"Mid-life crisis" Huobi launches public chain Heco to benchmark Binance HT. Is this really good?

Under the siege of Uniswap, Sushiswap and Binance Smart Chain (BSC), Huobi finally couldn't hold back and launched its own ecological public chain Huobi ECO Chain (hereinafter referred to as Heco). Although it was launched 3 months later than Binance and there is not even an English version, Huobi relies on its huge investment ecosystem and is still likely to make significant moves, and even reverse HT's long-standing negative image.

Almost identical to Binance BSC positioning

According to the official website, Heco is divided into four stages: Spark, Spark, Blaze, and Prairie Fire. The Spark stage is mainly to improve transaction performance and reduce transaction fees; the Spark stage will optimize the developer tool chain and improve the chain ecology; the Blaze stage will launch a cross-chain interoperability protocol and upgrade the consensus protocol; the Prairie Fire stage will support multiple virtual machines, provide privacy protection capabilities and multiple signature schemes, etc. The Heco public beta stage will officially start on December 21.

With almost the same positioning as BSC, Heco also focuses on high-performance transactions with low fees and is fully compatible with EVM. The advantage of this is that it is developer-friendly and can support projects within Ethereum's existing ecosystem, including lending, oracles, and wallets, and achieve seamless integration and migration, reducing development costs.

At the same time, Heco adopts the HPoS consensus mechanism, supported by 21 public chain nodes. Miners can become nodes through official review + staking HT, and rewards will be distributed according to the pledge ratio. The rewards will come from the HT transaction fees of on-chain transactions - this is also consistent with the rule that BSC uses BNB as the on-chain token.

However, Heco's strategy is slightly different from BSC's. In the future, Heco will also improve Ethereum's efficiency through Layer2, supplement and empower the Ethereum ecosystem, but this is only a future plan and it is more of an expression of a friendly attitude towards the Ethereum community.

The Heco white paper states that the nodes of the public chain will be generated through elections. Since the project has not yet been officially launched, the details of the election are not yet clear, but the black box nature of the node assessment mechanism is also what the competitor BSC has been criticized by the public .

At the same time, it is certain that any third party other than Huobi becoming a node means that it may get a share of Huobi's transaction revenue, which will be a considerable profit. Referring to the past Huobi Hydex campaign, it is likely that mainstream companies/investment institutions (to increase brand) and other project companies invested by Huobi will become nodes.

In addition, although the "public chain" cultivated by centralized exchanges has completely different genes from community projects such as Uniswap/Sushiswap, we can also see that centralized exchanges, as the entrance to fiat currency, still have long-term advantages in traffic and attracting new customers, and decentralized exchanges cannot completely replace such roles.

Heco emphasizes the development focus of "ecology" in many places in its white paper, which may be intended to speed up the listing of community projects and provide traffic entrances for high-quality Dapps. After running for a period of time, these high-quality projects are expected to be listed on the Huobi main site. This enables Heco and Huobi centralized exchange to form a mutually nurturing relationship and reversely direct community traffic to the centralized exchange, which is exactly the same as Binance BSC.

Heco may increase the price of the currency after it goes online

Although the three major domestic exchanges have launched their own platform coins, HT has always been the worst performer among them, with a market value of only 1/2 of OKB and 1/5 of BNB. This huge gap is surprising. There is a saying that Li Lin insisted on not making a market for HT and controlling the price of the coin, but this did not bring a good reputation, but was criticized for internal rat trading.

A few months ago, well-known institutions in the cryptocurrency circle, such as Multicoin, were bullish on HT, also based on similar views, namely: Huobi platform has the characteristics of "high globalization, high liquidity, public chain drainage potential and high HT repurchase rate", and various reasons make HT in a state of "mispricing". Of course, this optimism is more of a PR work under a cooperative relationship.

Huobi’s biggest advantage is that it has the best investment ecosystem in the Chinese world. Huobi University has brought together a group of blockchain entrepreneurs. Huobi is the main investor in Conflux/Nervos/Nest/ONT and other good local public chain projects. These invested projects will join in new projects. Heco uses HT as the native token on the chain. The node’s “HT pledge lock-up” may provide certain value support for HT, or even directly detonate the coin price.

Huobi’s weakness is the confusion and weakness in its internationalization work. Even when Heco was first designed, it did not consider the overseas community much, and did not even have an English website or white paper. On the other hand, its market operation ability is low, which makes the subsequent promotion not as vigorous as BSC. With the investigation storm still unresolved, Huobi’s senior management is also skeptical about whether they have the collective willingness to invest in Heco.

Can Huobi break through its "midlife crisis"?

As early as the first half of the year, Binance had been preparing for the development of BSC. It officially launched the BSC mainnet in early September. Projects such as BakerySwaph and BurgerSwap attracted a large amount of traffic to Binance in a short period of time, and directly caused the BNB price to reach a new high for the year.

On the other hand, after the hype in July and August this year, decentralized exchanges such as Uniswap, as the detonator of the DeFi concept, did not fall from the altar as the public imagined, but continued to maintain a certain level of popularity.

According to Coinmarketcap data, Binance's 24-hour trading volume is $4.2 billion, Huobi's is $1.78 billion, while Uniswap's 24-hour trading volume is $320 million, and Sushiswap's is $79 million. It can be seen that the latter two are an order of magnitude behind the trading volumes of traditional large exchanges such as Binance and Huobi, but the gap is not far away: before mid-June this year, Uniswap's average daily trading volume was less than $10 million, but it has grown exponentially since then.

With a fierce tiger in front and pursuers behind, and the "Shanxi investigation incident" still not being resolved, Huobi is more eager to make changes and use Heco to recreate the traffic entrance. However, at a time when the DeFi market is stalling and mainstream currencies are soaring, we need time to continue to observe how much impact Huobi's Heco layout can have on the platform.

In addition, for a public chain like Heco that does not have a spontaneous, true "community", it is more like a "company" doing to B business: in the startup phase, the operator may need to attract high-quality projects for the public chain, or even provide appropriate promotion for the project party like Binance, and this kind of promotion method can easily lead to infamy - because of the plummeting price of Backery, Binance Smart Chain was once burdened with the reputation of "cutting leeks", and the project was publicly promoted by Zhao Changpeng on Twitter.

Therefore, the boundary between the decentralized public chain and the centralized brand of the exchange may become a dilemma in the start-up phase of the public chain, and this dilemma may be more serious in the Chinese community where there are more retail and non-professional investors. (Author: M Editor: Wu said blockchain)