What’s Binance Chain Trying To Accomplish And Why Is It Pulling Projects From Other Platforms?
Binance, one of the biggest cryptocurrency exchanges by volume that has seen over $27 billion through its doors in the last 30 days, made big headlines at the end of April when it announced it had launched its mainnet Binance Chain. It then went on to execute the swap of its native token Binance Coin (BNB) off of the Ethereum Blockchain while also launching a decentralized exchange.
This move from the progressive cryptocurrency company was intended to help it build a base for issuing new cryptocurrencies and initial coin offering tokens. With this being the aim, Binance Chain becomes a powerful platform to help new projects, ICOs and tokens to try to get up and going.
Of course, it gives the company its own chain on which to issue and operate its successful native token, the BNB, but the fact that it also serves as a blockchain platform suddenly makes it a bit of a competitor for things like Ethereum.
Not only did Ethereum lose a lot of trading volume through the migration of BNB tokens, which before the switch saw the Ethereum blockchain attract a trading volume of $430 million, the smart contract blockchain has now picked up competition that some commentators noted provided equal, if not more, benefits, in the Binance Chain.
Already the migration has begun with projects that were on the Ethereum chain quickly jumping to the new Binance Chain to continue their operations while also profiting from the ‘Binance factor’ which comes with a lot of free attention.
Reasons for the new chain?
While Binance has been trying to push the boundaries of what a cryptocurrency exchange is, and what it can be, the move to create its own chain was an interesting one. Part of Binance’s success has come from its native token, the BNB, but also from their willingness to launch and accept different coins on to their platform.
Nearly at the same time, the exchange launched a decentralized exchange which was another big step for the all-conquering exchange:
Binance CEO Changpeng Zhao said in that announcement:
“We believe decentralized exchanges bring new hope and new possibilities, offering a trustless and transparent financial system. … With no central custody of funds, Binance DEX offers far more control over your own assets.”
Zhao spoke with Forbes about the overall aim of the new chain and how they feel it will help advance the cryptocurrency exchange even further.
“Binance Chain brings a new level of freedom for traders, as well as to projects that are looking to raise money or liquidity. Moreover, with its core Binance Chain technology, Binance DEX can handle the same trading volume as Binance.com handles today.
“Binance DEX solves the critical issues with speed and power that many traders have faced when using other decentralized Exchanges,” Zhao said.
One for the builders
The DEX and mainnet launch combined have offered a lot more opportunity to different sides of the marketplace with, as Zhao mentions, traders benefiting from the DEX being run on the chain’s technology. But, there are also benefits for projects who want to use the chain as their foundation.
“I think projects are attracted to Binance Chain for its security, speed and ease of use,” added Zhao. “Binance Chain has no custody of funds, which means traders maintain control of their private keys and assets, and trade wallet-to-wallet on Binance DEX. This means they no longer have to worry about exchanges being hacked.”
This statement has rung very true in the past few days as it was announced that Binance was hit by a 7,000 BTC hack where the criminals stole API keys, two-factor codes and other information in the attack.
“In addition, early projects that migrate over will receive additional support from Binance.com, in terms of marketing, promotions, as well as prioritized listing reviews on Binance.com. Wallets that have added support for Binance Chain early will capture a large slice of the pie.”
“We already see a large number of them supporting Binance Chain. I don’t think it is hype. I think the pace will pick up over time,” Zhao concluded.
‘The Binance Factor’
There is little doubting that Binance is a big newsmaker, and many coins and projects have already benefited from aligning themselves somehow with the exchange. Now, as mentioned by Zhao, that ‘Binance Factor’ is more than just ethereal, it is reliable support.
The initial support for the Binance Chain was reported to come from decentralized social media platform Mithril — with a market cap of $20.3 million and a token currently valued at $0.03 — which had adopted the Binance Chain first.
However, even that stat is up for debate as the jump across to Binanace coin came as a rush through the end of April.
ChangeNow, a cryptocurrency exchange that lets it’s users trade cryptocurrencies without the need to create an account, and technically a competitor of Binance, was reported, from Zhao, to be the ones first to issue their tokens before Mithril. He even tweeted his support in the listing of a ‘peer and a competitor’ on the BinanceDex to showcase the truly decentralized nature of the listing process on the DEX.
Zhao said in a tweet: “ChangeNow did issue tokens before MITH, without any communication or coordination from me or my team. The truly decentralized way. MITH tokens were issued later, but first on Binance DEX.”
Regardless of who came first through, it is these earlier adopters of the new chain, who have been convinced to move over with additional marketing and support from the major exchange, that is looking to profit from that ‘Binace Factor.’
However, ChangeNow — with its token valued at $0.01, and a circulating volume over the past 24 hours of around $6,700 — explained to Forbes what benefits it hopes to accrue from this alignment with such a big crypto brand, albeit a competitor.
“We believe that Binance Chain has great potential, mainly because they are considered to be a powerhouse and trendsetters in the crypto market. So, our users might be interested in having NOW-BEP2 tokens alongside the ERC-20 ones,” said Pauline Shangett, PR manager at ChangNOW, expanding on how the Binance chain has allowed platforms to keep their ERC-20 tokens alongside the new BEP 2 tokens.
“It’s about diversity and decentralization of our token if the token is alive in more than one chain, it’s more decentralized, therefore more immune to market trends and volatility.”
On a more technical level, it seems that it is still difficult to decipher if the Ethereum Chain is better or worse than the Binance chain when you get down to objective decisions, as Shangett goes on to explain.
“It’s hard to answer at the moment because there are still many debates about DPoS vs PoS vs PoW protocols. So, I guess I’ll stick to my first thoughts that Binance built a great brand and positioned themselves as market leaders, we believe they will harness their brand value into their new project, and we are happy to take part in their ecosystem.”
Thus, the pull of Binance’s ecosystem seems powerful enough for these emerging blockchain and cryptocurrency companies alone as they are letting go of a lot of legacy and experience from the Ethereum chain.
“Well, Ethereum has been there for a long time. They managed to build a vast ecosystem of projects and developers, and there’s a massive range of business cases supporting Ethereum, while Binance Mainnet has yet to prove itself,” added Shangett. “For now, we are not familiar with many cases of Binance Mainnet usage except their DEX platform. So it will be interesting to see how the company is going to develop their blockchain and to which direction they intend to take it.”
Better for the community
While a lot of questions have been raised, and are yet to be answered, by the Binance Chain launch, it is an exciting juncture to be in as this cryptocurrency behemoth makes another play for more dominance in the community.
Zhao has a positive spin on Binance looking to grow, to maintain the company it is helping build the entire community and ecosystem with its heading.
“Binance Chain is a blockchain software system where Binance is just one contributor to the project. There are many other community contributors to the project. We encourage more developers and teams to build on Binance Chain, to improve it and to grow the cryptocurrency ecosystem together.
“Our vision at Binance is community-first, to increase the freedom of exchange and provide the core infrastructure services for organizing the world’s crypto. We never aim to be a dominant force; We want to be a part of the community. We hope Binance Chain is one part of the ecosystem that will make a positive impact,” he concluded.
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