Ever considered trading on a cryptocurrency index similar to that of S&P500 or MSCI indices within the financial markets? It turns out that Huobi Group, a leading blockchain asset financial provider had the same exact plan of action. Huobi recently launched Huobi 10 Index, which comprises of the 10 largest digital assets based on market capitalization, technological soundness, and high liquidity. The 10 selected digital assets are paired against USDT, a cryptocurrency which is pegged against the US dollar.

A crypto index is a major leap in the world of digital assets as it indicates a growing confidence and maturity within the crypto markets. Huobi 10 Index is also scheduled to be listed on global financial communication agencies such as Bloomberg which is a sign of growing acceptance of the digital assets by major players in the financial markets.

Launched with a base of 1000 points on 23rdMay 2018, Huobi 10 Index currently stands at 959 and is listed on Huobi Pro. Huobi Pro, a subsidiary of Huobi Global is a leading digital asset exchange and has even outperformed Binance in the recent past in terms of daily volume. Huobi Pro lists more than 100 digital assets on its platform. World-class security and risks control systems form the basis of the success of Huobi Pro as a global leading asset exchange and is one of the safest exchanges in the market today. The component assets included in the Huobi 10 Index are:

Select of Sample Coins:

While 8 of the coins BTC, LTC, EOS, ETH DASH, XRP, ETC, and BCH are familiar and very popular, the selection of two other coins, HT and IOST are very interesting. Huobi Token or HT is the native token of the Huobi Pro exchange and has shown impressive growth since its launch in Jan 2018. In fact, it seems to be growing similarly to the Binance coin as Huobi Pro gains visibility and market share with its myriad developments and continuous evolvement.

Another coin which is an interesting entry in the Huobi 10 Index is the IOST or Internet of Services Token. IOST is a platform coin that has shown significant growth in the past several months, and stands to compete with other major dApp platforms. It is, in fact, the first project to be incubated by Huobi Labs. Funds such as Sequoia China and Zhenfund have been backing the IOST project along with Huobi.

Classification of global blockchain assets

As per the differing nature of the blockchain projects, different projects are divided into 4 categories by the Huobi Blockchain Application Research. The four categories are:

Coins: Developed on the basis of blockchain technology, the main function of the asset is to act as a medium of exchange and its value is determined by its liquidity.

Developed on the basis of blockchain technology, the main function of the asset is to act as a medium of exchange and its value is determined by its liquidity. Platform: The platform coins is the one which allows the blockchain technology underlying it to be used for development by other users

The platform coins is the one which allows the blockchain technology underlying it to be used for development by other users Application : Application coin is an asset with a specific application scenario, supported by the right to use, participation, dividends etc.

: Application coin is an asset with a specific application scenario, supported by the right to use, participation, dividends etc. Utility Token:These are digital currencies which are linked to real assets such as gold, US dollar, and other actual assets.

Methodology of sample selection:

- All the USDT pairs traded on Huobi Pro are taken from the previous quarter and their average daily turnover is calculated.

- The USDT trading pairs are categorized into 4 groups as mentioned above: Coins, Platform, Application and Utility Token. Utility token is excluded from the Huobi 10 index as the value of such assets is expressed in kind.

- The assets are ranked within each group and top performers are selected to form the index component coins.

The reason for choosing daily average data is that it reduces the volatility by removing the outliers of any single day, thus reflecting a better liquidity scenario during the audit period. In addition:

“this index will determine the proportion of index components of different types of blockchain assets according to the sum of the average daily trading volume of each type of blockchain assets in the previous quarter, so as to comprehensively reflect the overall performance of blockchain assets listed on Huobi and reflect the overall development of all kinds of blockchain technology applications”.

The Huobi 10 Index has performed well against the Bitcoin. The alpha of Huobi 10 Index stands at -0.0028 and the beta of the index stands at 0.79 for the data tested from March until May 2018. The numbers are an indication that the Index can suppress volatility while maintaining alpha at the same time.

Future Huobi offerings:

Huobi Group has expanded impressively ever since its launch in 2013 and has further plans to launch new financial products derived from the Huobi Index. There are several products in the pipeline and some of them include future financial derivatives, Crypto Exchange-traded Fund (ETF) and Bitcoin Exchange Traded Fund. Similar in nature to other ETFs, a crypto ETF or a Bitcoin ETF is a security that derives its value from an underlying index or a group of assets while trading as a digital asset on an exchange.

Apart from Huobi Pro, Huobi Group, headquartered in Singapore, comprises of an ecosystem as a financial service provider which is holistic in nature and includes: Huobi Pro, HADAX, Huobi Research, Huobi Capital, Huobi Lab and Huobi Mining Pool. With such offerings and advancement in technology, Huobi Group is definitely to watch out for!

-Pankhuri Bansal