Huobi, previously one of the major cryptocurrency exchanges in China, announced today that it will issue its own token based on the ethereum ERC-20 standard.
Dubbed the Huobi Token (HT), the new issuance is set to start on Jan. 23 with a capped supply of 500 million. According to the announcement, 300 million HT (60 percent) will be issued to users over a course of 15 days, while reserving the remaining 40 percent for platform operation, team incentives and user rewards.
Huobi said the token launch “is not an initial coin offering (ICO).” Instead, the 300 million HT will be given to users who purchase a service fee package at a discount on Huobi Pro using tether (USDT) – a crypto token pegged to the U.S. dollar. Other cryptocurrencies that can also facilitate the purchase include bitcoin, bitcoin cash, ethereum, litecoin and ethereum classic.
While details of the packages are yet to be revealed, the company said there will be a maximum limit for each user’s purchase and the minimal order will be 100 HT.
The news marks the latest move by Huobi to recover since the business was severely affected by China’s clampdown on domestic exchanges, according to Leon Li, founder of Huobi Group. It has since shifted to an over-the-counter (OTC) trading model and targeted overseas markets.
“We closed the trading book service on Sept. 15 and opened the crypto-to-crypto trading on Nov. 1 in 2017. The volume on Nov. 1 was about four to five percent of that on Sept. 15,” Li said in an interview with CoinDesk. “The impact was really significant.”
Essentially, through the new issuance, Huobi will be able to gather service fees upfront while increasing the level of user “stickiness,” Li said.
“For example, if you purchase the 1,000 HT package, it will only cost USDT 990, and you will get 1,000 HT for free. HT can be used for offsetting the trading fees,” the company said.
The ultimate goal, according to Li, is to make HT serve as an asset that connects users at Huobi’s exchanges in Japan, South Korea and the U.S. in the future, as the company expands overseas.
While business registration in the U.S. is expected to take some time, Li added, the new ventures in Japan and South Korea are planned to open in March this year.
Meanwhile, HT will also be available for trading as the company’s exchange platform will offer USDT, BTC or ETH trading pairs with the token. Addressing potential concerns over price volatility, Huobi will buy back HT based on its market price every quarter with 20 percent of its net profit during the same period.
Li said the funds bought back will be stored in an ethereum address as a reserve, dubbed the Huobi Investor Protection Fund, which will be made visible to the public.
Leon Li image via CoinDesk archive
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