Huobi, formerly one of the largest China’s cryptocurrency exchanges, declared today that it will issue its own token based on the ethereum ERC-20 standard.
Dubbed the Huobi Token (HT), the new edition is set to start on Jan. 23 with a capped supply of 500 million. In accordance with the announcement, 300 million HT (60%) will be sold to users over a course of 2 weeks, while reserving the remaining 40% for platform operation, team motivation and user rewards.
Huobi said the token launch “isn’t an initial coin offering (ICO).” Instead, the 300 million HT will be sold at a discount to users who buy a service fee package on Huobi Pro using tether (USDT) – a crypto token tied to the U.S. dollar.
While details of the packages are yet to be disclosed, the company said there will be a maximum limit for each user’s buy and the minimal order will be 100 HT.
The news notes the latest step by Huobi to recover since the business was heavily affected by China’s clampdown on domestic exchanges, in accordance with Leon Li, contributor of Huobi Group. It has since moved to an over-the-counter (OTC) trading model and targeted foreign 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 4 to 5% of that on Sept. 15,” Li said in an interview with CoinDesk. “The influence was really considerable.”
Substantially, due to the new output, Huobi will be able to gather service fees in advance while increasing the level of user “stickiness,” Li said.
“For instance, if you buy 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 final goal, in accordance with 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 near future, as the company extends overseas.
Business registration in the U.S. is going to take some time, so Li added, the new subsidiaries in Japan and South Korea are planned to open in March this year.
In the meantime, 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 variability, Huobi will buy back HT based on its market price every quarter with 20% 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 community.