One of the pioneers in the crypto exchange sector, Huobi, decided to get rid of over 14 million Huobi Tokens – tokens that empower their decentralized platform.
According to the company, the burning resulted in 14,011,700 tokens being removed from the total Huobi Tokens supply of 310,318,300 to “improve the market” and boost sales. The rate at which the tokens were swept is 116 percent greater than the previous quarter.
The severe token burning is part of a strategy to stabilize Huobi Token (HT)’s price. Huobi`s token holders are being ensure by the burning, that they will not become victims of inflation. Since 2018 Huobi has been spending twenty percent of their revenue on a quarterly basis to buy back the unused Hobi Tokens from the previous quarter.
As quarterly revenues are not constant, Huobi is buying back (burning) a different amount of Huobi Tokens per quarter. Huobi shows signs of steady growth, so it plans to increase the amount of buyback by 232-percent on a QoQ basis. From April 2015 until now there has been a total of 8 burning events held by Huobi, resulting in a total of 21,356,800 HuobiTokens burnt in Q2 as opposed to 6,474,800 HuobiTokens in Q1 of 2019.
Burning does not destroy the tokens. Instead of completely eliminating them, as Tether recently did because of a human error, Huobi stores its burned token into a public Ethereum wallet, called Huobi Investor Protection Fund. The stored HuobiTokens serve as a backup fund in case of eventual hacker attacks, for example.
“Two big trends dominate the buyback – the rapid market strengthening and the increased interest in our products,” Leon Li, founder and CEO of Huobi stated.
Huobi also named the sources of the quarterly increased results – a membership increase for their Huobi FastTrack and Huobi Prime, as well as increased trades for Huobi DM. The exchange makes over $7 billion in daily trading volumes.
Huobi’s CEO also mentioned that until the end of 2019, the company would make more innovations and improvements to its ecosystem. Leon Li cited the anticipated new feature implementations in Huobi Finance Chain – a public decentralized financial blockchain, and overhauls on their APIs.
The burning of HuobiTokens will be the last of its kind for Huobi, the company stated in a blog post. There will be new mechanisms for burning, such as the HuobiToken Tiered Fee deduction algorithm. Other improvements include sourcing most of the tokens for burning from Huobi’s holdings, and monthly, if not daily, token burning to streamline the process.
As of press time, Huobi Global has 478,643,200 ERC-20 tokens in circulation. Huobi’s native “currency” is used for granting access to otherwise non-tradeable crypto assets, for voting, and Huobi’s OTC merchants.
Huobi’s native token now trades at $4.22, with over $208 million in market capitalization and $5,5 million in daily trading volumes.