Cryptocurrency exchange Huobi seeks to become decentralized

Bitcoin, cryptocurrency & electronic finance

Huobi, one of the biggest cryptocurrency exchanges, wants to walk the talk.

The Singapore-based platform plans to invest $100 million toward building Huobi Chain. Once the project is complete, Huobi plans to migrate its operations onto this blockchain, according to a statement by the company.

Huobi wants to become a so-called decentralized autonomous organization, where traditional management structure is replaced with code and community based decision making, no third party is required to verify financial transactions and no central entity controls the entry of members on the network.

“By building a public blockchain, Huobi is migrating from a centralized corporation to a decentralized one that’s run by the communities,” the statement said.

DAOs have been a fixation for blockchain enthusiasts since at least 2013. While some projects have experimented with the idea, arguably the most famous one was a venture fund called The DAO, which raised $150 million in an initial coin offering in 2016 and lost $50 million after it was hacked. Losses were reversed in the following week in a decentralized bailout which caused the Ethereum blockchain to split.

Binance, the largest cryptocurrency exchange, said in March it also wants to launch a decentralized trading platform, which will co-exist with the centralized exchange. Decentralized exchanges, which need more computing power for many computers to verify and record trades, are often slower and have higher fees than centralized platforms.

Read: Binance Decentralized Exchange to List Almost Any Coin, CEO Says

The move is still in its early stages. Huobi just started recruiting for the team that will build the blockchain and plans for it to be live in about 18 months. The first step will be to migrate some of the decision-making processes to the network, for example, so the community can decide which tokens get listed on the exchange, said Gordon Chen, project director at Huobi. The plan is that, eventually, the exchange itself will be decentralized.

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Bloomberg