After a two-year bear run, we saw the third halving of Bitcoin in May 2020. Many predicted that the halving would be the start of a next bull run, but few predicted that Bitcoin would surge in price so early.
The crypto world is an industry full of possibilities, and in 2020 there was immense potential unlocked. As we take off into 2021, we look back fondly on the waves made by crypto.
We’ve all been suffering from the COVID-19 pandemic since the beginning of 2020. However, this did not stop the development of KuCoin. Our team has been decentralized for a long time, which means we have already adapted to remote communication and cooperation.
In the face of the explosive DeFi market in the second half of the year, we continued to innovate our products so that KuCoin will always be your #1 choice for trading altcoins.
When we encountered the security challenge in September, we acted quickly and transparently to protect all our users and partners.
At KuCoin, we work closely with over 200 top blockchain projects, serving 6 million users worldwide, and we handle hundreds of millions in transaction volume every day. The rapidly growing numbers often make us forget the fact that KuCoin is only a 3-year-old startup!
Hereby, I would like to take this opportunity to review all the efforts we made at KuCoin over the last year to push our community forward. At the same time, I am excited to share KuCoin’s roadmap with you to give you an idea of what the future holds for us. We’re eager to watch KuCoin grow and welcome more people who share the same dream to join us.
01 Better Serve Global Users
Crypto is a global currency, and as one of the most global exchanges, we have never stopped catering to a global market. Over the past year, we have supported 39 fiat currencies, such as the Turkish Lira (TRY), Bangladesh Taka (BDT) and Brazilian real (BRL) to purchase crypto assets, and the number of fiats we currently support is over 53. At the same time, we are expanding our payments tools and adding support for popular gateways like BTC Direct and Mobilum.
In order to create a virtual space in every region for all crypto investors to communicate, we launched Portuguese and Bengali communities in 2020, bringing the total number of communities worldwide to more than 15, over 200,000 members.
In these communities, we are inspired by listening to suggestions from our users. Thus, we have launched many amazing new features! In order to help users monitor the market easily, we launched the Market Ticker Feature - allowing users to see the latest price even if the KuCoin App is closed. With the launch of KuCoin Mobile Web Version, users can access KuCoin and start trading via mobile browser without downloading the app. We have also partnered up with TradingView in the first half of 2020, and the highly anticipated Convert to KCS feature has also recently been launched.
As crypto investors mature, more advanced investment tools are in demand. KuCoin margin trading and futures trading has also made great progress. In 2020, our margin trading volume increased 217% year on year and has supported 33 tokens and 54 trading pairs. Since the beginning of the year, KuCoin Futures have achieved a stunningly rapid 420% increase in trading volume and a remarkable 670% growth in the number of trading users. It now supports 17 coins, including USDT-Margined and Coin-Margined Contracts, and Perpetual Futures and Quarterly Delivery Futures.
Staking is the most convenient investment for anyone who wants to hold crypto for the long term. Over the past year, the Pool-x platform has supported over 50 projects such as KSM, ATOM, ETH, etc. - generating about $7 millions of passive income for users. We are also the first platform to support the staking of many promising projects like ZIL and DOT.
02 Find the Next Crypto Gem
From being unknown to serving users across 200 countries and regions, finding crypto gems is a major factor in the rise of KuCoin, and it is also a field we have focused on in the past year. We are very pleased to see that in 2020, many innovative blockchain products have been launched.
DeFi is a hot topic that cannot be dismissed in 2021. In order to provide stronger support for DeFi, we launched the DeFi Trading Board in August 2020. We select high-quality DeFi projects through Spotlight, community voting, direct listing, etc. Now, it covers stablecoins, lending, synthetic assets and DEX, and it supports 28 tokens including AAVE, LINK, AMPL, ORN and more.
NFT is another innovative field. In October 2020, we launched the NFT trading board to support the latest NFT trend. As an example, there’s Lukso, which got listed through KuCoin Spotlight. Fabian is the founder of Lukso and is the core developer of Ethereum. Another interesting NFT project is Dego. We donated 100,000 KCS to Dego and held a successful NFT mining campaign.
After 4 years of waiting, the Polkadot Mainnet went live. As an exchange that supports the Polkadot ecosystem for a long time, we listed KSM, OCEAN, ANKR, EWT and other Polkadot ecosystem projects early. At the same time, KuCoin will also fully support the upcoming Polkadot parachain slots auction, allowing users to participate in the Polkadot ecosystem more easily.
At the end of 2020, the most eye-catching event in the industry was the launching of the ETH 2.0 beacon chain. On November 30, KuCoin supported ETH 2.0 staking and launched the ETH2/ETH trading pair on December 1, becoming one of the first exchanges in the industry to provide liquidity for ETH 2.0.
In addition to finding the next crypto gems, KuCoin is fighting against scams and frauds to fortify the industry environment. In March 2020, KuCoin launched Project Pinocchio together with 21 top blockchain institutions around the world - establishing a neutral and credible alert platform for scam projects in the cryptocurrency industry. It has disclosed 25 projects including Fcoin and PlusToken.
03 All About Security
Operating an exchange, security is always our main priority. In 2020, we encountered the most severe security challenge since KuCoin was founded. Fortunately, with the concerted efforts of all parties, we successfully overcame the difficulties and greatly strengthened the security level of KuCoin.
In the early morning of September 26, 2020, the KuCoin team received an alarm from the risk control system and found an abnormal ETH transfer record. Subsequently, we monitored the abnormal alarms for the transfer of BTC, ETH and multiple ERC-20 tokens. It was found that a total of 154 tokens were affected by this incident, and the total value is approximately $285 million based on the market price of the day.
After the incident, we adopted a transparent and responsible attitude to keep users updated about the incident through YouTube live broadcasts, and we conducted three aspects of work at the same time:
- Wallet Security Upgrade: We immediately abandoned the previous hot wallet, re-deployed the wallet system and upgraded the wallet’s risk control process.
- Stolen Funds Recovery: We urgently contacted exchanges, projects and wallet partners to recover the stolen funds.
- Suspects Tracking: We continuously work closely with law enforcements and security institutions to track the suspects.
Although we faced many challenges, we have made breakthroughs in a short period of time. First, we gradually resumed the deposit and withdrawal services within a week, and now we fully resumed all features of the KuCoin platform. Secondly, with the efforts of all parties in the industry, we cooperated with exchange and project partners to recover $222 million (78%), and cooperated with law enforcements and security institutions to recover $17.45 million (6%). At the same time, KuCoin and our insurance fund covered the remaining part, about $45.55 million (16%). In the end, we ensured that no users sustained any loss in this incident. In addition, we have obtained substantial clues about the suspects, and the tracking is still in progress.
Looking back on this incident, I would like to thank the crypto exchanges, blockchain projects, security institutions and every user who supported and helped us. As we promised in the Safeguard Program, we will provide these partners with market, technology, ecosystem and other support.
Since the establishment of KuCoin, we have always attached great importance to security, but this incident warned us once again: pursuing security is a life-long journey.
As we said in the YouTube livestream, the main reason for the incident was the leakage of the private keys of a few KuCoin hot wallets. When further investigating the cause of the private key leak, we found that KuCoin encountered a complex APT attack in September 2020. The attacker was lurking for a long time, and this attack severely damaged our internal network, allowing the attacker to bypass the security system of KuCoin and obtain the private keys of a few hot wallets. After the incident, we have fixed the related vulnerabilities immediately and redeployed all hot wallets.
At the same time, we have re-architected a new security system from the following three aspects:
- The Entire Security System Upgrade: A more powerful risk control system has been added to the three access systems of WEB, APP, and API to ensure the safety of users’ accounts and assets.
- Network Security Architecture System Upgrade: Deploy network security measures in strict accordance with financial-level security compliance requirements. At the same time, we have been in contact with one Big Four accounting firm and will obtain its security standard certification.
- Security Team Restructure: We have rebuilt the KuCoin security team and reached close cooperation with top security and anti-APT agencies. At the same time, we will set up the KuCoin Information Security Emergency Response Center which will operate in an open and transparent manner. The center will make the most powerful, rapid and effective response to the industry’s future security challenges.
Security has always been the sword of Damocles hanging over the head of crypto exchanges. The security incident that we underwent at KuCoin, whether it’s regarding the total amount of affected funds, or the number of affected projects, is rare in the industry. Therefore, the difficulty in dealing with it is clear. To be honest, when the incident broke out, our team experienced a short period of low tide and many members fell into self-doubt. However, with the support and encouragement of our partners and users, we quickly changed our attitude and began to face it bravely and actively. Now we have fully recovered from the incident and our safety level has been greatly improved.
When I look back at the incident again today, I see it more as a learning opportunity, which let us find the existing problems of KuCoin. As the incident broke out, we were able to respond before it developed to be too difficult to solve. The saying, “what does not kill you makes you stronger” resonates with us. I believe that KuCoin today is stronger than we have ever been.
In the future, we will continue to increase our investment in security, and the experience gained from this incident will enable us to quickly advise and support other industry partners in the event of a security crisis in the future. Blockchain is still in its early stages of development, and the industry can only grow when we work together.
04 KuCoin Onwards: 2021 - 2023 Roadmap
Entering 2021, Bitcoin exceeded $30,000 and $40,000 in just over ten days. The sharp rise in price has led to a surge in investment enthusiasm. No one doubts the bull market anymore. But compared with the 2017-2018 bull market, we find some things are different.
In the second half of 2017, the main reason for the bull market was the FOMO sentiment brought by the influx of many new currencies into the market with the popularization of Ethereum smart contracts, which led to a large number of retail investors entering the market. It can be said that the cryptocurrency industry was in an earlier period, which was somewhat similar to the internet bubble in the early 2000s, and the bubble will eventually burst.
As 2020 went on, with the emergence of many DeFi applications, blockchain and cryptocurrency began to attract more and more attention from traditional markets - especially institutional investors. The entry of institutions is not due to FOMO, but the value of Bitcoin. Under the global macroeconomic environment of quantitative easing, the value of cryptocurrencies such as Bitcoin have been recognized, which has brought funds flowing into cryptocurrencies.
Many people are discussing how high the price of Bitcoin can reach in this bull market. Many members of KuCoin are “Bitcoin holders”, but while caring about the price, we should pay more attention to whether the value created by the blockchain is increasing. I believe that in this bull market, the crypto total market cap will reach $3 trillion or even $5 trillion.
In 2021 and even in the next 3-5 years, I think there are five major trends in the development of the crypto industry:
- Bitcoin will continue to overtake gold: When more and more financial institutions realize the role of Bitcoin in future global inflation, Bitcoin’s competitors are no longer other altcoins, but gold. With many advantages, Bitcoin’s erosion of the gold market share will be irreversible.
- Ethereum leads the race: Although innovative public chain projects continue to emerge, I think the possibility of them challenging Ethereum is getting lower and lower. At present, most excellent Dapps are on Ethereum. With the dawning of ETH 2.0, this network effect will intensify. But this doesn’t mean Ethereum challengers have no opportunities, but they must think carefully - whether they should challenge Ethereum or join Ethereum.
- The story of DeFi is just beginning: I believe that the development of DeFi has great potential, because it targets one of the most important industries in the traditional world--finance. From the initial decentralized exchanges, lending and derivatives, to the later algorithmic stablecoins, insurance and aggregators. DeFi continues to innovate and will only bring more.
- NFT for everyone: If DeFi is still in the early stage of development, then NFT is about to explode. NFT is used in a wide range of scenarios in our daily life, far beyond the digital collectibles. When DeFi revolutionizes our financial services, NFT will gradually penetrate into our daily lives.
- Embrace regulation: Needless to say, this is the prerequisite for the long-term sustainable development of the industry. With more and more regulatory agencies sorting out a clear regulatory framework, as industry practitioners, we all welcome regulation and are willing to actively embrace regulation.
As a leader of the industry, what will KuCoin do with these trends? The answer is always in our initial vision and mission.
At KuCoin, our vision is to grant access to the best of blockchain to all people. We believe decentralization and transparency powered by blockchain can facilitate the free flow of value around the world, upholding the well-being of everyone. Also, our mission is to be the bridge builder in the blockchain-based future.
With this vision and mission in mind, we have developed a roadmap for 2021-2023 as outlined below, in which we will achieve these product, technological and developmental goals on a quarterly basis.
In general, the future strategy of KuCoin will be carried out by two priorities: “Find the next crypto gem” and “Empowering KCS”.
In order to “Find the next crypto gem”, our blockchain project research team in multiple continents will keep up with the industry trends to find more promising projects. At the same time, the KuCoin Innovation Project Board will launch, which will enable us to support early blockchain projects more quickly. Our core trading system and matching engine will continue to iterate in order to ensure that each token can be steadily traded on KuCoin. At the same time, in order to offer users more investment tools, our innovation products such as Isolated Margin and Leveraged Tokens are in our future plans.
When it comes to KCS, users often sent personal messages to share their suggestions. And our team also realized that we haven’t given KCS enough attention and support. Therefore, “Empowering KCS'' will be another key priority in 2021 and beyond. In the KuCoin community, KCS is the bond to connect us all, and ideally, we hope all KuCoin users can be a member of KCS community. To this end, we will shed light on KCS to all KuCoin users, welcoming them to become KCS holders, grow with us and share the benefits from our growth. Moving forward, we will build KCS as a killer product rather than a simple token. We’ve already had plenty of internal discussion regarding the KCS Product Plan and will keep everyone informed once it has been finalized. In the long run, KCS performs as the key to the entire KuCoin ecosystem, and it will also be the native asset on KuCoin’s decentralized financial services as well as the governance token of the KuCoin Community. I believe KCS has been undervalued by the market, and with the implementation of related work, we are confident that KCS will enter the top 30 or even the top 15 of total market cap in 2-3 years.
In the meantime, we also have a new plan for KuCoin going decentralization. After evaluating all existing technologies and public chain ecosystems, we are going to launch new KuCoin decentralized trading solutions on the basis of KuChain. One thing is for sure, that KCS will be the underlying fuel whatever the solution actually is. The unique KCS bonus plan will also be implemented in our decentralized services. Please stay tuned!
The mass adoption of crypto has just started, I will see you in the blockchain-based future!
KuCoin Global CEO