The HTX cryptocurrency (previously Huobi Global), which is one of the top 3 cryptocurrency exchanges globally (July 2018), created its own cryptocurrency token. This could be a good move for the exchange, since it is among the top three exchanges.
The value of the token is tied to exchange performance, as well as other factors like coin supply and internal factors in the HTX eco-system. It’s a great success so far, but is it a good investment for the long term?
Binance Coin has reached nearly $1.5 billion in market capitalization, while smaller exchange KuCoin has seen the value of its token reach $300 million. Huobi Token’s (HT) current market cap of $160m can it match KuCoin? Or, to be more optimistic, Binance Coin.
If you consider the fact that the value of HT depends largely on the profits of the trading platform, which grow along with trade volumes no matter how high or low cryptocurrencies may be, this investment seems to make sense.
Exchanges don’t care about the success or failure a coin. The cryptocurrency exchanges are likely to continue making profits as long as cryptocurrencies continue to be traded assets (and I do not believe that they will disappear).
Note: Users in the US or UK will not be supported.
Voting & Rewards from the Huobi Token
Huobi Tokens allow you to take part in the Huobi Autonomous Digital Asset Exchange. This is a hybrid cryptocurrency exchange where users can vote for which coins to list.
Huobi Tokens are used to vote. HTX will then perform a minimal audit. Investment firms such as ZhenFund, Draper and Draper will conduct due diligence on the projects to ensure they meet minimum quality standards and comply with existing regulations.
The user benefits from the ability to list their favorite projects on a trading platform. They also benefit by receiving free coin if the project is accepted. Voting becomes more interesting.
A project may airdrop five free tokens per vote received. Voters will receive these tokens as long as their project is listed. If the project does not receive enough votes to make it on the list, the tokens will be returned. No matter the outcome, users will benefit.
HTX Reduced Transaction Fees
HTX follows a different system than Binance in terms of fees. Binance gives trading fee reductions to anyone who owns BNB tokens. Huobi proposes a subscription-based model, where each level offers lower trading fees.
Currently, HTX charges a 0.2% fee, while Binance’s fee is 0.1% for BNB holders. You can qualify for a fifth level subscription with 12,000 HT per month. This will give you a trading fee reduction of 0.1% which is the same as the Binance fee. Our full Binance review will tell you more.
Binance initially appears to offer a lower fee structure. However, this is only temporary. After five years, the Binance fee is the same as those charged by HTX.
HTX aims its service at institutional investors. These large investors can save thousands of dollars each month by saving 0.1% of their trading fees.
Huobi Tokens: Growth Potential
The above two use cases will provide investors with good reasons to hold and buy the HT token. This should result in a high upside potential of the token. The price of a Huobi Token will ultimately be determined by the supply and demand. Three primary factors will drive demand for an asset like the Huobi Token.
- How many institutional investor join the HTX Platform?
- How many traders think that the value of HT is going to rise?
- Investors show interest in joining voting rounds for new project
All of these demand factors are closely tied to the overall cryptocurrency markets. A bear market, like the one we currently experience, can prevent exchange tokens such as HT from gaining traction. If the markets start moving higher again, it is likely that cryptocurrencies like HTX and other exchange tokens will be adopted by more people.
The airdrops program will benefit from a rising market, as it will make it more competitive to get listed on HADAX. This increased competition will result in greater rewards for voters. This will encourage more people to purchase HT to vote on projects, and receive free tokens.
HTX has supported the price of HT by their own buyback program. Huobi buys Huobi Tokens every quarter using 20% of their exchange profits. They then store them in an Investor Protection Fund. This reduces the supply of HT and makes the remaining HT valuable.
Huobi Token vs. Other Exchange Tokens
HTX was not the first exchange that issued its own token. Binance (BNB), Bibox BIX, KuCoin KS and Coss COSS have also issued their own exchange tokens. Binance’s token has reached a market capitalization of nearly $1.5 billion, KuCoin is valued at $300 million, and Bibox’s token has risen to $75 million. COSS has a market cap of just $10 million.
Huobi Token, on the other hand, has a market capitalization of $160 million. It’s more than double the Bibox valuation, and we expect it to be close to the KuCoin value soon.
Huobi token is trading at about 25% its market capital daily, so there’s a lot of volume. The other coins, however, have daily trading volumes that are less than 10%, and KuCoin is less than 1%. Investors seem to be more interested in tokens for exchanges that directly pay their investors via airdrops and token burnings rather than dividend payments.
HTX can increase the value of its tokens by marketing. Huobi is a South Korean-based exchange, so most of their marketing efforts are focused on Asia. Many Europeans, North Americans and South Americans don’t even know that Huobi has a token. It could achieve adoption rates similar to Binance’s token if it increased its marketing efforts on a global level.
The conclusion of the article is:
Huobi Token deserves a close look by anyone who thinks that cryptocurrencies are here for the long haul. Huobi Token has many uses that could increase its value as well as others that would decrease the supply. It is also currently undervalued in comparison to other exchange tokens. However, it enjoys a high level of popularity among traders.
It could also see significant gains if the coin becomes better known in Europe and North America. It would be similar in growth to Binance and KuCoin, who saw their coin’s popularity grow when they increased marketing.
Exchange coins are something that I would recommend to anyone. Exchanges are a good idea as long as you don’t believe that cryptocurrencies will disappear. No matter what cryptocurrency is dominant, they will still make money. It is not a question of whether an exchange will continue to exist, but HTX seems well-positioned for continued service.
