New information is being uncovered about the crisis facing crypto exchange Huobi.
After the announcement of the layoff campaign that will affect 20% of the entire staff, now it turns out that during 2022 the exchange lost significant market share.
Huobi’s market share
According to some data recently published by Kaiko, in 2022 Huobi’s market share among crypto exchanges dropped to 4%, while in 2021 it was 16% and in 2020 even 22%.
Kaiko’s analysis takes trading volume on the world’s major crypto exchanges as a reference, revealing how Binance continues to dominate with an extraordinary 57% market share. In 2020 it was 37%, and by 2021 it had already risen to 48%.
However, it is worth mentioning that FTX, which is one of the top five crypto exchanges in the world, closed in November 2022, and this may have favored Binance more than any other.
Coinbase‘s market share is stable at 9%, while OKX’s has dropped from 21% in 2020 to 9% in 2022.
It is possible that the sharp decline of OKX, and especially Huobi, is due to the Asian market, as exchanges operating in Western markets seem to have held up much better.
Also worth noting is the significant growth of the decentralized exchange Uniswap, from 2% in 2020 to 5% in 2022. Then again, 2022 was a difficult year for centralized exchanges, although this does not apply to Binance.
According to Kaiko, in 2022 the crypto market as a whole consolidated significantly, and this may have favored large dominant exchanges like Binance.
Huobi’s HT token
Excluding the big speculative bubble of 2021, the current price of the Huobi HT token is not far from its pre-bubble price.
In fact, in November 2020 it had reached $4.3, while it currently travels at $4.9. However, in October 2022 it fell as low as $4, which is in line with the December 2020 price.
Actually, the speculative bubble on the price of the HT token lasted very little, because the absolute peak of nearly $40 occurred in May 2021, and not in November, and by July of that year it had already fallen below $8.
By August 2021 it had tried to recover, along with the rest of the crypto markets, but in September it also slipped below $7. After a brief recovery to $11, it began a long decline that seemed to have culminated at $4 in October 2022.
Actually in late October, it had recovered to over $9, but then fell back to $4.4 due to the collapse of FTX. It then again tried to rise again, returning to $7 at the end of November, but from December a new downward phase began, culminating in $4.6 on 6 January 2023.
New data regarding the sharp loss of its market share do not allow one to be very optimistic about its future.
The problems of USDD
Tron‘s founder, Justin Sun, is the majority shareholder of Huobi, so it is inevitable that any problems related to Tron will also adversely affect the exchange.
In particular, the most serious problem seems to be the depeg of the USDD algorithmic stablecoin from the dollar.
USDD is issued directly by the TRON DAO Reserve, thus proving to be closely associated with Justin Sun.
Last week there were widespread concerns about Huobi’s solvency related to USDD’s distress, such that the exchange suffered more than $100 million in outflows.
In addition, USDD’s market value fell from $0.98 to $0.97 on the very same day that Huobi announced it would lay off 20% of its staff. Justin Sun himself had to step in, with total transfers of $100 million in USDC and USDT from Binance to Huobi.
The point is that most of USDD’s reserves are in TRX, i.e., Tron’s native cryptocurrency, and although the TRON DAO Reserve claims to be holding collateral worth more than 200% of USDD’s market capitalization, the markets are still fearful.
Perhaps they fear something similar to what happened to UST in May 2022 due to the sharp decline in Luna’s value.
According to Kaiko USDD actually could still regain the peg with the dollar, but Huobi will instead face a real challenge to regain market share after being the big loser in crypto markets in 2022.
The future therefore seems uncertain, and given that several crypto exchanges during 2022 have already failed, the risk of something like this happening to Huobi cannot be ruled out a priori. Unless it is purchased by some rival.