HOTBIT AMA🎉:During the Halving Trend,Let’s Talk About Plantform Tokens and Stable Coins
Guest1: Ciara Vice President of Global Business at Huobi Group💗
Guest2: Lynn Head of Operation@HUSD 💗
Time:16:00（UTC+8） Apr 14
Let’s Talk about Platform Tokens and Stable Coins Under the Halving Trend
Q1：Please introduce HT and HUSD.
Ciara：First, let me introduce HT and HUSD to everyone here. HT is the core token developed and managed by Huobi Global based on blockchain. HUSD is the compliant stable coin issued by Stable Universal that provides secure, stable and convenient cryptocurrency services for its users. HUSD is strictly pegged to US Dollar by the ratio of 1:1. All assets of HUSD in US Dollars are held in escrow by American trust institution and audited by leading third-party audit company on a monthly basis. HUSD tokens are based on mature public chain Ethereum, which means that all on-chain operations of HUSD are open, transparent, non-temperable with very high level of security. Currently, HUSD has already been implemented in real life applications such as the trading of cryptocurrency assets and payments etc. In the future, HUSD will continue to expand its application scenarios into other aspects of cryptocurrency assets.
The reason that we chose to be the in-depth cooperative partner of HT ecosystem is due to the fact that Huobi has established a complete ecosystem with vibrant community members and a huge number of users and token holders.
Lynn:And I will introduce the HUSD token. HUSD is a USD-backed stablecoin, issued by Stable Universal and redeemable 1:1 to the U.S. dollar via the www.stcoins.com platform. The 1:1 peg is verified by an independent U.S. auditing firm. HUSD was launched back in July of 2019 as part of an initiative to increase transparency, security, and stability to the market for cryptocurrencies. Designed to offer users a gateway to reduce volatility when participating in the cryptocurrency market, as well as a convenient and secure platform for easy HUSD to USD redemption, we issued the HUSD token via the ERC20 protocol.
Just last month, HUSD exceeded market cap over $150 million, and we have been actively exploring new opportunities for HUSD to expand application in different scenarios such as trading, payment, as well as DeFi, which is a very interesting area thesedays. In the meantime, our team continues to build on our vision to provide secure, stable, and convenient blockchain services to our users.
Q2: Considering the fact that recently, the market is taking a positive turn, the market of platform tokens remain prosperous as well. What’s your opinion about this phenomenon? Do you think platform tokens will be the market focus of this year?
Ciara :Previously, under the bear market, all non-cash assets have suffered from either visible or invisible declines, which include platform tokens as well. As a matter of fact, considering the fact that the prices of platform tokens tend to fluctuate drastically, even if the prices of platform tokens suddenly decline, it also helps to increase the trading volumes of the platforms, and thus promotes the destruction of platform tokens and increases the speed of deflation.
From the attribute of trading, the nature of platform tokens can be described as the high volatility of cryptocurrency market. Why? Apart from all the promotional campaigns and slogans regarding the values of platform tokens, the most significant value of platform tokens is the so called “deflation” generated from the destruction of part of the platform tokens that are originated from the incomes of platform, and this is what differentiates platform tokens from other cryptocurrency assets. Platform tokens have actual values to sustain them. The larger the exchange is, the stronger power of management and control it holds over the deflation of its platform tokens.
The power of control over the deflation of the platform’s tokens is determined by two factors: First, market trends, which is what we call bull markets and bear markets. During the bull markets, the trading volumes of any exchanges are normally several times greater compared with normal market trends. Overall, any huge fluctuations of the market — no matter if its a huge increase or huge decline of the market — provide value supports for platforms. The second factor that determines the power of control over the deflation of the platform’s tokens is the overall operational and management capability of the platform itself, which determines the percentage of market share the platform’s brand, products and services will cover.
Q3: According to your opinion, what’s the most important factor that consists the value of any certain platform tokens?
Ciara :The capability to destroy its tokens. Statistics shows that, during February 2020, Huobi Global has destroyed 4,213,900 HT, which worth 18,195,800 USDT in value; during January 2020, Huobi Global has destroyed 4,056,800 HT in total, which worth 12,684,400 USDT in value. The detailed data regarding the destruction of HT during March 2020 will be published on April 15th, 2020. Please stay with us for more details.
It’s worth mentioning that, on February 29th, 2020, Huobi Global has published an announcement regarding the destruction of approximately 150,000,000 HT. Under the new rules and regulations of HT tokens, no more locked HT will enter secondary market, which means that HT has entered the new stage of “absolute deflation”. Until March 15th, 2020, Huobi Global has destroyed 197,469,600 HT, and the total volume of circulation for HT was 236,238,100 HT.
According to the unit price of USD$ 4, currently, the market value of HT is approximately 1,200,000,000 USDT. According to the total value of HT tokens destroyed during January and February 2020, it is expected that a total value of 190,000,000 USDT worth of HT tokens will be destroyed during 2020 in total.
Q4:Apart from the purpose of depositing Huobi’s incomes into HT, what other application values and scenarios does HT involve?
Ciara :Platform tokens also involve part of the values as tools. For example, HT can be used to pay transaction fees on Huobi platform, enjoy discounts, deduct interest rate during token borrowing, redeem VIP points, conduct lockup and mining activities etc. All application scenarios mentioned above have expanded the number of users of platform tokens and increased the value of platform tokens.
For example, HT is also known as the only infrastructure token of Huobi mainnet, which helps Huobi mainnet to form a dynamic relationship of mutual empowerment. After launching the mainet, Huobi mainnet will introduce “super application scenarios” for HT tokens, for example, by staking certain amount of HT tokens, the users may become the super nodes of HT mainnet etc.
Apart from that, platform tokens can also be used as payment and exchange methods. For example, HT has recently been adopted by a large website as payment method, which allows users to purchase various products under 30 categories from more than 140 countries around the world from now on. Also, HT has been adopted by Tripio payment method. All HT holders may use HT to reserve more than 450,000 restaurants and BNB around the world available on Tripio platform.
However, all application scenarios mentioned above are currently in their early stage of development, considering the fact that not that many people will choose to pay their bills with volatile platform tokens by using little-known APPs. Under such application scenarios mentioned above, compared with Alipay and credit cards, platform tokens enjoy no advantage at all.
Q5: How should we evaluate expectations that HT value will rise? What kind of collaborations can we expect to see with Hotbit?
Ciara：One thing is certain: Value is not produced out of thin air. A platform’s utility value is built from actual investment. Fundamentally this comes from a platform’s overall operations management strength. The stronger its operational management, the greater its token burn, the more support it will get from the market. In summary, the exchange’s decision to take millions in revenue and injection a portion of it into the platform’s utility token is the token’s best market value support mechanism.
For a while now, Huobi ’s business has maintained rapid growth, with consolidated trading volume in its 3 core businesses taking the №1 spot in the industry over a long period. This has resulted in its ability to maintain profitability amongst the top exchanges in the long term. This is the key reason driving HT’s market valuation.
However, by treading the path of a utility token, Huobi hopes to steadily share profits with HT holders on a long-term basis. For example, we would rather bear negative remarks that the platform’s utility token price “is boring”, or that “Huobi moves too slowly”, but we do not allow users to bear significant market risks.
In the future, we will accelerate addition of enterprise application channels into the eco-system. These include international credit card, digital bank card, large internet firms. and co-working spaces. This would aid the steady development of the eco-system, and increase application-use cases. We thus also welcome blockchain industry platforms like Hotbit and traditional business platforms to explore similar cooperative ventures with us.
Q6：What is stablecoin?
Lynn:In layman words, stablecoin is a form of cryptocurrency that is pegged to another asset, generally a fiat asset (e.g. US Dollar), a commodity (e.g. Gold or oil), or even a basket of assets. The rise and adoption of stablecoin mainly stemmed from one of the biggest barriers keeping the general population from entering the cryptocurrency market: Volatility.
I’m sure you know what I’m talking about, given the media reports as much on the “revolutionary” aspects of blockchain/cryptocurrency as it does on the volatility (like that famous story of a programmer purchasing 2 large pizzas for 10,000 bitcoins).
Currently, the most common types of stablecoin on the market are fiat-backed stablecoins, like HUSD. The U.S. dollars backing each HUSD in circulation are held in custody by a U.S. trust company. The funds are then attested by an independent auditing firm on a monthly basis to verify the 1:1 peg and provide a high level of transparency for HUSD holders.
Q7：Why the market needs stablecoin？
Lynn:Volatility is one of the biggest barriers to keeping retail traders and institutions alike from entering the cryptocurrency market. For example, in the flash crash on March 12, Bitcoin dropped over $1500 in an hour.
While Bitcoin and a majority of cryptocurrencies brought forth revolutionary technology designed to be mediums of exchange, the volatility at times make it hard for them to be widely adopted as medium of exchange and payment. So, the market needs a middle ground between technology and stability — a safe haven for traders, of sorts. That solution is stablecoin. It leverages both blockchain technology and stable architecture to provide the cryptocurrency market assets with stabilized values for trading and payment.
Q8：What’s the difference between HUSD and USDT？
Lynn:While the blockchain and cryptocurrency industry has made some revolutionary progress when it comes to technology, the industry may still be in its infant stage. We, along with the rest of the industry, continue to expand upon technological advantages and explore innovation boundries. For example, the flash crash of USDT on October 15th 2018, brought to light limitations of the existing stablecoin products: lack of transparency and auditability.
HUSD is just the opposite of that. To ensure that each HUSD is backed 1:1 by the U.S. dollar, all of the fiat assets HUSD received are held in a U.S. regulated trust company. We do not and cannot touch client’s money. And we also have an independent audit firm to provide monthly attestations to bring transparency and trust in the area. These attestations are available for public viewing on www.stcoins.com.
With HUSD’s ATH market cap reached $150 M in March, and total issuance exceeds $924M, we have received many users’ trust and we appreciate the support and trust we get in the industry. We will continue to provide a safe and secure stablecoin product and service to the world.
Q9：Where and how can I use stablecoin？
Lynn:Currently, crypto trading is still the primary use case of stablecoin. User can use HUSD as a counter currency in trading pairs on Cefi exchanges such as Huobi Global, Ftx, Hotbit, Huobi Indonesia, as well as dexs such as Tokenlon. We’ve seen lots of user activity on pairs such as usdt/husd and btc/husd, and volumes on other trading pairs are picking up as the awareness of secure dollar-backed stablecoins are rising quickly in the industry this year.
We also look into adoption cases in wider scenarios such as payment and Defi applications:
Alchemy Pay now supports users in Singapore, Hong Kong S.A.R., Japan and Dubai to make payments in supermarkets, shopping malls and car rental firms with HUSD. Major DeFi platforms like Lendf.me has also just launched HUSD as one of the stablecoin lending product offerings. We are building the HUSD ecosystem for our users, step by step.
I believe stablecoin is an important infrastructure of the cryptocurrency ecosystem and we will continue to explore opportunities to expand HUSD application cases.
Q10： We see the market cap of stablecoins are blowing up in March，can you tell us the reason behind? And can you tell us why the emerging exchanges like HotBit choose to list HUSD，what does that mean to the market?
Lynn:According to the data from Coin Metrics，HUSD’s market cap rose by 80.18% in March, similarly, USDC grew 55.4%，USDT grew 55.91%，PAX grew 24.74%. So yes, the market does see a growing trend for stablecoins.
Why the dramatic growth? I think it’s largely due to a wave of risk aversion sparked by the flash crash of major cryptocurrencies in early March, generating the need for risk avoidance which led people to using stablecoins as safe haven. Simultaneously, new traders looking to enter the market need to find a safe, stable and convenient fiat gateway to join the crypto world. And that is the type of service which HUSD provides.
All in all, in the past few years, I do observe the industry becoming more professional and regulated. With that trend, I expect to see a growing need and adoption for stablecoins like HUSD. For why Hotbit decided to list HUSD, I can not speak for the Hotbit team, but I would like to believe it is largely due to the secure, reliable and convenient services provided by HUSD team! We are excited to see HUSD added as a growing list of options for Hotbit users to choose from, and will continue to improve upon our services to provide users with secure and trusted products and services.
Q11: Are we going to witness another halving trend? From the perspective of investment, what’s your opinion regarding how to conduct investment activities during halving trend?
Ciara ：Market volatility lately has largely exceeded most expectations, making it unpredictable. It’s anyone’s guess where the market will go, and is largely a gamble. Currently, the global coronavirus pandemic has yet to be effectively brought under control, and given that the the general economy has yet to improve, we suggest the following:
1. Be prepared to face challenges brought about by big changes to the environment in the 2nd half of the year, prepare sufficient liquidity, and increase investments.
2. Hold liquid assets;
3. If you do not have the ability to control leverage risk, use leverage carefully;
4. Be wary of projects that wash trade. In my previous analysis, I cited an example of a platform token with wash trading. From this round’s decline, gains accumulated from wash trading will eventually be flattened by the market and the decline will be greater, leading to investors bearing even more losses. More importantly, wash trading requires high capital investments, risks liquidity, and increases business risks. If customers funds were used, the risk will be even higher. Thus, traders in the digital asset space should take risk control seriously.