Leon Li is founder and CEO of Huobi Group. As an alumnus of Tsinghua University’s Department of Automation, Leon became an early pioneer and a serial entrepreneur in the field of financial technology. Before establishing Huobi Group in 2013 and building it into one of the world’s leading providers of financial services in digital assets, Leon was a computer engineer at Oracle, the world’s largest database provider.
- In a recent post, Leon shared some thoughts about this question posed to him: “You and Huobi keeps saying that you are number 1, who is actually number 1?”
Leon’s response: To evaluate a company, there are many different aspects in which we can evaluate, such as market value, income, profit, customer volume. In the exchange sector, there are indicators for trading such as trading volume, asset volume and liquidity.
When companies claim they are first, they are usually referring to being first in a specific area.
Here are some companies I perceive to be first by specific criteria:
By Platform with the highest token market value: BNB.
By Company’s with the highest market value: Coinbase.
By the number of users and assets managed: Coinbase.
By trading volume:
Spot trading: Huobi’s strength is in mainstream cryptoassets; Binance’s strength is in non-mainstream cryptoassets. The leading exchange is constantly alternating in spot trading volume. Since Binance has not yet opened up derivative trading, Huobi is currently leading trading volume.
By income: We have publically purchasing several exchanges. From the purchased amount perspective, Huobi is leading
However, this issue is actually not that important. In the past six years, the number 1 player has been constantly changing. From trading optics, Mtgox, Btcc, Bitfinex, Bitstamp, Bitflyer, Bithumb, Huobi, Okcoin, Coinbase, Yunbi, Jubi, Binance all have been number 1 at some point in time.
In the digital asset industry, development and changes happen very fast, there are strong oppositional forces such as global policy uncertainty, high business risks, and ongoing industry structure changes. This space is far from reaching a stable competitive landscape.
Therefore, although an indicator tells us that we are number one, although it is worthy of praise and celebration, it is not particularly worthy of complacency.
2) In the next question, Leon answers “why does Huobi have such as large gap in market value when your performance is on par with peers?”
-Our industry peers are more forward-looking than we are. Their token mechanism design is more reasonable- they started token destruction more than a year ago, which means they enjoy a year in advance in fee deduction
-Having a public chain opens up the imagination, and some investors are more optimistic with expectations than actually evaluating the current performance
-Our peers are indeed doing better marketing than we are
To give further examples, at one point, one company’s market value was much higher than that of Youku and Iqiyi (two Chinese public media companies), but the business didn’t look like it was doing much better than them. The only difference is that the market looks more favorably towards this company’s business and future outlook, and that they are doing better PR. Similarly, Amazon has a higher valuation than Alibaba because of the imagination around the potential of Amazon’s cloud business. What kind of position we are currently in, time will tell.
3) Lastly, Leon responds to the co-founder of Binance, He Yi, comments on Wechat, about the reported news that Huobi has fired all of its US employees. He Yi came off as she was throwing shade at Huobi and telling Huobi to go take care of themselves after this layoff news.
Here is Leon’s response: he does recognize there are various ways that Huobi can improve on, here are some:
❶ The stability of Huobi’s technology. There have been significant improvements in the last two months, but there are still gaps. This is the base.
❷ Globalization. There is a huge gap. Especially the United States, the world’s largest market. How to compliantly enter the US market.
❸ Cryptoassets- we can improve on the identification and surfacing of the types of crypto assets side
❹ Liquidity- The liquidity of non-mainstream assets needs to be improved.
❺ Innovation- Innovation is seriously inadequate and needs to be improved.
❻ Management / execution- There has been a big improvement in the past six months, and there is still a lot of room.
Additionally, Leon says that he won’t spend time looking for “negative” articles about Binance, but he will share some advice with them too:
❶ Focus on security. Safety is the lifeblood of the exchange.
❷ Focus on compliance. Especially in large countries. Compliance will be mainstream.
❸ Focus on the user experience. Users need more comprehensive products and functions, more user-friendly UI, UE.
❹ Be sincere and respectful. Be sincere to your users and respect your peers.
Of course, Leon adds, on the whole, Binance is a very respectable and successful peer, doing a lot of innovative work in the industry and achieving amazing results. If both Huobi and Binance can improve our own deficiencies, we should all be able to achieve greater development. The blockchain is naturally a global market, and this market is very large and has just begun. This market is totally big enough to accommodate multiple large players and it’s exciting that all the players are from China.