Q&A: What lessons must be learned from the crypto crunch?
It's been a bruising few months for the crypto markets. But with things beginning to stabilize, there's now an opportunity to take a step back and figure out what lessons can be learned.
Here, OKX director of financial markets Lennix Lai tells us about the steps crypto businesses need to take to protect investors, what the industry should be doing differently, and how the bear market has affected the behavior of its customers.
1. Hello! Tough question to begin with: Does the crypto industry have a trust issue?
When it comes to the recent liquidity crisis that has significantly affected lenders, I think there is absolutely an issue. The problem is that money managers have been opaque when it comes to how they are investing with users' funds.
To solve this, we need to find a way to separate clients' tokens from managers' in-house wallets while ensuring that those managers fulfill their duties to both their clients and the related communities. Investors need to have knowledge of how their funds are being staked, traded or used as collateral.
2. What needs to be done to protect investors?
Investors need both better transparency into how their funds are being invested and better control over how those investments are being handled. Platforms like OKX's Custody Trading Sub-Account fix this trust issue by giving investors visibility into how their funds are being invested, as well as granting them controls that include trade-freeze level and kill switch.
The industry also needs a renewed focus on risk management. At OKX, we are providing exactly this by acting as a third-party custodian for investors and their funds.
3. And we've seen something of a "contagion effect," with the downfall of one project affecting others?
The "crypto
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