The blockchain industry is known for its volatility and rapid evolution. Companies that navigate this landscape successfully share key traits: robust fundamentals, adaptive strategies, and a clear focus on sustainable growth. In a recent discussion between two leading figures in the space—Xu Kun, Chief Strategic Officer of OKEx, and Dovey Wan, Founding Partner of Primitive Ventures—insights emerged about acquisition strategies, risk management, and ecosystem development.
Understanding Blockchain Acquisitions: Offensive vs. Defensive Moves
Acquisitions in the blockchain space often follow patterns seen in traditional tech industries but with unique twists.
Dovey Wan categorizes acquisitions into two types: defensive and offensive. Defensive acquisitions aim to eliminate competition or address vulnerabilities, while offensive acquisitions focus on expanding capabilities or entering new markets.
She notes that many acquisitions are essentially "acqui-hires," where the primary value lies in the talent rather than the product or revenue. In such cases, the acquisition price may be based on a per-employee calculation, common in high-cost talent markets like Silicon Valley.
Premium acquisitions, like Facebook’s purchase of WhatsApp, involve significant溢价 and are driven by competitive dynamics. However, in the blockchain industry, acquisitions are often less formalized and more influenced by founder relationships and mutual interests.
Xu Kun emphasizes that acquisitions must align with the core business strategy. For exchanges like OKEx, any acquisition should strengthen the trading ecosystem and enhance user value. Transparency and fairness post-acquisition are also critical to maintain trust across the industry.
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Risk Management: How to Survive and Thrive
Blockchain companies face unique challenges due to market volatility, regulatory uncertainty, and operational risks.
For Businesses with Revenue Models
Dovey Wan highlights the importance of "造血能力" (revenue-generating capability). Companies must achieve product-market fit and operate within proven business models: advertising, marketplaces, subscriptions, or virtual goods. Without sustainable revenue, even promising projects can fail.
She also notes that media companies in the space often rely heavily on advertising, which can compromise independence and originality over time.
For Non-Profit and Decentralized Organizations
Entities like the Ethereum Foundation or ConsenSys operate without traditional revenue. Their longevity depends on prudent financial management—maintaining sufficient reserves and controlling expenditures. Dovey Wan points out that some organizations have decades of runway thanks to careful planning.
OKEx’s Approach to Long-Term Stability
Xu Kun shares three pillars of OKEx’s resilience:
- Strong Cash Flow Management: OKEx ensures operational costs are covered in stable currencies like USD or USDT, avoiding over-reliance on crypto-denominated assets.
- Technical Excellence: The platform’s robust trading products and infrastructure form a solid foundation.
- Adaptability: OKEx embraces change, quickly responding to market signals. For example, the launch of options trading initially seemed risky but now attracts institutional users seeking advanced strategies.
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Building a Comprehensive Crypto Ecosystem
A holistic approach to user needs is essential for long-term success. Xu Kun outlines OKEx’s "globalization and full-cycle" strategy, designed to serve users throughout their crypto journey.
Four Core Product Lines
- Buy Crypto: Simplifying fiat onboarding via credit cards, OTC trading, and other channels.
- Exchange Services: Offering spot trading, margin, futures, and options to cater to diverse trading strategies.
- Tools and Earnings Products: Including lending, staking, and savings solutions to help users grow their assets.
- Investor Education: Providing resources to improve market literacy and reduce risks associated with misinformation or inexperience.
This structure ensures that OKEx meets users’ needs at every stage, from acquisition to advanced trading and wealth management. The focus on education has also unexpectedly aided user acquisition, as non-users engage with OKEx’s learning materials.
Frequently Asked Questions
What makes an acquisition successful in the blockchain industry?
Success depends on strategic alignment, talent integration, and fair valuation. Acquisitions should enhance the core business rather than divert resources.
How can startups avoid failure during market downturns?
Startups must prioritize revenue generation or secure sufficient funding to weather volatility. Diversifying revenue streams and managing costs are critical.
Why is investor education important for exchanges?
Education reduces user errors and builds trust. Informed users are less likely to panic during market swings and more likely to engage with advanced products.
What role do stable currencies play in risk management?
Holding reserves in stable currencies like USDT protects companies from crypto volatility, ensuring operational continuity during bear markets.
How does OKEx support institutional traders?
OKEx offers sophisticated tools like options and futures, enabling complex strategies and hedging. Institutional feedback has been positive post-options launch.
Are acqui-hires common in crypto?
Yes, many acquisitions focus on talent rather than products. This is especially true in regions with high recruitment costs.
Conclusion
Long-term success in blockchain requires a blend of strategic acquisitions, financial prudence, and user-centric innovation. Companies like OKEx demonstrate that with strong fundamentals and adaptability, it is possible to not only survive but thrive amid industry turbulence. The insights from Xu Kun and Dovey Wan provide a roadmap for aspiring players aiming to build sustainable ventures in this dynamic space.