The Singapore-based Huobi, a cryptocurrency exchange, has committed an investment of about $100 million in creating Huobi Chain. After the completion of the project, the company intends to move its operations to the new platform that is based on blockchain technology. One of the primary reasons for the migration is its preference for a decentralized autonomous organization. That would mean replacement of code and community-associated decision making from the conventional structure of management. Also, there is no need for any third party to verify financial transactions.
No Control of Central Entity
The migration towards the new platform would also mean that there is no control of central authority on the members’ entry on the network. The company’s statement disclosed that the creation of a public blockchain would mean that Huobi is moving towards a decentralized structure from a centralized corporation. That is because the decentralized is managed by the community. Since 2013, DAOs were seen as a fixation for blockchain enthusiasts. Though some projects were done with the idea of experimenting, the most popular one was “The DAO” that raised as much as $150 million from the initial coin offering (ICO) two years ago. However, it suffered a loss of $50 million following the hacking.
In the subsequent week, losses were reversed due to a decentralized rescue that has driven the split in ethereum blockchain. Interestingly, another cryptocurrency exchange, Binance, which is the biggest, also indicated its preference in March for a decentralized trading platform. However, the exchange disclosed that it would exist along with the centralized exchange. The reason behind it was that decentralized exchange required more computing power to crosscheck and record trades. Aside from that, it was considered as slow while the fees for decentralized platforms were higher than the centralized one.
According to a Bloomberg report, Huobi’s latest move is only in the initial stages. That is because the company has just commenced hiring the right kind of team to create the blockchain. The team would also be entrusted with the responsibility of launching it live within a period of one and half years.
As a first step, the company plans to shift some of the processes of decision-making to the network. This should facilitate the community to take a decision on the type of digital tokens to get listed. Project director, Gordon Chen, indicated that the ultimate objective is to make the cryptocurrency exchange as a decentralized one.
Another report in Coindesk indicated that Huobi is exploring the external assistance for creating the new system. The company is also ready to offer about 30 million tokens towards incentives that would have different stages. It has also indicated that it would provide a fraction of its annual revenue to the pool. However, it has not disclosed the percentage.
Huobi will also create a committee to draft a policy, as well as, a framework for self-regulation for the completion of the project. Aside from this, the company’s chief strategy officer, Cai Kailong, disclosed the launch of a new exchange in Australia before the current month ends.