A change to the rules for voting on new token listings has caused a backlash against Huobi's HADAX cryptocurrency exchange platform.
On Friday of last week, Huobi published an update – "HADAX Super Nodes and Voting Rules Updates and Subsequent Arrangements" – which outlined that, henceforth, HADAX will rely on two separate groups of funds to help with deciding on new listings.
The company introduced the idea of "Standing Nodes," for which the HADAX platform will invite 14 large, traditional venture capital firms to join, such as ZhenFund, FBG, Unity Ventures, and Draper Dragon.
The new rules will also include 31 "Selected Nodes," which are chosen through an application review process. Based on the announcement, Selected Nodes are smaller, crypto-specific venture firms such as Node Capital, Dfund, and BlockVC.
Huobi launched HADAX in February of this year, allowing users to vote – using its HT token – for new assets to be listed on the platform for trading. The firm later introduced a mechanism that would allow notable venture firms to serve as a supernodes to help HADAX screen new tokens before presenting them for public voting.
With the updated rules, HADAX said that, from now on, "All projects for the public voting list must be supported by a Standing Node and projects that were not supported by any standing nodes will be removed from the list and votes will be refunded."
Effectively, Standing Nodes will have a stronger role to play in deciding which tokens can be listed on the HADAX platform.
The move immediately drew backlash from various token funds who felt they had been demoted, accusing HADAX of being "discriminative and authoritarian."
Most notably perhaps, Du Jun, founder of Node Capital and also a co-founder of the Huobi exchange, announced through his WeChat platform that, although his firm had been a HADAX supernode, it will withdraw and no longer be involved in the supernode vote.
Illustrating the post with a middle-finger photo, Du replied in this own thread:
"Fuck the HADAX operation team."
Node Capital was soon joined by other crypto funds in announcing that they would not tolerate the decision and would withdraw from supernode roles – including Dfund, established by Chinese over-the-counter trader Zhao Dong, as well as Bixin Capital, the venture arm of crypto wallet Bixin.
In response to the crypto funds' departures, Li Lin, co-founder and CEO of Huobi Group, said via his WeChat channel that, while it could have been communicated better, that the move is aimed to ensure the quality of tokens chosen to be traded on the platform.
"I apologize for not having effectively communicated with supernodes before publishing our new decision. ... We understand that some selected nodes feel disrespected or their branding is hurt, which led to their respective responses. We build collaborations based on a win-win purpose. Partnership or not is always a free market choice. Huobi always opens its gate for partners. But HADAX must be completely revamped and we will have another major upgrade in July. In regardless of what model it will take, we think being responsible for users is of utmost importance."
As of press time, the company had not responded to CoinDesk's request for further details on HADAX's future plans around the arrangement.
HADAX is now the 43rd largest exchange on CoinMarketCap with 40 tokens available for trading and $23 million changing hands in the last 24 hours.
Image via Huobi Facebook