The cryptocurrency exchange Huobi, with a trading volume of over $1bn, has announced plans to move its operations onto the blockchain and become a decentralized autonomous organization (DAO).
Announced in Singapore on Wednesday, the Huobi Chain project will see the exchange’s cryptocurrency trading move from centralized servers onto a distributed ledger format.
As well as value transfer, Huobi Chain will reportedly also be used as a platform for the exchange’s other products and services, including securitization and fundraising; and will be open for both individual and institutional investors.
To help in the development of the decentralized exchange, Huobi has also launched its Huobi Chain Superhero Championship Program (HCSCP), a 21-month hackathon designed to invite blockchain developers to build the new platform and with the chance of winning funds from a prize pool.
“We firmly believe in a decentralized future and the main goal of the Huobi Chain project is to transform a centralized corporation to a decentralized one that’s run by the community,” said the CEO and founder of Huobi Group, Lin Li. “Our dream is for Huobi to run on the public blockchain and become a truly decentralized autonomous organization.”
Although centralized companies, such as Coinbase and the present Huobi platform continue to take the lion’s share of the sector’s trading volume, the framework of decentralized exchanges makes them harder to hack or steal from because there is no single point of vulnerability.
Back in March, Huobi’s main rival, Binance said it was also planning to move towards a decentralized system of operations.
Huobi, which will gradually migrate onto the blockchain as it develops, has initially invested 20m Huobi tokens into the project, worth around $110m according to CoinMarketCap. As it progresses, Huobi has said that a percentage of its annual revenue will also go towards the project’s development.
Although an exact roadmap for Huobi Chain has yet to be specified, the exchange has divided the project’s development into ten milestones. Code will be open-sourced after the completion of each milestone, allowing developers to participate at various stages of the project’s development.
By not being based or headquartered in one singular physical location, decentralized exchanges open new questions on how financial authorities can properly regulate them.
Huobi has previously expressed an interest in what decentralized exchanges have to offer. In September of 2017, the company was forced to cease cryptocurrency trading in China, after the government banned ICOs and exchanges in the country.
Last year, Huobi Pro, the company’s professional digital asset trading platform, announced it would support decentralized exchanges, such as AirSwap, Kyber Network and 0x by launching new pairs for the exchanges’ native tokens against bitcoin.
Disclaimer: The author is invested in BTC, which is mentioned in this article.