Huobi DM Maintained A Record of Zero-clawbacks: Vice President of Huobi Group Jason Jianzhong Lan
Huobi Derivative Market (Huobi DM) was launched in November and has seen rapid growth ever since. Jason Jianzhong Lan, Vice President of Huobi Group granted the following interview with Cointime about Huobi DM.
Jason Jianzhong Lan, Vice President of Huobi Group
Lan said that the purpose of launching a cryptocurrency asset trading service is based on user needs. "The reason why the Huobi has achieved today's results is that we value our users needs," ‘Don't be evil’ is a core value of our company and is also our greatest strength.
Although still in the early stages of its development, Huobi DM is growing extremely rapidly. Though only about two months old, the cumulative trading volume of the Huobi DM now exceeds 20 billion US dollars (as of January 12, 2019). At the same time, the service boasts excellent liquidity, safety and risk control. Lan said that as of January 18, 2019, Huobi DM maintained a record of zero-clawbacks.
Cointime: Why did Huobi Group choose to launch the contracts trading now?
Lan: In the bearish market, many digital assets have seriously dropped in value. Our goal with Huobi DM was, firstly, to serve the needs of traders who want to engage in short selling of crypto assets, and, secondly, to provide a way for users to hedge against risk and sudden depreciation. Huobi DM does both.
Cointime: During the current bearish market, does Huobi DM try to bring more trading volume to the platform through contracts?
Lan: Yes. As I mentioned in the previous question, the main reason for launching a crypto asset contract trading platform by Huobi is to meet user's demand for tools that let them hedge. In the case of a bearish market, Huobi DM is a very practical and affordable hedging tool.
The launch of Huobi DM will indeed bring new trading opportunities to the market, and correspondingly, it will also increase the overall trading volume of Huobi. According to third-party data, the 24-hour trading volume of Huobi Global and Huobi DM has been ranked first in the world's fee exchanges.
Cointime：In Huobi DM, if a user's margin account loses value, those losses may be taken from the user's main holdings. Why choose such a mechanism?
Lan: In the market, this is a common practice. Cross-margin is also known as “Spread Margin”, which is a margin method that utilizes the full amount of funds in the Available Balance to avoid liquidations.
Huobi DM provides a cross- margin model.
This margin method is useful for users who are hedging existing positions and also for arbitragers that do not wish to be exposed on one side of the trade in the event of a liquidation.
This is also the reason why the Huobi DM first introduced the cross-margin margin trading model. Later on, we will also launch the isolated margin model.
Cointime: Will Huobi DM add other cryptocurrency contracts?
Lan: Huobi DM provides weekly，bi-weekly, and quarterly contracts for BTC, ETH and EOS. Next week, we will launch LTC contracts. In the future, we will launch additional types of crypto contract to meet the various users' investment needs.
Cointime：Why did Huobi DM decide to buy back Huobi Token (HT) with 20% of its income?
Lan: 20% of Huobi Global's revenue is already used to buy back HT. As a member of the Huobi ecosystem, Huobi DM is an important part of
the trading business, and 20% of the revenue will also be used for repurchasing HT. We believe that this will help launch more businesses and more scenarios, which will motivate HT to develop better. The nickname of HT is "ham" and DM Is transliterate to "rice" in Chinese. The income of "rice "is used to buy "ham", is it very interesting?
Cointime: OKEx and BitMEX both launched perpetual contracts. Will Huobi DM follow them?
Lan: At this stage, we will focus on doing contracts for set expiration times. We will provide users with the safest, most efficient and most professional services. In the future, we may also launch perpetual contracts to meet more users' trading needs – subject, of course, to regulatory and compliance requirements.
Cointime: What is Huobi DM's strategic status in the whole Huobi exchange system?
Lan: Huobi DM is a very important part of the Huobi exchange business. We only launched Huobi DM in November and it has become the world's third-largest digital asset contract trading platform. It also benefits from the global ecology of the Huobi Group. We've devoted a lot of effort and resources to Huobi DM since it launched, and this has allowed it to develop fast.
Cointime: Crypto exchanges like OKEx, BitMEX even Bakkt have have all launched or are going to launch crypto assets contract trading. In your opinion, could this be a sign of things to come?
Lan: Yes. In traditional financial markets, the volume of derivatives trading far exceeds spot markets. As time goes on, there will also be more and more users who need to invest in digital asset contracts.
Cointime: BitMEX and OKEx's services have been around for years. Huobi DM was recently launched. What is your strength?
Lan: The crypto asset contract market is a relatively concentrated market. That means users have very little choice. Now that Huobi DM is rising, we can offer more choices for users. The market needs more secure, experienced, innovative, and sustainable platforms. In fact, one of the reasons why Huobi has achieved the results it has is that the we pay attention to the user's experiences. We were founded in 2013, and we quickly developed to become the world's largest exchange. Our strength is that ‘don't be evil’ ethos, which has become the core value of the entire company. Users are rational people and will become more and more aware of this as time goes on.
Our technical team has drawn overseas talents from top investment banks and Hong Kong fund companies, and has extremely strong capabilities. We are very cautious and mainly based on technical considerations. Before launching our service, we conducted multiple rounds of testing over the course of more than two months to ensure our platform was safe and reliable. From our launch on December 10, 2018, till now, we have maintained a zero-clawback record for six consecutive weeks and counting.
At the same time, users of Huobi DM enjoy the protection Huobi DM's extensive safety provisions. We have a 20,000 BTC protection fund to protect against catastrophic events.
Cointime: How's everything going since Huobi DM has launched?
Lan: Huobi DM has grown rapidly since it was launched. Our average daily trading volume for crypto asset trading platforms ranks third in the world. The growth rate of Huobi DM ranks first in this category and the trading volume continues soaring to greater heights. Compared with the average daily trading volume in November, our growth rate reached 661% in December. Compared with the previous nine days in December, the average trading volume in the first nine days of January increased by 198%.
Cointime: Does Huobi DM have the confidence to continue to maintain a zero-clawback record?
Lan: Although clawbacks happen frequently in other exchanges, our team is confident in Huobi DM's stability, depth, and liquidity. We are so confident that starting next week, the Huobi DM team will be depositing USD $50,000 into a special fund. If there is clawback before Friday, the 50,000 dollars will be used to cover the societal loss generated. If there is no clawback, another USD $50,000 will be added for each of the four weeks. If there are no clawbacks at all, the eventual total will be 200,000 dollars.
Cointime: Most cryptocurrency exchanges, such as OKEx, BitMEX, and upcoming Bakkt, have launched crypto asset contract trading. In your opinion, will this trading bring new hope to the cryptocurrency exchange in the bear market?
Lan: Yes. In traditional financial markets, the volume of derivatives trading far exceeds spot market trading. However, in the cryptocurrency market, there will be more demand by users to gain access to crypto asset trading services.
Executive editor： Emily Sun