone to try it out and share your experiences with us.

How does UEX deal with compliance regulation and traditional asset tokenization?

Maodi: You mentioned tokenized stocks, RWAs, gold, foreign exchange, and other traditional assets. If these are expanded to UEX, will compliance and regulation be more difficult? How do you plan to address this?

KH: Compliance is always a key consideration in our product design. We conduct rigorous due diligence on RWA asset issuers, including whether they hold relevant broker-dealer licenses, entity compliance, restricted countries, user privacy requirements, and, importantly, equity/dividend plans. We maintain close communication with all active issuers in the market. For example, Ondo, with whom we are currently integrating, has completed rigorous two-way due diligence. We have mature integration solutions for gold and forex. MetaTrader is a globally renowned online forex/CFD service provider. We will obtain the relevant licenses and complete all required integration licenses. We will also adhere to the highest standards, including AML/CFT, to ensure our products meet legal and regulatory requirements.

Maodi: There's considerable debate about liquidity and equity ownership in tokenized stocks, and this field is still in its early stages. Have you taken on Ondo's products? Have you researched the specific equity ownership plans for these products? Do you have any new ideas?

KH: As a product still in its early stages of development, liquidity for the RWA token is indeed a temporary issue. Therefore, we haven't listed any RWA token pairs on the spot matching market. Instead, we've chosen to access Ondo's liquidity pool on 1inch, with their designated market maker providing liquidity. Compared to listing directly on the exchange, this method of "external liquidity" is more concentrated and ideal, so we made this choice.

Regarding dividends, each issuer has a different approach. For example, Ondo incorporates the dividend discount into the token's "equity price." Over the long term, if the underlying asset continues to pay dividends, Ondo's token price could be higher than the current traditional market price. It's not a one-to-one peg, but rather incorporates the dividend reinvestment premium into the RWA asset price. For users, this represents an equity price equivalent to "continuously reinvesting dividends." I believe that as the industry matures, more accepted solutions will emerge.

We've also innovated in RWA derivatives: launching perpetual contracts for US stocks based on the RWA index. Considering that the same underlying asset (such as Tesla) can have multiple issuers with varying initial liquidity, we've transformed the underlying asset into an index contract. Each issuer contributes to the index's price, assigning different weights based on trading volume and liquidity to maximize effective liquidity and foster a more stable and efficient pricing market.

During normal stock trading hours, such as when Tesla is trading in the US, do you include the current US stock price performance as part of the index price? If it's during non-trading hours, do you use the price of the tokenized stock product you just mentioned as a weighted index and the price of the derivative? Is that correct?

KH: We don't directly use the current price of the underlying traditional market because we support tokenized derivatives. Traditional prices can be used as a reference for price constraints or risk control, but in principle, the underlying derivative (PERP) is the RWA token. For example, Ondo's RWA token is tradable 24/7, but not on non-market days. On market days, it is tradable 24 hours a day.