Huobi has made a name for itself in the cryptocurrency ecosystem as a trustworthy exchange. Now, the blockchain-based organisation is planning to show the world that exchanges can do more for the market than support trading.
Huobi is partnering with Nervos to launch a decentralised financial services blockchain (DeFi). The new network will be called FinanceChain and is expected to enter the market in the second half of 2020.
A high-performance financial blockchain
The Huobi Group is planning a complex product that targets financial institutions, exchanges, and enterprises. Organisations of all sizes could build blockchains and tokenise assets on this high-performance financial blockchain.
The new decentralised solution would support a wide range of applications, including debit services, security token offerings (STOs), decentralised exchanges, and real-world payment services.
Huobi Group CEO and founder Leon Li stated in a press release:
“The mission of Huobi Group is to make finance more efficient and make wealth accessible to all.”
The Singapore-based crypto exchange claims that the new network can upgrade financial services by making them more transparent, inclusive, and efficient.
However, a decentralised financial system is still far from becoming a reality. The system continues to be very traditional and follows the guidance of central authorities.
FinanceChain features
The decentralised financial platform FinanceChain will provide an innovative framework where developers can create blockchain products and DeFi services. It’s going to be an open source platform with smart contract capabilities that will provide support for multiple types of digital assets.
Companies that choose FinanceChain to host their applications will get:
- Scalability and flexibility that enable both companies and financial institutions to develop complex blockchain infrastructure.
- A protocol that minimises the risks of fraud and money laundering, in line with the Anti-Money Laundering international requirements.
- Identity protocols, such as Know Your Customer, as well as a decentralised identifier (DID) for verifiable digital identity on the network.
- Regulatory compliance through a system that enables regulators to join the network and become validators.
According to its developers, FinanceChain will coexist with other private or public networks, such as Bitcoin or Ethereum.
Why Huobi needs FinanceChain
Huobi hopes that the new financial blockchain will allow it to remain competitive in a fast-changing industry.
Li explained further:
“Although Huobi is currently a leader in the cryptocurrency industry, this industry is likely to undergo far-reaching changes in the future. Exploring public chain technologies and business models both keeps us innovative and serves as a strategic defence.”
Huobi has gone all-in on digital asset tokenisation with this new infrastructure for a token-based decentralised economy. It’s a way of diversifying its offering in line with existing trends and international compliance requirements.
FinanceChain will consolidate a DeFi ecosystem, essential for decentralising the global financial system.
How Nervos makes FinanceChain possible
Nervos is a layered network designed to support the decentralised economy. The blockchain uses the Proof-of-Work algorithm together with a protocol called Common Knowledge Base (CKB).
Similar to Bitcoin, the CKB protocol focuses more on security and decentralisation than on performance and efficiency. However, its developers claim they can provide “unlimited scalability” and guarantee privacy and finality on the network. The protocol was designed to provide secure issuance and storage for crypto assets.
Nervos will build the infrastructure necessary for Huobi FinanceChain to become a network that supports multi-sidechain architecture and multiple crypto assets. Its developers are planning a flexible product that can work with outside networks, whether they’re built on the blockchain or not.
The Nervos project is backed by big names in the Chinese market, such as Polychain Capital, China Merchants Bank, and Sequoia China. The network raised $28 million (£21.5 million) after its Series A funding round last year.
An alternative to the global financial system
The complicated process of decentralising finances won’t happen overnight. Banks and other centralised financial organisations still manage most of the assets, as well as international payment and money transfer tools.
However, projects like Huobi FinanceChain are making decentralised finance possible in a world still dependent on the global financial system. This will allow people to have more control over their funds and finances through services that provide transparency and efficiency.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.