Its native token sets the direction for exchange tokens’ second wave.
With all the chatter about meme coins – interrupted occasionally by utility token news – we might lose focus on another, equally impactful class of digital asset: exchange tokens. Evolving out of the utility space, exchange tokens have become integral components of running a DeFi organization.
Exchanges tokens’ main purpose is to provide such benefits as commission discounts, voting rights, staking privileges and dividend payments from the exchange. Seven years ago, Binance had this market to itself, and although price appreciation isn’t usually the main goal of exchange tokens, its BNB had quite a run last year.
Still, it’s a new year. Offering a native token is essentially table stakes for running a reputable exchange, and interest in them keeps growing. That’s why HTX, formerly Huobi, is upgrading its longstanding HT token to the improved HTX. This second-wave coin offers more governance features and opportunities to influence the exchange’s ecosystem than anything that has come before.
The rise of exchange tokens
Utility tokens have a specific purpose within a blockchain-based ecosystem. That’s in contrast with “true” cryptocurrencies, which function as a medium to exchange or store of value. The innate value of a utility token comes from the demand for the services or benefits it confers. The best-known of all utility tokens is Ether, which debuted in 2015. Its utility comes from the ability to add conditions to a self-executing smart contract. Later utility tokens provided rights to access blocks of cloud storage or the ability to monitor environmental sensors.
It was just a matter of time before someone saw that utility tokens had a use case in exchange trading. They could be used, for instance, to apportion voting rights and gatekeep exclusive offerings. Of course, how much decentralized decision making is, at the get-go, a centralized decision, so the degree to which outsiders are let in was bound to be incremental.
If you’re a crypto enthusiast, you remember the years 2016 and 2017 fondly. That is, unless you were running an exchange. While bitcoin was closing in on that “absurd” $15,000 valuation, it became clear that the infrastructure didn’t exist to trade all that newly minted lucre.
Binance used BNB as a way of pre-selling trading fees – essentially breaking them up so that the sticker shock wasn’t as severe. This led to a wave of new users for the exchange and, very likely, a wave of new crypto investors from the broader population. Some of them stayed with Binance, while others shopped around for other exchanges. Even so, Binance could honestly claim that it reinvested much of its proceeds from BNB sales to improve the exchange’s user interface.
Now there are dozens of exchange tokens. While they can occasionally go a valuation run, they tend to be safe, non-volatile bets that retain their value. For example: FTT, the native token of the failed and fraudulent FTX exchange, currently trades right around where it launched in 2019.
HTX token: The new paradigm
The biggest difference between legacy HT and the new HTX token – no swap required, by the way – is in the underlying institution. The HTX exchange now operates as a distributed autonomous organization and, like all DAOs, is governed by its community.
The HTX DAO empowers token holders to shape the future of the platform by participating in its governance. This is an invitation to people who have come to rely on the platform to get involved, stay engaged and keep the day-to-day management transparent and hold them accountable.
While all exchange tokens have the same purpose, they don’t all behave the same or offer the same range of benefits. The HTX token, though, seems to check all the boxes:
- Community empowerment and decentralized governance
- Interest-bearing rewards for staking the asset
- Token burns to support the coin’s value
- Exclusive access, benefits and privileges to token holders
The exchange destroys liquidity tokens, ensuring that at least half of revenues are used for liquidity contributions. This strategy not only provides long-term liquidity support for the coin, but also helps maintain market price stability. A trade mining strategy allows users to earn additional HTX tokens by paying excess fees when trading the popular BTC/USDT pair. This strategy further promotes revenue growth and price stability through the token’s buyback and destruction mechanism.
There’s more on the drawing board. Payment processing, DeFi application development and partnerships are in the works, and while the HTX token is the farthest thing from a meme coin, it is heavily exposed to them – so expect partnerships with some of those projects.
The future of the HTX token
All that is in the coin’s immediate future, but the issuing exchange hasn’t stayed in business this long by focusing on the immediate.
The HTX DAO invites all participants to propose collaborations with other projects and protocol enhancements that can benefit the entire community. The authority to influence the direction of the initiative, through voting on these proposals, firmly rests with HTX token holders.
“In a world where change is the sole constant, the ‘X’ within HTX embodies adaptability, inclusivity and the potential for exponential growth,” according to the coin’s white paper. “We are no longer confined to a single trajectory; we are on a diverse path that mirrors the ever-evolving blockchain landscape. HTX as a DAO is poised to become a vibrant community where innovative ideas converge, giving rise to pioneering projects and revolutionary concepts. It is a fertile ground for the blockchain's brightest minds to collaborate and thrive, shaping the future of decentralized governance.”
If, along the way, holders of the coin prosper as the value of their shared asset becomes more widely appreciated, perhaps that’s to be expected.
It can only do that, though, if the people who are entitled to get involved actually do so. While some management teams might be dismissive of outside opinions, such is not the culture at the HTX DAO. Give it a try: Find something the exchange could be doing better. Write up a proposal. Send it in.
Nothing would make them happier.
