The largest cryptocurrency exchange in terms of trading volume, Binance , conducted the long-awaited release of its own blockchain network Binance Chain and the decentralized trading platform DEX built on its basis.
Why did Binance need a second trading platform and how can it help combat common types of crypto asset trading? We will understand this material.
At the end of April, the ATOM token of the Cosmos project was added to the listing of the Binance exchange. This was noticed by the head of the trading platform, Changpen Zhao, noting :
"Here is a project that even refused to talk to us about listing (and we have good relations with their technical experts), but we still posted it."
The free listing of the ATOM token, compliments from Zhao and “good relations” with the technical team of the project are all links in one chain, because Cosmos products were used in the development of the Binance Chain network. Moreover, the Cosmos project is noted in the thanks section of the Binance Chain documentation:
“Our current implementation is built on the forks of Tendermint and Cosmos SDK. We use the revised version of the Tendermint consensus and its P2P communication logic, and from Cosmos SDK we have taken the “bank” for coin transactions. ”
The blockchain network Binance Chain was officially launched on April 18th. Within a few days after that, the Binance Coin coins went from the Ethereum blockchain and the ERC20 standard to the BEP2 standard of its own exchange network.
“Binance Chain consists of a very simple chain [of blocks] from the point of view of an application, but it is able to withstand heavy loads ,” says one of the announcements of Binance.
The main advantage of Binance Chain in the company is the almost instantaneous transaction confirmation speed and the fast – less than a second – block generation. This makes the blockchain Binance most suitable for the main business – trading operations.
Decentralized Binance DEX Exchange
The operations for the exchange of crypto assets underlie the first application built on the Binance Chain, a decentralized exchange . In many ways, the new blockchain was developed to launch DEX, which has the ability to process a number of transactions comparable to the centralized Binance site.
But private keys in DEX are stored on the user side, which allows you to create a peer-to-peer network for transactions without intermediaries. In addition, the support of Binance DEX has already announced the famous manufacturer of "cold" wallets – the company Ledger. This means a new level of security for trading assets, because it is the “hot” online storage that is the main reason for the massive hacker hacking of crypto-burg . Another Binance partner in hardware wallets was the Singapore company CoolBitX.
Among the possibilities of the site is also called the function of issuing your own tokens, as well as proposals for new pairs of listing by voting (to nominate to vote the user requires a minimum BNB coin steak).
It is worth dwelling in detail, perhaps, on the new mechanism of the match (information) orders. In Binance Chain, the matching is carried out by the nodes on the basis of a periodic auction and takes place in each block. In any round, the matching is performed immediately for all orders with the same price, therefore, as the Binance team writes, such notions of traders as “Maker” or “Taker” disappear. Instead, they appear "Candidates" – orders that will participate in the next round of the match (in each block).
Reliable DEX without artificial volumes
According to the developers of Binance, fast matching of orders allows you to deal with the practice of frontranning (from the English “front running”), when a trader based on insider information places an order before a large bid, hoping to get support for his target price. In addition, the opportunity for high-frequency trading is virtually lost.
Among other things, the Binance DEX matching mechanism is designed to increase the credibility of the platform for trading cryptocurrencies, seriously shaken after investigations about large-scale falsification of trading data by the exchanges .
Due to the fact that the matching occurs in blocks, the history of order convergence is transparent and fully traceable. Thus, the owner of a full node can observe matching in real time, which makes it possible to immediately notice instances of lush trading (from the English “wash trading” – a practice when a trader buys and sells assets himself).
Binance Chain is a competitor to Ethereum?
Although there is no support for smart contracts in Binance Chain, in particular, the new project is regarded as another “killer” of Ethereum . And several large applications have already been transferred from the Vitalik Buterin camp to the side of the blockchain Changpen Zhao. However, he himself cooled the fervor of the blockchain community: according to him , Binance Chain does not compete with Ethereum, but with “ourselves, the exchanges”.
The first to move with ERC20 standard on BEP2 announced a decentralized social network Mithril. As stated in the official blog of a startup, its team has long looked closely at different blockchain networks, but the decisive advantage of Binance Chain was the focus on usability, security and the “incredible speed of creating blocks in one second.”
In addition, the following plans were launched or announced on the Binance Chain network: ChangeNow cryptocurrency exchange, Red Pulse Phoenix platform for market analytics, Atomic Wallet wallet, service for integrating blockchain into gamejack Enjin. On April 30, the platform for video content and live broadcasts Bolt also announced the transfer of its token to the BEP2 standard.
Following Bolt, plans to use Binance Chain were announced by an Aeron startup that is developing an aviation application to record all flight data and aircraft sensor readings in a distributed registry.
Although the benefits of these migrations are not yet clear, it was only by announcing a partnership with Binance that the price of all the above tokens increased, in some cases showing a three-digit increase.
Spoon of tar in a barrel Binance Chain
Not everyone is ready to join the celebration of a new page in the history of Binance, and for good reason.
First, the Block information crypto portal noted that on the eve of the launch of Maininet Binance, without notifying investors and the community, it changed the wording in the section on burning coins in white paper of its blockchain . Namely, it replaced the term “ransom” (repurchase) with “burning” (burn). But the essence of the process has not changed, as well as the basic parameters.
Everything is also supposed to be burned every quarter and just destroy 50% of the entire emission. And although from the section was removed the provision on the direction of 20% of Binance's revenue on the purchase of tokens for their subsequent incineration, the company does not abandon these plans. The reason for the change of terms remained unclear. As noted by Zhao, this change is due to the desire to show that Binance is not going to make a redemption of BNB coins.
Secondly, independent developer Udi Wertheimer criticized Binance for the fact that the company did not publish the source code of the software for the full node. In his opinion, this calls into question the decentralization of the Binance Chain network. In addition, without this data, it will be difficult for the projects that have announced this to go to the new blockchain.
Conclusion
At first glance, it seems that Binance holds all the cards. Binance Chain was conceived primarily as a basis for Binance DEX, and if all the declared functions are implemented, then the new platform will save many diseases from the cryptocurrency trade.
But at the same time, what happened is, in fact, a credit of trust. Binance DEX doesn’t have many users yet, and not all key functions have been tested to the end. It is unclear how the transition to the BEP2 standard will affect third-party tokens.
Meanwhile, the community’s expectations are more than positive. Perhaps even overpriced. Since January 1 of this year, the price of the Binance token has increased from $ 6 to $ 23.
Is this growth natural for a stock coin and is there a painful correction awaiting us if Binance can’t justify even a fraction of high expectations? After all, as you know, the higher you go, the harder it is to fall.
Publication date 07/05/2019
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