In brief
- Huobi has launched the testnet of its own blockchain platform.
- The blockchain is for Huobi’s own Huobi Token.
- It will support decentralized finance tools.
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Cryptocurrency exchange Huobi has announced the public testnet launch of its own decentralized network, dubbed Huobi Chain. In doing so, it’s following in the footsteps of its larger, more successful, rival: Binance.
According to the official press release, Huobi Chain is an open-source public blockchain designed to provide a “global, blockchain-based, digital asset financial infrastructure.”
Unsurprisingly, on paper, the project sounds quite similar to the Binance Coin (BNB) initiative. Per the announcement, Huobi Chain's main focus will be decentralized finance (DeFi) services and applications while the exchange’s internal Huobi Token (HT) is also being employed as the network’s sole utility token.
Binance Coin (BNB) is one of crypto’s most surprising success stories. The token, which started as a means of paying fees on the exchange, now has its own blockchain, runs decentralized apps, a non-custodial exchange, supports other tokens and operates at the heart of the Binance community. Employees get paid in the coin and community members hold the coin—and sometimes work for free—hoping that they can make Binance a success, and along with it, BNB.
And it’s working. As Decrypt reported previously, Binance Coin rose 22,000% in the first six months after it was issued, surpassing Bitcoin (BTC) and Ethereum (ETH). Although these gains were largely driven by regular coin burns, designed to artificially boost the price of BNB.
But if it worked for Binance, will it work for Huobi?
A leaf out of Binance's book
Huobi has borrowed a number of ideas from Binance’s playbook. It too regularly burns 20% of the exchange’s revenues in the token—similarly designed to reduce supply and increase the price. It also offers a discount on trading fees when traders pay in HT. Plus it’s trying to get people to use the token for payments, not just for paying fees.
Yet it hasn’t proved as successful. While BNB has shot up to the top 10 coins by market cap, HT is ranked sixteenth. And it’s value has only jumped fourfold since it was launched, unlike BNB’s more extreme growth.
Huobi Token’s move towards its own blockchain will help it to achieve its aims of becoming more widely used. And yet, Binance created its own blockchain platform for BNB a whole year ago.
So while Huobi is moving in the same direction as Binance, it remains one step behind.