Currently sitting at a comfortable 3rd place in terms of exchange volume, Huobi has made strides in the recent months to take on new ventures in the cryptocurrency space, such as launching their billion dollar blockchain fund and launching their Huobi 10 cryptocurrency index, and are currently undergoing a rebranding to push more into the global sphere and away from China – such as changing domains from Huobi.Pro to Huobi.com, and searching for a Huobi Global CEO over the next 3 months. You can register with Huobi here.
Next on Huobi’s radar is the development of their own chain, under the so-called Huobi Chain Project (HCP). The blockchain will be public and once completed, all the code will be open-sourced, and eventually Huobi itself will be migrated onto this new public blockchain.
Leon Li, Huobi founder and CEO, had the following to say:
We firmly believe in a decentralized future, and the main goal of the Huobi Chain project is to transform a centralized corporation to a decentralized one that’s run by the community.. Our dream is for Huobi to run on the public blockchain and become a truly decentralized autonomous organization.
Speaking to Reuters, Gordon Chen, a senior Huobi executive, said:
Huobi wants to make history and lead this transition. We see this as a grand experiment. We also think this new world needs a new financial infrastructure, which is what we are hoping Huobi Chain will be.
A public chain is what is used by other cryptocurrencies such as Bitcoin, Ethereum, or Litecoin, and in fact most other cryptocurrencies, and is an open network whereby any users can join and interact with the blockchain without a central controlling entity. Private chains are shielded from prying eyes and generally just for internal use between select parties, or when speed or other factors are prioritised – Ripple (XRP) is one such private or “permissioned” blockchain. However, public chains are seen to be more secure, as they are generally more decentralised and therefore do not suffer from the same attack vulnerabilities as a private chain.
Under the Huobi Chain Superhero Championship Program (HCSCP), the building of the blockchain will be left open to teams from around the globe, who will compete for an overall prize pool of 30 million Huobi Tokens (HT), worth an estimated $171 million at the time of writing. The project will be separated into several “milestones”, and new teams will be able to join in at any given milestone, and continue work based on the previously completed code.
According to their press release, the aim is to become a “next-generation self-regulating and decentralized financial platform”. This appears to show that they are at least leaving the option to become a DEX (decentralised exchange) on the table, which would put them significantly ahead of much of the competition in terms of the leading exchanges, or potentially to migrate HADAX, their existing autonomous sister exchange of Huobi, onto the public blockchain.
As part of the migration to Huobi Chain, Huobi Token (HT) will become a token based on the Huobi Chain, and key partners who already exist within the Huobi Ecosystem will be upgraded to become super nodes on the Huobi Chain.
This shift towards on-chain operations also coincides with a growing move towards asset digitalisation or “tokenisation” – especially so-called security tokens, which are essentially the bringing of traditional financial assets onto the blockchain and creating the idea of “programmable ownership”. The advantages of having these assets digitised are many, such as lower fees, faster execution, a larger base of investors and associated exposure, and several others due to the cutting out of traditional middlemen. You can read more about tokenised securities in this Medium post.
Exchanges – especially large ones such as Coinbase, Binance, or Huobi – will have somewhat of an advantage over traditional financial institutions by already having the technical infrastructure in place. Additionally, Coinbase is on track to operate as a registered broker-dealer for security tokens, if US federal authorities give them the green light, and Circle is also going after a banking license to enable customers to trade securities. Huobi may well be testing the waters and lining up their own game plan for this kind of future.
Migrating entirely away from centralised solutions to their own chain is a big step for Huobi, but with an investment of this magnitude, it is clear that they’re firmly behind it and see the advantages it will bring them. What will also be interesting is how regulations will adapt to meet the challenges faced by decentralised exchanges and companies – with no clear geographical location or headquarters, pinning down which jurisdiction is in control should make for interesting developments over the next years.
You can subscribe to the Huobi YouTube Channel to keep up to date with the latest from Huobi, as well as checking out their recently begun Blockchain 101 video series which can catch you up on the crypto space in general. Register with Huobi here.