Huobi Opens HUSD Stablecoin Solution; Swap GUSD, PAX, TUSD and USDC Easily
Huobi Exchange Has Decided on Four Stablecoins That They Will Let Users Swap
Huobi has been offering cryptocurrency exchange services to Singapore residents and others since it was founded in 2013. In a post on Twitter, the platform announced their new opportunity that investors can now take advantage of – the ability to swap four stablecoins. The Twitter post said,
“We are pleased to announce $HUSD, an innovative new stablecoin solution, exclusively available on Huobi Global.” They added that the “Collaboration involves Paxos Global, Trust Token, Gemini Trust, and the USD Coin.”
The purpose of the addition is to help users if the market starts to fluctuate too much. They also held a press conference to discuss the new HUSD solution. Before now, users experienced more limitations when they wanted to convert their cryptocurrency to fiat currency. However, the introduction of HUSD lets the user deposit any of the applicable stablecoins, and then withdraw a different one.
To provide further information, chief operating officer Robin Zhu elaborated that HUSD is not actually a stablecoin or a protocol at all. Instead, it is more of an interventional medium that makes the exchange between the two stablecoins into a possibility.
In action, let’s say that a 10 PAX deposit is setup in a user’s account. That user will be provided with 10 HUSD. When they withdraw, they can withdraw the same amount in GUSD, which will come from a shared pool of other deposited HUSD that users have switched out. However, the only limit that truly comes with this type of interaction is that the user cannot take more than the supply in the shared pool. If the user wants to withdraw all of their assets with the use of one particular stablecoin, then the pool needs to have enough available to them to do so.
Zhu is concerned that the platform could end up running into this situation, but the platform has already planned for it. He said,
“In those circumstances, we will buy back these stablecoins from their issuers into the pool.”
Due to this potential issue, Huobi says that they won’t be allowing users to engage in trading pairs for every stablecoin against the major assets, like Bitcoin and Ethereum. However, the company has decided to establish trading pairs for the HUSD against the tokens within the next month.
Most investors would expect to see Tether involved in this collaboration, considering that it is the most established stablecoin that is presently in the market. Ultimately, Huobi decided to not include it in the pool, but they will have a trading pair that includes HUSD and USDT that will be added on October 22nd. The main reason seems to be due to the debate of if USDT can manage to comply with their requirements. Simply stated, Zhu said,
“Tether doesn't have a reliable and regularly released auditing report to prove its U.S. dollar reserve.”
Back in June, Tether released documentation that was supposed to show that their token is backed by U.S. Dollar reserves. However, the authenticity and truth of this document was questioned, due to being prepared by a law firm rather than by a third-party auditing company. This unfortunately makes it unable to be added to the HUSD project, because Zhu’s platform doesn’t see is as the most stable option.
“The market could see over hundreds of stablecoins in the future,” he noted. “While we welcome the integration of more regulated stablecoins, we hope the use of HUSD could help maintain the stability of this market.”