Huobi Group, a blockchain services provider, is partnering with layered blockchain network Nervos to develop a new public blockchain focused on decentralized financial (DeFi) services. The project, provisionally named Huobi Finance Chain, aims to be a regulator-friendly, high-performance financial blockchain.
“The mission of Huobi Group is to make finance more efficient and make wealth accessible to all,” said Leon Li, CEO and Founder of Huobi Group. “This project is not only in line with Huobi’s overall strategy, but it also fulfils our core mission. From a strategic point of view, decentralized financial services are still in an early stage of development. The market demand is clear, however, and we believe this is a very definite business opportunity.”
The Huobi/Nervos vision
The Huobi/Nervos vision is that the Huobi Finance Chain will enable enterprises, financial institutions and exchanges to deploy their own blockchains, tokenised assets and DeFi services. Among other applications, the project will have the potential to host:
- lending services
- debit services
- security token offerings (STOs) and other means of asset issuance
- decentralised exchanges (DEXs)
- real-world payment services
- and more.
Nervos is providing the technology for the new blockchain platform, which will be launched in partnership with Huobi as part of a joint initiative to accelerate the future of decentralised finance. The project is expected to:
- go open source in Q3 2019
- offer a testnet launch in Q1 2020
- launch its mainnet in Q2 2020.
“Our vision is to build the infrastructure for the future decentralized economy, so we’re thrilled to partner with Huobi to bring our technology to the financial sector,” said Kevin Wang, co-founder of Nervos. “More and more assets are being tokenized and moved to the digital world, including both native cryptocurrencies and traditional physical assets. The financial industry is now at an inflection point, and together with Huobi, we’re well positioned to help it modernize its services for the decentralized future.”
The platform appeal
By providing a decentralised framework and infrastructure for institutions and enterprises to build on, Huobi and Nervos hope to make financial services more transparent, inclusive, and efficient. The joint project:
- is to be open source
- provides multi-asset support and smart contract capabilities
- enables third-party developers to build and deploy a wide range of DeFi services.
The project and platform will also support:
- multi and side chain architectures (to provide a flexible and globally scaleable blockchain infrastructure for financial institutions and enterprises)
- decentralised identifier (DID)
- identity protocols, such as Know Your Customer (KYC)
- verification to meet Anti-Money Laundering (AML) requirements
- full regulatory compliance (regulators will also be able to join Huobi Chain and contribute to the network as validators).
The Nervos Network
In this context, the Nervos Network is a collection of protocols and a public blockchain ecosystem. Backed by US$28M from China Merchant Bank, Polychain Capital, Sequoia China and more, the Nervos Common Knowledge Base (CKB) is the layer 1, proof of work public permissionless blockchain protocol of the Nervos Network. This enables:
- any crypto-asset to store with the security, immutability and permissionless nature of Bitcoin
- enable smart contracts and layer 2 scaling
- capture of total network value through native token and crypto-economic design.
The CKB provides a ‘turing-complete’ programming model (the cell model). Like smart contract platforms, the CKB is stateful, though it is a state verification and storage system (like Bitcoin) rather than a computation platform. This means CKB transactions include both inputs and outputs (like Bitcoin) and never produce unexpected results.
Enterprise Times: what does this mean
Prima facie, this Huobi/Nervos partnership looks like the dream answer to the financier’s blockchain prayer (“please let me capitalise on blockchain without doing much or taking any risk”). Therein lies, to Enterprise Times, the first reservation. The description is all-embracing: the Huobi Finance Chain will do almost anything. That is an ambitious target, even with mainnet not becoming available before mid-next year.
A second reservation also seems relevant. Neither Huobi nor Nervos are financial services organisations (and there is plenty of competition in the blockchain-based payments or settlements arena). This can be a positive – they will not necessarily observe existing less than efficient practices. But it raises the possibility (?probability?) that financial institutions will lack conviction and not take up the Huobi Finance Chain in the way that the partners anticipate.
A third reservation echoes those of others, like the BIS, about cryptocurrencies. At least in their current form.