Huobi, one of the world’s oldest cryptocurrency exchanges, has taken steps to reduce the supply of the token that powers its global ecosystem, Huobi Token (HT), in a quarterly burning event.
According to a company statement, the exchange removed 14,011,700 tokens from a 310,318,300 market supply, at a rate that is 116 percent greater than it did last quarter. The company cited “improving market conditions” and sales growth for the decision.
The move is intended to stabilize the currency’s price, as well as create an incentive for users to hold the token by curbing inflation. Every quarter since early 2018 when the Singapore-based exchange introduced Huobi Token, it has spent 20 percent of its quarterly revenues buying back outstanding tokens.
Revenues fluctuate quarter to quarter, meaning Huobi does not always burn a consistent amount. This past quarter is no different. Driven by strong growth, the company’s revenues put towards its token burning plan represents an increase of 232 percent quarter-over-quarter. Beginning on April 15, Huobi held eight token burning events of a total 21,356,800 HT, more than the 6,474,800 HT it repurchased in the first quarter.
The repurchased tokens are stored in a visible ethereum address, dubbed the Huobi Investor Protection Fund, and act as a reserve fund.
Leon Li, CEO and Founder of Huobi Group said:
“There are two big trends reflecting the size of this quarter’s buyback. The first is a rapidly strengthening market for digital assets and the other is the increasing popularity of our entire product line.”
The company cited increasing membership to Huobi Prime and Huobi FastTrack programs – generators of fees – as well as a productive Spring for the $504 billion trading volume Huobi DM platform.
“The rest of 2019 will see even more improvements and innovations coming from Huobi,” said Li, pointing to further developments to the recently launched Huobi Finance Chain, a decentralized finance public blockchain, and improvements to the high frequency algorithmic API.
In a separate post, the company said this token burn cycle “will be the last time HT tokens will be destroyed using the traditional buyback method.”
Going forward, the company looks to use revenues generated in the HT Tiered Fee deduction program to directly burn tokens. It has also proposed to start sourcing one-thirds of the burnable tokens from team holdings, and the rest from the open market. Additionally, the company is considering switching to monthly or daily burns, from quarterly.
“No final decision has been made yet, however. We’ll be discussing this more with our community,” Li said.
As of today, the total circulating supply of the ethereum ERC-20 token is 478,643,200. The native tokens are used to gain access to “premium coins” through Huobi Prime, as security deposits for merchants on its over the counter exchange, Huobi OTC merchants, and to vote.
Huobi Group was established in 2013 in China, and now comprises 10 seperate businesses. It operates in more than 130 countries, and exceeds $1 trillion in accumulative turnover.