Every token holds a story waiting to be mined. But what happens when the story is written in subsidies rather than substance? Over the past months, HTX—formerly Huobi—has resurrected a familiar playbook: the “Trade to Earn” model, this time dressed in the garb of TradFi perpetuals. The core promise was audacious: up to 110% fee rebates on trading gold, crypto indices, and even US equities like NVDA and MSFT. The stage was set for a narrative of abundance—a platform burning its own profits to reward users, then burning its own token ($HTX) to create scarcity. But the soul of the chain is written in its holders, and the story of these holders is one of fleeting gain and enduring risk. Let us peel back the layers of this orchestrated campaign, for beneath the glitter of negative fees lies a fragile scaffolding propped by unsustainable incentives, regulatory landmines, and a reliance on a narrative that may already be fading.
Context: The Resurrection of an Old Tune
HTX, a veteran exchange with roots stretching back to 2013, has witnessed multiple incarnations. After its acquisition by Justin Sun’s ecosystem, the platform sought to reclaim relevance in a market dominated by Binance, OKX, and Bybit. The first phase of the “Trade to Earn” activity, which concluded earlier this year, targeted perpetual contracts on traditional finance assets—a move that immediately raised eyebrows. The mechanics were simple: users trading eligible perpetuals would receive fee rebates up to 110%, effectively being paid to trade. A daily prize pool of 6,000 USDT added to the allure, and HTX committed to quarterly buybacks and burns of its native $HTX token, fuelled by the fees generated during the activity. The stated goal was to create a “positive cycle”: more trading volume → more fees → more buybacks → higher token price → more users. To the uninitiated, it sounded like a virtuous flywheel. To the narrative hunter, it smelled of a carefully curated illusion.
Core: The Mechanics Behind the Mirage
To understand why this activity is a textbook case of unsustainable incentive design, we must examine its three pillars: negative fee subsidies, buyback-and-burn, and the TradFi derivative offering. Each, when scrutinised with the rigour of evidence-based restraint, reveals deep cracks.
First, the negative fee structure. When a platform offers 110% fee rebates, it is not earning revenue from those trades—it is paying users to generate volume. This is the antithesis of a sustainable business model. In the short term, it can artificially inflate trading volume metrics, creating a sense of momentum. But long term, the platform must either find other sources of income (e.g., withdrawal fees, lending rates) or dilute its token supply to fund the subsidies. Based on my experience analysing 45 ICO whitepapers in 2017—a period when narrative logic was often detached from technical reality—I can attest that projects promising “negative fee” models almost always rely on continual capital injection from external sources (treasury, venture funding, or new user deposits). They are, in essence, Ponzi-like structures that require ever-growing participation to sustain the payout.
Second, the buyback-and-burn narrative. HTX committed to using a portion of activity fees to repurchase and destroy $HTX tokens. The first phase reportedly burned approximately 1.8 billion $HTX. Yet, the token’s total supply is in the trillions—a burn of that magnitude is negligible. Worse, the source of the token rewards for the activity itself is ambiguous. It is highly likely that the rebates are paid from newly minted $HTX or from the treasury, meaning the net circulating supply may actually increase. The buyback is a cosmetic gesture designed to appease holders while the inflation behind the scenes erodes value. During my three-week retreat in the Pyrenees in 2020, studying the economic incentives of Uniswap and Compound, I learned that true token value capture requires scarcity driven by genuine utility, not by a subsidy that masks dilution.
Third, the TradFi derivative offering. This is the most dangerous element. HTX is offering perpetual contracts on US equities (NVDA, MSFT), indices (QQQ), and commodities (gold). In most developed jurisdictions—the United States, the European Union, the United Kingdom—such products are considered unregistered securities derivatives or contracts for difference (CFDs), which are illegal to offer to retail investors. The platform operates under a Seychelles registration, a classic regulatory arbitrage tactic. But the risk is not merely theoretical. The SEC and CFTC have increasingly pursued offshore exchanges that target US residents. Even for non-US users, the regulatory environment is tightening globally. This activity is less about innovation and more about testing the boundaries of compliance—a dangerous game for both the platform and its users.
The narrative of a “positive cycle” is a carefully crafted distortion. In reality, the machine requires constant fuel. The 6,000 USDT daily prize pool is a tiny amount relative to the volume needed to keep the narrative alive. The first phase ended with modest participation (63.37 million USDT in volume for the specific pair), far below the scale needed to create a self-sustaining loop. The platform is effectively paying for user attention—a strategy that, as any marketing professional knows, results in low retention once the subsidies stop. The soul of the chain is written in its holders, and the holders attracted by such offers are mercenary; they will leave for the next higher bidder.
Contrarian: Who Really Wins?
The prevailing narrative frames the activity as a win-win: traders earn rebates, and $HTX holders benefit from buybacks. But the contrarian truth is that the primary beneficiaries are not retail traders—they are market makers and high-frequency trading firms. These entities can deploy algorithms to capture the negative fee spread with minimal risk, effectively extracting value from the platform’s subsidy programme. Retail traders, lured by the promise of profits, often engage in undisciplined trading, overtrading to chase rebates, and ending up with losses that exceed the fee refund. In this dynamic, the platform gains volume metrics to trumpet in press releases, the market makers earn risk-free arbitrage, and the largest holders of $HTX (likely connected to the team) see a temporary price boost. The retail user, meanwhile, is left holding a token with a diluted value proposition and a bag of potentially high-risk positions.
Furthermore, the activity reveals a deeper vulnerability: HTX may be losing market share and user engagement. Offering such aggressive subsidies is a sign of desperation, not strength. The exchange is trying to halt a decline by throwing money at the problem. Yet, without fundamental improvements in product, liquidity, or compliance, the effect is short-lived. As a veteran observer of the crypto sector’s boom-and-bust cycles, I have seen this pattern repeat: a dramatic marketing campaign masks structural decay, only for the narrative to collapse when the next crisis emerges.
Takeaway: The Next Narrative
The second phase of the “Trade to Earn” activity is imminent, and it will likely be met with renewed enthusiasm from short-term traders and speculators. But the smart money will recognise the underlying fragility. The real story is not about HTX’s ingenious engine of value creation; it is about the commodification of user attention in a saturated market. We do not just trade assets; we curate narratives. The narrative of free lunch is alluring, but the dust settles quickly. For those seeking lasting value, look to protocols that generate sustainable revenue through genuine user demand, where the token’s value is earned, not manufactured by subsidies. The question is not whether HTX can pump its volume for a few weeks—it is whether the platform can survive the inevitable regulatory storm and the defection of its mercenary user base. In the silence between trading sessions, that is the story worth listening to.