Binance: A Genius’ Passion – Data Driven Investor
It was the year 2017. Everyone was trading on Bittrex and it was considered to be a sanctuary for altcoins. Bittrex was the clear choice of being the heir to succeed the long-forgotten Poloniex where every aspect of the trading platform was better than the latter. Bittrex swiftly rose up the rankings in the leaderboard of having the most trading volume in an exchange. While they were rejoicing for their success and got complacent with their services, another competitor was unknowingly behind the scenes, preparing for their big debut. Little did they know what was coming to them, let alone snatch their throne away. It was imminent — they were going to suffer the same fate as their ancestor. Fast forward 2 years and now we are here, this exchange has set the gold standard for all cryptocurrency exchanges and has made its stand to stay — Binance, the world’s leading cryptocurrency exchange
Binance Exchange was officially launched on 14th July 2017. It held an initial coin offering (ICO) by issuing their own token on the Ethereum blockchain, BNB with a total supply of 200 million tokens. 100 million of BNB were sold during the ICO which was held from 1st July 2017 to 21st July 2017 and they managed to raise approximately $15 million. The ICO price of 1 BNB was equivalent to 0.1 USD.
For the other 100 million of BNB, 20 million are allocated for angel investors while 80 million are vested by the founding team where 20% will be unlocked each year, starting from the year of the exchange launch.
The primary use case of the BNB token allows holders to receive a discount on fees when trading on the exchange. As seen from the table above, the discount on trading fees that the holders enjoy will halve annually, with the discount being scrapped from the fifth year onwards. (Year 2022)
Binance also has plans to conduct a buy-back program where they will use 20% of their profits to buy back BNB in each quarter and all of the tokens bought will be burned. This will continue on till 100 million of BNB are burned. This means that Binance intends to burn half of its total supply, leaving 100 million of BNB circulating. With the token’s supply reducing every quarterly, it increases the value of each token circulating as it becomes scarce. By putting skin into the game through sacrificing a part of their profits, it shows the investors that they are serious about building up the crypto exchange.
Since the utility of the token is closely tied to the usage of the exchange, the demand for BNB will only rise if the trading activity on the exchange is constantly growing too. It is in the best interest of Binance to onboard new users as quickly as possible while also finding ways to keep them trading within the platform.
The appreciation rate of the BNB token is directly proportionate to the growth of the exchange
1. Implementation of a lucrative referral program
What better way to get your users to spread the word around? Referral programs effectively convert customers to be advocates for your product, increasing market outreach on social media platforms. Initially, the program allows users to earn 50% commission on trading fees for each trade made by the person that uses their referral link to sign up, in REAL TIME. The commission rate has since been adjusted to 20% and accounts holding 500 BNB or more will enjoy 40%.
2. Community Coin of the Month
Another way to onboard more users to trade on Binance is to make a wide variety of cryptocurrencies easily available to the masses. Binance has actively been listing popular altcoins as compared to other exchanges and this proactiveness bodes well for them as it drives more users to their platform.
But how do they gauge which altcoin listing should they prioritize to maximize the inflow of trading volume into the exchange? Hosting the community coin of the month allows the team to identify which altcoin has the highest demand and transfers the power to the community to have an influence over the new additions into the exchange. The coin that won will get a FREE LISTING on Binance. This is a huge deal as there are many rumours about the exorbitant listing fee paid to be listed on Binance.
Every month, the team will review the applications and select nominees based on who they deemed suitable. A list will be generated and registered users can vote for their preferred choice on the platform using BNB during the window of the voting period. This is a win-win situation for both sides. The community of each nominee finds this as a way to help their beloved project so they will rally together and vote for their coin while being exposed to the users of Binance. Binance gains more awareness as well and adds on more value to BNB as a token as it is required for voting, resulting in an increase in demand.
After Round 9, the Community Coin of the Month voting scheme has been stopped until further notice.
3. Binance Launchpad
Many people wanted a piece of the pie during the ICO craze in 2017 after learning about the attractive returns that could potentially be made in a short period of time. However, it felt that the playing field was not fair for the small players. Investors who have either pooled resources from a community or have their own large capital are given access to participate in the pre-sale with a huge discount offered by the team. It was risky to participate in the public token sale for the fear of being dumped on. Exit scams were also prevalent.
Since most projects issue their tokens on Ethereum, they can be traded on decentralized exchanges such as Etherdelta/IDEX once they were released. It is complicated for an average joe to navigate around a decentralized exchange, let alone trade on it if they have no knowledge on how transactions work on the blockchain. This resulted in many cases of fat finger errors where users paid way more than intended. Being able to provide a trading medium where there is a high amount of liquidity and is also user-friendly became a top priority. Many projects struggled to list their tokens on any decent centralized exchanges and left investors hanging.
Binance recognizes these problems and came out with an initiative of a launchpad where startups can leverage their platform to host token sales and are GUARANTEED a listing on the exchange. Not only does it solve the trouble of finding reputable exchanges for listing, listing on Binance means that the spotlight would fall on the project as it receives widespread publicity from the millions of Binance users and potential investors.
Binance also realized that the main problem of the 2017 ICO bubble was that investors were blindly investing in projects that were shilled by crypto influencers/celebrities and hence not doing their due diligence. In order for this to be a success, Binance has to ensure that the projects on the launchpad are of high quality. The responsibility of conducting thorough research now lies in the hands of Binance and their reputation is at stake. Binance’s show of support would offer visibility and credibility to any launchpad projects so it is very crucial that Binance follows a strict screening process in order to rule out frauds and scams.
It was a smart move from Binance to include BNB as the only cryptocurrency to be accepted in the token sales held on the launchpad, further driving up the demand and value for the token.
The ICO frenzy gave us an insight as to how sloppy teams are in administering their token sales. Initial Exchange Offerings (IEO) are quickly replacing ICOs and is set to become the trend for fundraising in 2019. Binance is the first to lead the charge in this new venture as the fundraising process for IEOs has clear advantages over ICOs. Everything from security/verification to the last step of token issuance is handled by the exchange and most importantly, there is a factor of trust among users of the exchange with the reputation that has been built with it.
All token sales held on Binance Launchpad has seen great success as it has managed to reach the fundraising cap every time with remarkable speed. As seen from the graph above, all 6 of the Binance IEOs has a 100% rate in providing huge positive returns up to this date. This performance by the IEOs has caught the eye of many investors in the crypto space and could be regarded as a ‘risk-free’ investment with great upside potential. This is the reason why every announcement of the next Binance IEO would spark an appreciation in the price of BNB. It is now conducted in a lottery ticket format and users looking to invest would want to increase their BNB holdings in order to maximize their chances of being allocated tickets for the participation of the token sale.
Binance has come out with several products with the goal of benefitting the crypto community and helping people in need, proving that behind the great minds lies a culture of caring. Let’s take a look at the products:
Binance Info is designed to be your go-to place to learn about your favourite crypto projects and has all the information that you need at your fingertips. It has a huge compilation of research reports from Binance Research and third-party agencies which covers a wide variety of cryptocurrencies.
The info page for each coin has a better user interface to navigate around and provides more information in a presentable way compared to Coinmarketcap. The section on social media platforms and news allows users who are interested to keep up to date about recent happenings of the project.
Research reports from various third-party agencies are featured on Binance Info where users can download a copy of the report to view in order to understand more about their evaluation of a project. The user could also take these ratings given by several professional research institutions as a reference to decide whether to invest in certain projects.
Binance put up a team that comprises of crypto enthusiasts from different backgrounds and experiences in data science, finance, blockchain engineering, etc. This is to facilitate the flow and transparency of the higher quality of content.
It is split into 2 types of research — Market & Project Research. Market Research consists of analysis and insights to the latest trends in the ecosystem such as Decentralized Finance (DeFi) as well as market developments/performance. Project Research delves deeper into the fundamentals of each project with the aim of providing investors with a comprehensive overview of the project.
To prove that Binance has done their due diligence and justify their reason for choosing a particular project to be on the Launchpad, they have released their own research report on Binance Research that interested investors can read about the project. This sets an example of transparency that Binance will continue to show in their upcoming IEOs.
Binance Labs is focused on the bigger picture, helping to grow budding entrepreneurs in the blockchain industry by providing them with resources tailored to their needs. Binance’s form of support is not only through funding but also working with project teams to advise them on their strategies. With Binance’s vast knowledge and experience of the field, it would only benefit the project they have incubated going forward.
Fear of getting into blockchain/cryptocurrency because it seems complicated at first glance? No worries, self-directed learning has never been easier with the introduction of Binance Academy. In its efforts to increase adoption, Binance believes that the first step is to lower the learning barrier by providing the public with free access to education. Articles which fall under the same theme are lumped together into a playlist so it would be easier for the user to explore all the informative content for that particular topic. Great news for people who aren’t visual learners, there is an audio file attached to each article which you could listen on the way to work or school!
Binance Charity Foundation
Binance Charity Foundation was built to showcase what blockchain technology can do for philanthropy. Donors are skeptical about traditional charities because it is difficult to trace the whereabouts of their donations and they have to trust that their money would reach the needy. Cases of corrupted executives pocketing donations do not help at all. This creates a situation where there are lesser trusted avenues for donation which results in the number of funds raised not realizing its fullest potential.
The main issue here is transparency of the movement of funds. Using blockchain technology to enhance the process of handling donations in a transparent manner, anyone can verify the transactions on the blockchain to check what the charity is doing with their donations. The property of immutability comes in handy as no one can alter the records.
Binance Charity launched its Lunch for Children Program starting in Jolly Mercy Learning Centre Uganda. This initiative is powered by Zcoin who pledged 24,000 USD to cover two meals a day for more than 200 students and school staff for the whole of 2019. The campaign aims to benefit 1 million people in the developing world with a blockchain-empowered donation system. This would eventually spread to more schools in Uganda and other countries such as Rwanda, Kenya, and Ethiopia.
With the quality of products that Binance is constantly churning out, I am looking forward to more innovative ways that Binance can come up with to help the community in the future! Let’s give our support in their efforts to bring the crypto space to greater heights!
Binance launched its mainnet and performed a token swap for BNB from ERC-20 to BEP-2 on 23rd April 2019, migrating from the Ethereum blockchain to Binance Chain. BNB will be the native token on Binance Chain, used as payment for transactions on the network which increases the utility of the token.
With its own blockchain in place, the objective is to attract projects to issue tokens on Binance Chain and also allow Binance DEX to leverage the technology provided by Binance Chain. It has been stated that early projects who migrate over to Binance Chain will receive additional support from Binance as an exchange for their leap of faith. This is especially enticing for newer projects as the promotional benefits that come from Binance’s influence can greatly boost the market’s attention on the project. Binance Chain becomes another competitor to Ethereum and projects would have to decide which blockchain they want to go with by weighing the pros and cons.
Decentralized exchanges should be the direction that the blockchain industry is striving towards. Centralized exchanges require users to deposit their funds before making a trade which means that the control over your funds is now transferred to a central authority. As the saying goes, not your keys, not your crypto. The management of the security behind centralized exchanges is very important as they are very susceptible to hacks due to a single point of failure. This is seen from the recent Binance hack where more than 40 million worth of BTC was stolen due to a data breach. Binance did reimburse users from their own pocket but in unfortunate cases like the infamous Mt Gox hack, those people have not even seen a single satoshi of their bitcoin till this day. Know Your Customer (KYC) process is necessary for most exchanges as there is a higher withdrawal limit for verified users so exchanges also keep records of your personal data.
However, with all the risks involved, many still prefer trading on centralized exchanges when comparing the volume between the two types of exchanges. At its current state, decentralized exchanges would need the blockchain to scale properly in order to match the performance of a centralized exchange. They are still too complex for users to fully understand how it works and thus, less user-friendly. I believe this preference will change over the course of time and Binance wants to take a neutral stance on this matter hence the release of Binance DEX.
Binance DEX claims to be able to handle as much volume as Binance Exchange with one second block times for quicker processing of order matching. It allows users to control their own private keys since the exchange is connecting to your own wallet to access your funds for trading. However, it is not truly decentralized as all the node validators are controlled by the exchange. Users have complained that Binance DEX should not be advertised as a DEX when it is a non-custodial exchange. Binance CEO has addressed this concern on Twitter where the main intention was not about decentralization but to facilitate trustless trading without the need to deposit funds.
Binance DEX can only enable non-custodial exchange of assets that are limited to BEP-2 tokens since it is built on Binance Chain. This would deter users from trading on Binance DEX as they do not have access to assets with a high amount of liquidity such as Bitcoin or USD which would diminish the trading volume greatly. To make it available as a trading pair on Binance DEX, Binance issued a token on Binance Chain that is pegged to BTC (BTCB) and is 100% backed by Binance’s BTC reserves. USDSB is the first stable coin pegged 1:1 to the US Dollar issued on Binance Chain by Stably which created USDS and is backed by their physical reserves of cash. Now, users can purchase these tokens on Binance Exchange and trade it on Binance DEX as if there were a BTC and USD pair.
Ever since Binance stepped into the highly competitive realm of cryptocurrency exchanges, it has been relentless in its efforts to establish itself as the best trading platform out there. Binance has proven itself to be the cream of the crop with the speed that it is progressing and does not seem to be stopping at all, leaving other exchanges chasing on its coat tail. Exchanges are scrambling to replicate the success of Binance but none has even come close to what Binance has achieved in this short period of time — It is one thing to implement but another to execute. The astounding performance has also reflected in the price action of BNB, soaring from the initial ICO price of 0.10 USD to 32.10 USD, sitting at a current market capitalization of 4.5 billion USD. It is apparent that the overall value that people sees in Binance is attributed to the competence and professionalism that the team has shown since day one of launch.
Who’s the genius behind it all? The man who needs no introduction — The face and CEO of Binance, Changpeng Zhao. Many see the glory of him now but few knew about his past. He was born in Jiangsu Province, China. He has shown that he has a mature mindset since he was a teenager by working to help his family with household expenses. After majoring in computer science at Montreal’s McGill University, he went on to develop trading software for Tokyo Stock Exchange and Bloomberg Tradebook. He then quitted in 2005 and moved to Shanghai which he became a founder of Fusion Systems known for building some of the fastest high-frequency trading systems for brokers. He started to dabble in prominent cryptocurrency projects at the beginning of 2013 which includes Blockchain.info and held the position as a chief technology officer of OKcoin.
He made use of all the experiences that he has amassed from developing quality trading systems and advanced further into his blockchain career where Binance flourish under his superior leadership. He has slowly built up a good public image for himself with the daily interactions on Twitter and has always openly declared his support for cryptocurrencies which he took action by growing Binance to what it is today. Kudos to the Binance team who played an equally important role as well!
I will end off with a quote that I think best describes Changpeng Zhao,
“You will never be entirely comfortable. This is the truth behind the champion — he is always fighting something. To do otherwise is to settle.”
― Julien Smith, The Flinch