The world is at an interesting juncture in a number of sectors, but, if we look at the cryptocurrency space and the way in which Covid-19 has impacted our everyday lives there appears to be the potential for big, and positive, change.
Cryptocurrency has always promised to disrupt the financial system as we know it and empower those who have become generally oppressed by the legacy that has been established. At the same time, the impact of the pandemic has put a further strain on individuals and the financial system as a whole leaving a gaping crevice for a new system to work its way to the fore.
We, at Huobi, believe that this system is once based on blockchain and cryptocurrency and have the vision of crypto reaching into a 100 million households. This vision is an extension of Huobi’s long standing mission to empower financial freedom and create new global wealth. As a company, we want to help create an equitable and inclusive financial ecosystem for everyone and we believe digital assets play a central role in that future.
This has become an undertaking on our behalf and we know that such ambitious visions and goals need to test an enterprise’s comprehensive ability, including long-term strategic vision, sensitivity to global market changes, as well as diversified industry chain layout and product development that are compatible to market needs. For a crypto exchange in particular, risk control, compliance and better user experience require constant effort, perseverance and product polishing.
In order to achieve our goals to empower 100 million households worldwide to own crypto assets and drive mass adoption, we approach corporate compliance as foundational to our business.
And this is a particularly exciting time for blockchain and crypto. Crypto adoption is accelerating at a rapid pace and more nation-states and regulators throughout the world are embracing digital assets as a necessary and legitimate asset class within the broader financial ecosystem. Crypto has become much less taboo that it was years ago.
The role crypto is playing in the global economy
To say that 2020 has been a challenging year would be an understatement but there’s always a silver lining. The world was already moving toward a digital economy but this year’s events like the coronavirus pandemic and increasing geopolitical turmoil are accelerating that transition by years.
First, let’s address the pandemic. COVID-19 is something no one could have anticipated. It’s a black swan event that has completely upended our lives and the global economy. While countries around the world are making progress, the effects of the coronavirus on the traditional financial markets will be long lasting.
In addition to the uncertain economic landscape, there are major geopolitical movements as well, such as the upcoming U.S. presidential election and the ongoing friction between China and other nations like India and the U.S. We can continue to expect some level of market volatility for the foreseeable future but that’s a very natural part of market cycles. Most experienced traders will agree that volatility offers a potentially advantageous opportunity.
Beyond trading opportunities in volatile markets, the current macroeconomic landscape creates the perfect environment for Bitcoin and other crypto to thrive as an alternative asset class for both institutional and retail traders. Governments and central banks around the world have responded to this unprecedented pandemic with aggressive monetary policy measures like quantitative easing. You don’t need to be an economist to know that printing large sums of money in a short period of time carries high inflation risks, and some countries are already seeing the impacts of inflation in basic necessities like food prices.
While the response of governments and central banks are well-intentioned, it reveals the limits of government-issued currencies. That’s not to say cryptocurrencies should replace all fiat currencies, but they can provide hedge against inflation and future monetary policy measures.
The best example of this is Bitcoin. Bitcoin is a digital asset with a finite supply. No central organization or nation controls Bitcoin. Changes in monetary policy have no direct impact on Bitcoin. It cannot be manipulated by any one person. As unfortunate as this current economic environment is, the timing couldn’t be more perfect for Bitcoin. With the recent third halving cutting mining rewards in half, Bitcoin is now more scarce than ever, which is something that can‘t be said about traditional currencies. In fact, Bitcoin has now seen its inflation fall below 2 percent — lower than what most central banks aim for with currencies. Bitcoin’s scarcity will likely have a positive impact on its price for some time to come as more people turn to the digital asset as an alternative store of value amid global uncertainty.
People are also becoming increasingly aware of how adaptable digital assets are. Early critics argued that crypto is not an ideal medium of exchange and not fit for everyday transactions because its value fluctuates but stablecoins like Tether and HUSD have shown that digital assets can in fact play a transactional role. Governments and central banks in particular are taking a similar approach with CBDCs, or Central Bank Digital Currencies. The most notable is China, which plans to come out of COVID-19 with its own digital currency to rival other popular cryptocurrencies. The Bank of England is also leading collective research into digital currencies, along with some of the world’s largest central banks like the Bank of Canada, the Bank of Japan, the European Central Bank, and the Swiss National Bank.
All of this is driving new interest in crypto across all categories, retail, institutional, and government, so there’s been a surge in adoption and trading volume. The landscape is heating up as we’re just now getting into DeFi season so we expect a lot more activity in the second half of 2020.
Making crypto more accessible
A big part of driving crypto adoption is making it more accessible to all types of users across many different markets. We take a product-driven approach to empower users on our platform.
As mentioned earlier, Huobi has set up a vision to empower 100 million households to own crypto assets. And we are confident in this because we are executing a continuous strategy to achieve this goal.
As of today, Huobi Global ranks THE FIRST among top exchanges regarding aggregated funds deposited. According to popular data provider Bituniverse, the user capital deposited on Huobi recorded $5.73 billion, which accounts for 5.2% of the entire digital asset market capitalization, noting that this is only user assets. The deposit of funds is the least falsifiable and most meaningful indicator to measure an exchange’s true liquidity as users put their money on the exchange in order to trade.
Huobi has a global appearance and has opened a dozen fiat gateways and licences worldwide, including Gibraltar, Thailand, Japan. In the Q4, Huobi will cooperate with more third parties to open additional fiat gateways to make our services more accessible to users all across the world.
At the moment, we are working with Simplex, a payment solution provider to allow users to purchase crypto with fiat. Huobi will announce three more payment solution partners in the following month to expand our channels to allow users worldwide to purchase crypto with their local fiat currency and experience professional financial services at Huobi.
We also offer a wide range of products and services to cater to all kinds of users. From stable savings products with sustainable interest rates, to lending products and derivatives trading like futures trading and perpetual swaps, to liquidity mining and staking, Huobi can meet the needs of users at different levels of financial management.
One of our latest additions is Crypto Savings, a crypto investment product with a stable interest rate. It is suitable for users who are new to the crypto space and want to earn some stable interest before they start exploring crypto trading. After a user is onboarded to Huobi, crypto savings should be a must-use product as it is incredibly flexible to set up new accounts with Huobi Crypto Savings. It enables users to make deposits and withdrawals at any time and interest is paid out daily. It’s a great way to earn interest when you’re not actively trading.
Crypto Savings is also suitable for users who are underbanked. Cryptocurrency has long been touted as a tool for the 1.7 billion-strong unbanked population globally with its inclusive and more flexible nature. The use of cryptocurrencies for the unbanked and others in underdeveloped markets is clear and obvious in terms of transactional usage, but Huobi Crypto Savings aims to drive new financial empowerment. The current annual yield for deposits in USDT is 8 percent, while deposits in Bitcoin yield 3.5 percent. There is a clear and obvious demand for such a product, especially for those who have been excluded from the traditional banking sector.
The product has only been live for a little over a week but all of the traction has been organic. We’re seeing interest from a lot of users who want to keep their assets in one place while earning good profit without any risk.
Creating a more robust market for users
Another way we’re paving the way for the widespread adoption of crypto is by strengthening the markets with more liquidity, a wider variety of highly-vetted digital assets, and sophisticated trading products. We’re also investing into building the digital asset ecosystem.
For example, Huobi has different listing channels and Huobi has been really careful in selecting the right asset through the right channel. In August, Huobi Global launched a new token listing pathway Huobi Inno Hub. Huobi Inno Hub is an essential part at Huobi Global’s main page and the key strategic deployment of the Huobi’s blockchain ecology. We opened the pathway with an open attitude; believing this move will provide opportunities to our users with high-potential blockchain projects in various fields.
DeFi tokens YFII and YFI were the first ones to land in the global observation zone. DeFi Liquidity Mining is an inevitable topic for 2020. DeFi is developing at a rapid speed with drastic changes as a type of new layouts in digital finance. Many expect DeFi to become the foundation of a world-wide open finance ecosystem and to give birth to a number of great projects with huge wealth opportunities.
As a leading company in the blockchain industry, Huobi has taken it upon itself to support and lead the development of DeFi. Huobi Global introduced a DeFi section and dozens of new projects that covered multiple applications in businesses like lending, prediction, DEX, derivatives, and public chain, etc. We also announced our DeFi lab and established a DeFi alliance. We strongly believe that a decentralized world will push the industry toward greater efficiency and give more people financial freedom in the long run.
Last week, we also started a DeFi liquidity campaign. Huobi Global has kicked off with 5,000,000 USDT worth of block chain assets for DeFi Liquidity Mining, and more rounds will be held after with a total 10 million USDT worth of block chain assets. Rewards (all income) generated from DeFi Liquidity Mining will be distributed to all qualified participants who stake HT/ HPT.
And in terms of staking products, Huobi Global has just announced the H-token series – a suite of assets that are issued on Ethereum and backed by cryptocurrencies from other blockchains to bring more digital assets to the Ethereum DeFi ecosystem. The staking will include DOT, LTC, and BCH. The combined market cap of these assets has approximated $1.1 billion and they are welcomed by crypto enthusiasts around the world.Up to now, approximately 5,000 HBTC has been minted, and these tokens enable users to seamlessly access decentralized protocols such as Uniswap, Curve, Balancer, Nest, and ForTube. In the near future, HBTC will also be used as DAI collateral on MakerDAO. HBTC’s growing use cases prove that its value has been recognized by the market.
Apart from the expanding DeFi market, the core of Huobi’s business still lies in CeFi. Huobi focuses especially on the derivative side, Huobi Futures has seen trading volume of $877.8 billion in the first six months of 2020. Interestingly, Q1, which was a good quarter for the cryptocurrency space, has been matched by Q2 on Huobi despite the second quarter being impacted by a major bitcoin market collapse. For Q1, unilateral trading volume totalled $444.2 billion while Q2 was USD433.7 billion. Even though Q2 was characterised by a market drop and then sideways trading, the transaction volume saw no significant decline.
Huobi only recently launched its own perpetual swap product, but it has been an instant success, keeping up with, and sometimes outperforming BitMEX, one of the leaders in the space. In its first full quarter, Huobi’s perpetual swap trading volume came in at $21.65 billion in April, but rocketed up to $79.5 billion the next month, falling just short of BitMEX’s trading volume. Then, in June, Huobi overtook BitMEX with a total of $50.2 billion.
Huobi has also managed to push new boundaries against other well established exchanges when it comes to futures trading volume as the coin-margined futures trading volume for the last three months has been better on Huobi than our competitors.
April saw nearly a hundred billion dollars traded on these futures contracts at Huobi while May managed to cross into the hundred-billion-dollar range. June dropped back a bit as $74.05 billion was traded, but all three of these months outperformed our major competitors.
Weekly contacts trading was another area where Huobi managed to thrive as it registered on average more than $5 billion across April, May and June. Huobi recorded more than double the trading volume of its competitor through these three months.
While for bi-weekly contracts trading, Huobi finished the quarter with $3.82 billion in trading in June.In terms of quarterly contacts, Huobi was again at the top in volume registering more than double the trading volume of major competitors. Also on September 1st, Huobi Futures, after successfully launching Huobi Perpetual Swaps in April this year, has set its eyes offering more opportunities for its traders with the unveiling of Futures Options.
Liquidity is also a priority for us. Cryptocurrency exchanges have a vital role to play in the use of these burgeoning digital assets as they provide a direct link for people to access, use, trade, sell and buy. Exchange liquidity is one area that Huobi prides itself on, and according to popular blockchain data site Coinmarketcap, Huobi ranks first in this metric. The depth indicator mainly refers to the quotation depth, in other words, the number of orders at a specific price (usually the best bid and offer price). The better the depth, the more obvious the restraining effect on the extreme market, which can prevent large scale of artificial intervention in trading and improve the trading experience of leveraged users. A look over Coinmarketcap’s liquidity ranking index on September 13, it shows that Huobi Global’s average liquidity index score is 502 points, ranking first among the average liquidity index of global exchanges
However, we like to take it a step further and also provide low slippage, another important metric of a professional exchange. The slippage spread indicator is the most commonly used liquidity measurement method, because slippage reflects the difference between the estimated transaction price and the actual transaction calculated by the market. The smaller the slippage, the lower the cost of placing an order.
Huobi’s liquidity advantage is more prominent at present. The slippage of various amounts such as BTC/USDT is significantly ahead of other exchanges, and the gap has a further widening trend. Whether ordinary users or professional institutional users, whether spot users or leveraged contract users, they can choose a trading platform with better liquidity when trading digital assets.
Continuing to serve excellence
In the 7 years we’ve been around, our exchange hasn’t been affected by a major security breach and we plan to keep it that way. Even as we see record trading volume and user activity, we continue to prioritize our users’ safety. Huobi has over 500 in-house developers to maintain the network and ensure users safety. We’re also proud that our exchange hasn’t experienced any major outages and has kept a record of 0 claw back during extremely volatile moments when there are a large number of concurrent users. We’ve been able to maintain the uptime unlike some of the other major exchanges because we’ve invested heavily into our backend infrastructure.
Our exchanges now serve millions of users in over 170 countries. Both our spot exchange and our derivatives exchange top the market in terms of liquidity, trading volume, market depth, compliance, and security, all of the key factors that define a safe and sustainable trading environment. We operate localized and regulated exchanges all over the world, both directly and through trusted local partners, and we operate in full compliance with all of the necessary licenses for each jurisdiction.