The true identity of Justin Sun in Huobi is in doubt: global consultant or behind-the-scenes boss?

On October 8, the news that Li Lin sold his shares in Huobi Global swept the crypto circle. The lack of information about the acquirer, Hong Kong Baiyu Capital, caused various speculations, but the subsequent news that Justin Sun became a member of Huobi Global Advisory Committee seemed to confirm the previous rumors: the actual acquirer of Huobi was Brother Sun.

People familiar with the matter revealed that Justin Sun himself appeared at the delivery site in Singapore on October 8. Interestingly, at the Token2049 conference held in the same city at the end of September, Justin Sun himself also appeared at the Huobi site to attend a party with former employees.

In addition, it can be found from multiple public social recruitment channels that Tron is increasing the scale and intensity of recruitment, and it is rumored that some departments of Huobi are also being taken over by Tron (the original executives with the letter C in their names have gradually revoked their authority and resigned).

What is even more surprising is that in Sun Yuchen’s latest tweet on the 17th, he said that he would implement specific measures to empower HT this week and planned to make Huobi one of the top three in the world. After the tweet was released at 14:35, HT rose from $6.81 to the current $7.24, an increase of 5.78%.

Brother Sun, who has always been very good at marketing, riding on hot topics and seizing opportunities, explicitly denied the outside world's speculation about the acquisition of Huobi. However, a series of key details pointed to his close relationship with this acquisition. More details unknown to the public may be hidden under the mysterious surface of capital operations.

1. After Huobi changed its owner, many details proved that Sun Yuchen had an ambiguous relationship with it

At the same time as he became Huobi's global advisor, Justin Sun changed his Twitter profile link to Huobi's official website. It is well known in the crypto community that Justin Sun is a top industry V in the world. This person who once held a charity banquet with Buffett and served as the permanent representative of the South American country Grenada to the United Nations, who is one of the top three public blockchain leaders in the world, actually has influence across politics, entertainment, technology and investment circles, although he has also been criticized for many negative news in the past.

Therefore, Sun Yuchen, who has 3.35 million Twitter followers, made this move that clearly shows that the degree of his connection with Huobi and the close business intersections between him and Huobi may exceed the imagination of outsiders. But then, Sun Yuchen stated after a series of questions that he was not a buyer of Huobi and would strongly support the development of Huobi as a consultant.

What is even more interesting is that on the 10th of this month, just after Sun Yuchen announced his appointment as Huobi Global Advisor, he stated at the internal staff meeting of Huobi that Huobi Global will have a series of brand upgrades and actions in the future, and will increase the value of HT as a whole. As soon as this news came out, the confidence of HT bulls was immediately strengthened. The price of HT rose from around $4.8 on the 10th to more than $8 on the 14th, an increase of nearly 50%. Many users who missed the opportunity to buy HT at the bottom lamented that the $1 billion acquisition price was worth it!

According to Etherscan data, 74 million HT from Huobi’s official wallet is suspected to have been transferred to Sun’s wallet. The HT holdings of these two wallets rank third and fourth respectively. In this way, Sun has become a giant HT holder. This further confirms the close connection between Tron and Huobi. Sun Yuchen later admitted in an interview with Coindesk that he has increased his holdings of 10 million HT and will continue to increase his holdings in the future to match and catch up with BNB.

Perhaps due to various reasons and concerns, Justin Sun and Tron officials did not reveal much about their substantive relationship with Huobi, and adopted an ambiguous and specious attitude in external public relations. This may also be intentional by Sun's team, who are well versed in user psychology and marketing strategies. Whether Sun has become the actual controller of Huobi is still difficult for the outside world to determine, but there are three points that can be confirmed:

First, Huobi and TRON have a close relationship, and their business ties will be deepened, which Sun Ge himself has confirmed;

Second, Huobi, which changed its course due to force majeure at the end of last year but failed, may usher in a new turnaround;

Third, Brother Sun will increase the operation and customer development of Huobi in the later stage. The exchange track may change, and the deep binding between Huobi and Tron is also worth watching.

2. Huobi and TRON ecosystem interoperability is almost certain, but the effectiveness is still unknown

If the HT rally is a tactical strategy after the acquisition of Huobi, then the interconnection of the two major public chains may be the highest priority strategic plan. After all, the two major public chains have their own advantages and are also complementary to a certain extent. Sun Yuchen also recently posted on social media to emphasize this point.

In addition, Justin Sun also mentioned in an interview with Coindesk that the algorithmic stablecoin USDD issued by Tron this year will become the value medium of Huobi, and the two will be deeply integrated. Currently, Huobi has also matched the 6 most popular representatives for USDD to form trading pairs with it, just to enhance the circulation and acceptance of USDD.

Of course, TRON’s biggest killer is the TRC-20 transfer protocol. According to official data, compared with the transfer protocols launched by competing products such as Ethereum, the more cost-effective TRC-20 protocol currently has a total user base of over 100 million, and the data is still growing.

Although the biggest shortcoming of the TRC-20 protocol, poor profitability, remains unsolved, it is an important entry point for TRON to attract traffic and acquire customers. If this huge user group can be linked to Huobi’s wallet address, it will produce a huge synergy effect.

In addition, a large number of Dapps in the TRON ecosystem and the Huobi exchange can build a closed trading loop similar to FTX and Solana, Binance and BNB Chain with one click to enhance the liquidity of the project.

At present, the foreseeable cooperation framework for the marriage between the two is basically limited to the closed-loop ecology of native public chain + stable currency + exchange. This seems to be complementary and unbreakable, but there are actually huge loopholes in each link.

First of all, the algorithmic stablecoin USDD officially launched by Tron has not escaped the death spiral from a mechanism perspective. Of course, this is an inherent defect of any algorithmic stablecoin.

Moreover, with the lessons learned from the collapse of Luna and the collapse of UST, it seems difficult for Tron to change users' perception of algorithmic stablecoins in a short period of time, and it is impossible for users to accept USDD and abandon centralized stablecoins such as USDT and USDC.

Secondly, Huobi's public chain Heco lost most of its users last year due to reputation issues. It is difficult to judge whether Heco, which has been silent for nearly a year, is a burden or a benefit to the Tron public chain. But one thing is clear: the binding of the already riddled Heco public chain to Tron is not a strong combination, because the resources and energy of both parties are completely unequal at this time.

In addition, although the Tron public chain has certain advantages in terms of user numbers, capital scale, and developer ecology, its biggest shortcoming is the lack of the most representative high-quality projects, while Ethereum, BNB Chain, and Solana have made outstanding achievements in this regard. For Tron, the lack of leading projects will cause an overdraft of ecological vitality, because it will not be able to aggregate user traffic, and ultimately this series of dividends will not be able to spill over to other ecosystems. At present, there are only a few projects left on the Heco public chain, let alone high-quality top-tier projects, so the inability to bind Heco to Tron cannot bring about a complementary effect;

Lastly, and most importantly, Huobi Exchange is no longer as powerful as it once was. Last year, Huobi lost its most important market due to force majeure, but it has not been smooth sailing in the process of finding growth in other markets, because there are already strong players there and they have been planning for a long time.

We have seen that Binance has further strengthened its leading position in overseas markets over the past year, and OKX has also taken Web3 as its focus. Its heterogeneous multi-chain Web3 wallet is likely to replace other digital wallets and seize the entrance to Web3. At the same time, both have also used their money to sponsor top entertainment events or programs in a global arms race, greatly enhancing their brand effect.

In addition, FTX's core advantages of relying on the Solana public chain ecosystem and Coinbase's position as the number one crypto exchange remain unshakable, its moat is more solid, and its momentum of being far ahead of Huobi in the short term is irreversible.

In contrast, Huobi has actually missed a very important window of opportunity during this year of silence. When the next round of bull market begins, it is difficult to be optimistic about whether Huobi, which is struggling under multiple constraints, can be ready to compete with other fully armed competitors.

3. The crypto industry began to copy the competition pattern of mobile Internet, and moved towards oligopoly competition in the later stage

In conclusion, we don’t need to make too many predictions or inferences about the final outcome of Sun Ge’s entry into Huobi, because the variables in the cryptographic circle under the Web3 dimension are greater than those in the mobile Internet circle of Web2. However, after a rough review, we will find that Web3 is inevitably repeating the industry structure of Web2 in the middle and late stages: oligopolistic competition.

Justin Sun's entry into Huobi is essentially a conspiracy between a strong public chain and a strong exchange. BNB Chain has become even stronger with the expansion of Binance Exchange, Coinbase is behind the gradual erosion of USDC's market share by USDT, and the reason why BitMex has lost its position as the number one contract exchange in the crypto circle is that its ecosystem is too single.

Various signs indicate that the future competition landscape of the cryptosphere will inevitably be a process where all ecological links, out of consideration for maximizing interests, will unite with complementary players. The surface competition will be weakened, but the pursuit of interests will become more intense in the fierce confrontation between various oligarchs. The degree of decentralization will naturally be temporarily shelved, and the priority order will be repeatedly arranged backwards.

In fact, this has been foreshadowed since Ethereum switched to the POS mechanism. For ordinary users, how to seize projects and opportunities that suit them under this general trend is a test of their cognitive level and judgment ability.