OKEx

DIGITAL ASSET REPORT:

OKB Review and Investment Grade

Crypto Briefing Research Department

May 1, 2020
Grade-B

Quick Facts

TickerOKB
Current Price$5.41
Market Capitalization$324,476,803
Buy Up to Price$12.50

Funding Information

Founded in 2014,  the exchange has gained millions of dollars worth of investments (in an amount not disclosed) from several venture funds.

Circulating Supply282,838,290 OKB
Total Supply300,000,000 OKB
Top 10 Addresses20.03%
ATH Price$6.10 (Feb 16, 2020)
30-Day Average Price$4.75
24H Volume$137,890,833
30-Day Average Volume$139,830,609

Contents

Fundamental Factors

Market Opportunity 80;
Ecosystem Development 70;
Token Economics 85;
Token Performance 65;
Core Team 80;
Underlying Technology 70;
Roadmap 70;

Combined Score: 7.48

Introduction

As the blockchain space develops and enters our everyday life, market capitalization and trading volumes of blockchain projects will grow accordingly. Cryptocurrency exchanges will likely be one of the biggest beneficiaries of the growing crypto economy. Already, the largest players generate hundreds of millions in yearly revenues and are considered to be the most influential players in the industry.

One such player is the OKEx cryptocurrency exchange. The exchange has been among the highest ranked in the market. Its native token, OKB, is a top 2 exchange token by market capitalization. The project has developed a strong ecosystem and now covers 153 countries and regions, with over 1M users around the world. 

OKEx offers its users a variety of trading options, such as spot, margin, and futures trading. Additionally, the exchange has an options trading platform and its own DEX. 

The exchange has been especially successful in China, offering OTC services to its customers.

However, between Dec 1, 2019, and Feb 29, 2020, the exchange burned $17M worth of its OKB tokens, or 30% of the transaction fee income, which shows that it is able to generate a healthy stream of revenue. 

The project also has a very ambitious development roadmap. It plans to continue its worldwide expansion and create more partnerships and services for its users. It is also planning to launch its own chain and capitalize on global decentralization development. 

Overall, OKEx has shown tremendous growth in the past and has very ambitious goals for the future. As the market continues its bullish trend, the exchange will likely remain among the top performers in the space.

Market Opportunity

Although the market for cryptocurrency trading is highly volatile and difficult to forecast, fintech experts predict a bullish long-term trend for its future. It may revolutionize the global financial system and, according to some reports, reach a value of $5 trillion to $40 trillion in the next 10 years. 

However, while there are a lot of opportunities, the competition in the market is also high. In fact, since 2017, the market has seen tremendous growth in the number of centralized and decentralized exchanges. 

Currently, CoinMarketCap is registering over 300 exchanges, and it is likely that this number will only continue to increase.

Although the competition is really tough, OKEx could be considered one of the most actively developing players in the space. It is keeping up with trends in the industry and now offers a wide range of products for its users. 

OKEx derivatives platform is among the most popular in the market. In March of this year, around 28% of the total volume for Bitcoin futures was traded on OKEx.

The OKEx spot exchange volume has also been quite high. According to a March 2020 Exchange Review by Cryptocompare.com:

Binance and OKEx have dominated in Q1 2020 relative to other Top Tier exchanges, capitalizing on the recent BTC volatility on the 12th and 13th. On the 13th, Binance and OKEx traded $3.6Bn and $3.9Bn respectively while the next largest (Coinbase) traded $1.4 Bn. 

One caveat to this is the fact that OKEx has been previously (September 2019) accused of wash trading by the Blockchain Transparency Institute. 

However, the exchanges have denied all the allegations, stating that they are not accurate and misleading:

“Due to the complexity of derivatives instruments trading, thousands of trades could be placed per day by a single user via collocated machines. Attempting to use retail-oriented parameters such as website/mobile traffic in any research is de-facto an apple-to-orange comparison.”

To prove that it is not faking its volumes, the exchange has also joined the Data Accountability & Transparency Alliance led by CoinMarketCap.

Wash trading remains a big problem for the cryptocurrency industry and it is also extremely difficult (if not impossible) to calculate the percentage of “fake trades” on a certain exchange. Still, we know that according to Similar Web, okex.com has had around 1.7M visits on its website, which is more than enough to generate significant trading volume on any exchange. 

OKEx, along with Huobi, also seem to have more favorable acceptance by Chinese authorities than other exchanges. In fact, OKEx is very active in China, facilitating yuan to BTC/USDT peer-to-peer OTC deals. 

Despite the confusion surrounding the legal status of cryptocurrency in China, the market remains very large and active and OKEx is one of the top players there. 

Overall, the exchange has shown that it can successfully deal with the rising competition and build the ecosystem. This should help the project to further grow its user base and continue development.

Underlying Technology

OKChain’s architecture is built on top of Cosmos SDK and adopts Tendermint’s network and consensus code.

Tendermint is a widely used software across many platforms in the crypto space. It provides security and consistency, while replicating an application on many machines. Tendermint works even if up to 1/3 of nodes fail on the network, and is proven to be one of the most simple and secure platforms for launching new networks. 

OKChain uses a POS + BFT algorithm and is planning to issue a new native token, OKT. OKT holders will have the ability to earn corresponding yields by pledging OKT to the validator in the system.  

The network will support two types of nodes:

  • Full nodes -  verify blockchain transactions and blocks and in some cases provide blockchain APIs for applications.
  • Validator nodes - validate blocks and participate in on-chain governance of the network. 21 nodes that have obtained the highest numbers of votes from OKT voters are elected as super nodes in the next cycle.

Currently, the network is in the Testnet phase, while the project is planning to launch its Mainnet in the near future. OKChain will allow several features:

  • Issuance of new cryptocurrencies
  • Building new decentralized exchanges
  • Support of DeFi applications
  • Support of Smart contracts
  • Support of BTC Cross-chain application

Since OKChain is built on top of Cosmos SDK, it has realized the connection with the Cosmos ecosystem. In the future, as Cosmos launches its IBC (Inter Blockchain Communication) protocol, OKChain will have the ability to implement multiple cross-chain solutions with mainstream public chains (such as Bitcoin and Ethereum) with more diverse chain tools. 

Cross-chain compatibility enables Blockchain networks to directly communicate with each other and could significantly enhance the functionality of dApps on OKChain. 

The first DeFi application on OKChain is OKEx DEX (currently on the testnet). OKEx is aiming to provide the solution that would give its users full control over their assets. The project’s DEX will also support real-time settlement of profits daily to ensure a better trading experience and liquidity for its users. DEXes are likely to be the future of crypto trading, so large players are building their own DEXes to stay competitive on this front. 

As the project launches its mainnet, it will likely contribute even more with additional decentralized applications on top of OKChain. This will improve the utility of the network and help further enhance the OKEx ecosystem.

Ecosystem Development

OKEx has been developing its ecosystem in several different directions. The exchange offers its customers a variety of trading options, along with other services that help attract liquidity and remain competitive in the market.

On the trading side, OKEx provides a variety of spot trading options. Currently, more than 370 trading pairs are listed on its spot exchange. The exchange offers futures and options trading on its platform as well.

According to Skew.com, OKEx is currently the third exchange by 24h BTC futures volume, and the number one exchange by BTC futures open interest.

The exchange offers PoW mining services and currently supports 13 major crypto assets for PoW mining, with its Bitcoin mining pool among the top 5 largest pools in the world.

The project also offers lending, staking, and term-deposit services for its users. All of these services are consolidated under the umbrella "Earn" interface. OKEx supports a large variety of crypto assets, so the offer looks very attractive for users that are looking to earn passive income and make use of the coins that they are holding for the long term.

To grow the ecosystem, the project is actively working with partners that are planning to launch new cryptocurrency exchanges. For these purposes, it offers comprehensive technical support and its own cloud platform for partners that are launching exchanges on OKEx Cloud. Currently, four exchanges are using the OKEx Cloud platform.

According to OKEx CEO, Jay Hao, the project has been accelerating the internationalization of the platform:

“At present, OKEx has reached cooperation with the world's seven largest legal fiat payment providers through the fiat gateway project, supported 30 fiat currencies including United States dollars and euros, and accepts 17 payment methods including Visa and Mastercard. Also, we have provided services to more than 20 million users in more than 200 countries and regions around the world, and that is still increasing.”

Additionally, the exchange has been active on the partherhip front. For the adoption of OKChain, the exchange has joined hands with over 30 global enterprises in the blockchain space.

Recently, the exchange has partnered with several Bain-backed crypto exchanges to launch leveraged futures in India. Given the recent lift on crypto trading and relevant business in India, the crypto market in that region of the world has the potential to boom. OKEx has a good chance to share a large portion of that market. 

Overall, the OKEx team has built a very healthy ecosystem with multiple services for the users of the platform. As the project continues its expansion, it has the potential to further grow its presence and influence in the blockchain space.

Token Economics

OKEx utilizes its own token, OKB. Currently, this is an ERC-20 token and it has multiple forms of utility.

  • Discount on trading fees - users can get a discount on trading fees if they hold a minimum of 500 OKB. 
  • Participating in OKEx IEOs - users need to hold OKB tokens in order to participate in an IEO on the OKEx Jumpstart platform. As a general rule, users who hold a daily minimum of 100 OKB for 5 consecutive days before the token sale day are eligible to participate in the OKEx Jumpstart token sale. 
  • Designated Merchants - a number of merchants accept the coin as a payment option.

OKB utilizes deflationary token economics, which could naturally increase the value of the token in the future. From May 4, 2019, the exchange committed to burn 30% of the OKEx spot market transaction fee income. 

Current total supply is equal to 282,838,290.94 OKB. The historical burn rate is presented in the table below.

So currently, all the OKBs that are burned are bought-back from the secondary market and not from the company’s reserves, which is certainly a positive factor for their token holders. 

With the launch of OKChain, OKEx is planning to migrate the OKB token from the Ethereum platform to OKChain. Moreover, OKChain will also have its own native token, OKT. The price of OKT will be based on the development of the OKChain and its ecosystem. 

The important benefit that OKB token holders will receive with the launch of the mainnet of OKChain is the airdrop of the OKT token. In fact, the exchange is planning to map 100% of the genesis block OKT to all OKB holders according to their OKB holdings. 

All things considered, OKEx has developed thoroughly thought-out token economics, where the value of OKB token is tied directly to the success of the main trading platform. Moreover, the demand for the token is likely to increase as the project introduces new use cases and airdrops OKT tokens to OKB holders.

The OKEx Team

Jay Hao -  Chief Executive Officer. Prior to OKEx, he focused on blockchain-driven applications for live video streaming and mobile gaming. He also has more than 20 years experience in the semiconductor industry. Jay graduated from the Georgia Institute of Technology with a Master of Science in Electrical Engineering.

Alysa Xu -  Chief Strategy Officer. Xu has over a decade of experience in blockchain development and strategic planning. Prior to joining OKEx she worked as head of Tianfeng Securities Blockchain Research Center. She also worked as assistant general manager of the private equity investment division at Zhongrong International Trust Company.

Lennix Lai - Director of Financial Markets. Lai has over a decade of experience in financial markets where he was specializing in high-frequency trading, risk management, asset management, and compliance. Prior to joining OKEx he worked as the Head of Global Trading Solutions and the Strategic Business Development Director at CASH Financial services group.

OKex has a highly professional team with substantial experience in blockchain technology and trading. In total, the exchange has over 1000 employees that serve retail and institutional customers around the world. 

This highly professional team has helped the project to not only build a strong ecosystem, but also maintained security for its users.

In fact, the exchange has never been involved in any security breaches. 

OKEx has one of the strongest teams in the industry, which should help the exchange grow even further going forward.

Roadmap

The most important milestone for the project in 2020 is the launch of OKChain. The miannet launch is planned for the second half of 2020.

After the launch, the team is planning to grow the ecosystem of DeFi and various other dApps, forming an interworking ecosystem based on OKChain.

The exchange also plans to grow its presence on different local markets, and is going to continue its global expansion. Movement into local markets will include establishing onramps to enable the purchase of crypto with local currencies.

Token Performance

Over the last 6 months, the price of OKB has been moving with the overall market. The token is currently down around 26% from its ATH. The recent meltdown on the crypto market did affect the token price, but it looks like the token has been recovering.

Looking at the charts, OKB has formed a bullish triple-bottom pattern formation across the higher time frame, which indicates that a powerful upside rally may be forthcoming. According to technical analysis a range breakout above the $7.50 may expose the cryptocurrency to further upside towards the $12.50 resistance area.

Conclusion

OKEx is one of the few large exchanges in the space that puts a great deal of emphasis on product development and ecosystem expansion. The exchange is actively working to expand the variety of its product offerings and grow its user base around the world. 

Moreover, the project is established financially and has a strong team with an ambitious roadmap, as well as plans for development.

All of this should help OKEx to further grow its numbers and build up its share in the crypto space. Given the project's strengths, it receives a grade of B.

The author(s) of this report is/are invested in the following coins: BTC, ETH.

How to purchase OKB

 Choose your preferred exchange. OKB can be purchased from several cryptocurrency exchanges, the full list of available exchanges can be seen ​here​.

Step 1. Head over to your preferred exchange.

It is a good idea to buy OKB directly from OKEx exchange since it’s the biggest liquidity provider for OKB.

Step 2. Create an account on the exchange of your choice if you don’t already have one.

Step 3. Top-up your exchange balance with some of your BTC, ETH or USDT 

On OKEx, OKB can be purchased with either BTC, ETH, or USDT, so make sure to first send over some of the tokens to your exchange wallet. (Don’t forget to double-check that the address you are sending your coins to is correct!)

*Optional​: If you don’t own BTC, USDT, or ETH the easiest way to buy them is through Coinbase.

Step 4. Choose your trading pair

Head over to the exchange and choose USDT to purchase OKB with.

Step 5. Purchase OKB with limit or market order

If you want to buy just a small amount instantly, it is easiest to use a Market Order.

If you need to purchase a large amount of OKB, it is best to use a Limit Order to get the best possible price.

Input the amount of OKB you would like to purchase and the price at which the order should be filled at and press Buy. (It might take some time for the whole order to be filled if you are purchasing a large amount).

Step 6. Store your OKB on one of the supported wallets for increased security.

To store OKB, you can use Trezor​, or Ledger for improved security. You can find the instructions on how to manage your ERC-20 tokens on Ledger here.