As the market has matured, and startups have discovered more precise and appropriate use cases, new types of tokens have emerged. One of the most notable of such tokens are exchange tokens, which deliver to exchange users several attractive benefits that incentivize the use of the tokens.
While the Binance Coin (BNB) is arguably the most well-known of these tokens, being one of the most popular global exchanges, numerous other exchanges have shown equal gumption in attaching monetary and trading benefits to these tokens. The volatility of the market, in combination with the benefits that traders receive by using exchange tokens for trading, has quickly made exchange tokens both a trading vehicle and an semi-significant investment - a smart move, as it redirects investment into the exchange’s services.
As proof of its utility and demand by the cryptocommunity, the quick rise of several exchange tokens to the top of crypto rankings is proof that exchange tokens are used and desired by the cryptocommunity. The Huobi Token (HT) is only second to BNB in terms of market cap, and, practically speaking, on par with UNUS SED LEO (Bitfinex’s exchange token). Huobi has tightly linked the existence of the token to the services within its ecosystem.
We examine the Huobi Token, including its history, the features that it offers to holders and how it stacks up against other exchanges and their respective tokens.
History of Huobi Token (HT)
Huobi is one of the largest cryptocurrency exchanges in the world, with 24 hour trading volumes of roughly $300 million, and offers more than 220 tokens for trading. Headquartered in Singapore, Huobi was originally based in China, before relocating following the Chinese government's crackdown on the crypto market. The exchange launched the Huobi token in February 2018, with a total of 500 million tokens, roughly 250 million of which is in circulation. The exchange burns tokens every quarter.
The tokens were distributed to Huobi VIP members, with 5 tier levels, each with its own cost of Huobi Tokens to access the trading discount features. The highest tier sees a 50% discount, while the lowest tier sees a 10% discount. The former sees a cost of 120,000 HT, the latter 120 HT.
Leon Li, the founder of the Huobi Group, has stated that the ultimate goal of the Huobi Token is to connect users in the various Huobi exchanges in different countries. Huobi shifted its focus to overseas markets after the Chinese government began to crack down on exchanges and ICOs; it now has offices in Hong Kong, Japan, South Korea and the United States.
There are several notable features that the project delivers, including the Huobi Chain, its own ledger; OTC and derivatives/futures trading options and a soon to be released decentralized exchange; Huobi FastTrack, a means by which tokens can get off the ground faster; and Huobi Prime, a premium service that lets users invest in particular projects and tokens early - similar to Binance’s launchpad.
Purpose of Huobi Token (HT)
Built on the ERC-20 standard, the Huobi Token is very similar to a token like Binance Coin, designed for use within the Huobi ecosystem and directly incentivizing use on the exchange such that it benefits both the user, and the growth of the exchange and its services. Huobi Tokens can be bought using ‘Point Cards’ on Huobi Pro. These point cards are pre-purchased cards with one card being the equivalent of one Tether (USDT).
The team has made extensive efforts to broaden the usage of the token, most recently making it possible for the Huobi Token to be used as an e-commerce payment method. Purchase possibilities include art, apparel, hardware, event tickets and more.
For example, Huobi Prime and Huobi FastTrack, Huobi's innovative premium coin launch platform and its new coin listing program, which respectively launched in March and June this year, both use HT as their main token of exchange. In July, Huobi implemented a series of tiered trading fee discounts for users based on HT holdings.
Like other exchange tokens, holders of the Huobi token can take advantage of it being paired to several popular tokens, airdrops of other tokens for HT holders, discounting on trading fees, liquidity protection, utilize it in governance mechanisms. The discount on trading fees is a particularly important beneficial, giving its holders up to 50% of a discount on trades. The exchange will ensure liquidity protection by buying Huobi Tokens on the open market and protecting users’ interests with 20% of Huobi’s transaction fees earned during that period.
As exchange tokens are meant to be used within an exchange’s ecosystem - including all of its services - Huobi has made it a point to deliver features that encourage the use of the token within the ecosystem.
The Huobi Token itself has not been at the center of any controversy. As for Huobi, the most doubt that can be cast on it is when reports emerged last year that it, along with other EOS Block Producers, were voting in favour of each other, with monetary benefits to boot.
These reports began streaming out in October 2018, and it was alleged that Huobi and EOS had colluded for the purposes of “mutual voting” i.e. Huobi nodes had voted for others with some financial gain involved. Both EOS and Huobi addressed these allegations, and no allegations have emerged since. The development drew remarks from members of the cryptocommunity, including Vitalik Buterin, who had said that the EOS network was subject to manipulation.
Besides this, Huobi has largely remained outside the spotlight of controversy.
The Huobi Token itself is an initiative of Huobi, the exchange, so any partnerships that exist have been established by Huobi and others to benefit the growth of each - which directly benefits the expansion and liquidity pool of the exchange.
One notable Huobi partnership - or rather, collaborative effort in conjunction with a number of prominent crypto entities - is that of Global Digital Finance (GDF) initiative. The latter is an industry group that features such members as Circle, Coinbase, ConsenSys, DLA Piper, Diginex, Hogan Lovells, and R3, which have come together “to develop best practices and standards within the digital assets community.”
Another particularly unique partnership that Huobi has established relates to local markets. Over 80 local market entities have signed up in this partnership with Huobi, with profits being split 50/50 between Huobi and the local entities. This is a smart move that benefits Huobi by giving them access to emerging markets, while the local entities can leverage Huobi’s services and improve their trading volume. This is a smart move that is keeping Huobi abreast with competitors like Binance, which is executing similar strategies.
Naturally, there are several competitors to the Huobi Token, inasmuch as there are competitors to the Huobi exchange. Notable exchange tokens and general exchange competitors are Binance and the Binance Coin, Bitfinex and UNUS SED LEO, Quione and QASH, and LATOKEN and its token LATOKEN.
The features of these tokens are largely the same, with their differences largely being determined by their opportunities for use in their respective ecosystems. For example, Binance has quite cleverly built an ICO launch platform called Binance Launchpad, a decentralized exchange and a margin trading platform - all of which has been the recipient of a lot of attention and activity.
Binance is by far the largest competitor to Huobi - and indeed to every other player in this space. The exchange has an incredible market reach and shows trading volumes that are well and above that of others.
However, Huobi certainly has a portion of the market covered, and its efforts to gain a foothold in emerging markets make it give a much needed boost to compete with Binance and break away from the others. With a decentralized exchange running in beta, such initiatives should help it gain some ground in the race to become a global go-to crypto exchange.
Huobi is a popular and extremely active exchange in its own right, and the release of the Huobi Token has only served to further the growth of the exchange. With several features on the way, and the business-savvy strategies being implemented in emerging markets, the Huobi Group stands to gain a lot from the token. The token is particularly useful for those investors who see value in the tokens that Huobi attracts to its Prime and FastTrack services. Binance has seen its users who invested in its Launchpad projects receive a lot of profit; similarly, Huobi users may expect to see a profit from respectable projects that appear on Huobi’s services.
If an individual makes use of a particular exchange, then the corresponding exchange token, if available, is an extremely sensible investment, doubling as a trading tool and as an actual investment that could be used in the exchange’s particular services. Whether that be one of its competitors or the Huobi Token itself, there is no doubt that exchange tokens are increasingly showing themselves to be a popular investment for ardent investors.