Chengpeng Zhao (CZ), Co-founder and CEO of Binance Exchange, went on a LIVE interview with Boxmining on 11th August 2020 to talk about Decentralised Finance (DeFi), Binance card, how Binance decides what coins to list and more.
Binance is a cryptocurrency exchange that provides users with a platform to trade various cryptocurrencies. It is one, if not THE largest cryptocurrency exchanges in the world in terms of trading volume.
Watch the full interview here:
Binance Recent Updates
Binance has been focusing its growth on the futures side of their products offerings- they added 16 derivative contracts in July 2020 alone, and now offers 43 futures contracts along with 8 leveraged tokens. The Future’s trading volume on the Exchange has grown from 80 billion to 109 billion in July 2020-nearly a 25% growth in one month. Binance also reached $13 billion trading volume in the same month, which is the all-time highest trading volume. Binance has also observed steady growth in trading volume and in July 2020 smashed their record for highest daily trading volume seen on their Exchange- $17 billion.
They also recently shipped out their Binance cards to several areas in Europe. See also our section below where we look at Binance Card in more detail.
Furthermore, Binance recently launched Binance Australia, a fiat-to-crypto trading platform providing Australian users with a fast, secure and reliable platform to deposit fiat currencies from their bank accounts and buy and trade digital currencies on the Exchange.
Listen to the Full interview on Podcast: https://anchor.fm/boxmining/episodes/EXCLUSIVE-Binance-Exchange-CEO-Changpeng-Zhao-CZ-ei62bi/a-a2uverv
DeFi and DEXs?
According to CZ DeFi, is truly an innovative space, particularly Automatic Market Makers (AMM) which he sees as a very interesting invention. In fact, he revealed that he would be interested in adding AMMs into Binance so that people can add liquidity to certain pairs.
But he cautions that most DeFi projects will fail and only a few will see things through, though these few survivors will succeed wildly. He also warns traders to be careful while investing in DeFi tokens, as it is a new space and involves a lot of risks. This, however, does not mean that DeFi as a whole is bad and in fact, the team at Binance are very supportive of DeFi and are doing a number of related initiatives.
CZ also believes that decentralised exchanges (DEXs) are not a challenge to Binance- which is a part of the centralised finance space. This is because he finds the industry to be quite small, so the more working platforms there are the more people will be attracted and invited into this space. CZ also believes that DEX and centralised finance users are fundamentally quite different, and despite the rapid increase in DeFi staked assets, the number of users is still relatively low. This is because DeFi requires users to hold their own private keys and keep them secure. But the vast majority of people are not capable of doing that currently.
Criteria for Listing New Coins on Binance: How Do They Decide?
CZ said that the coin listing on Binance has always been based on the number of users. Simply put, if a coin has a large number of users and there is a huge demand from the community, they will list it. The fact is that Binance does not choose which coin to list, if a coin has a large number of users and it is very sought after and popular, then exchanges have no choice but to list it.
CZ offers some tips for users who really want a particular coin to get listed. He suggests that the projects really work hard on building their community and getting more users in. Binance itself reviews several criteria when deciding to list a coin including community size, number of Twitter followers and number of addresses. If Binance sees that there is genuinely a high number of users, they will list it. In fact, CZ reveals that he is not personally involved in the listing process and sometimes he even only knows a coin has been listed on Binance when he sees the announcement on Twitter afterwards.
He also mentions that Binance has ramped up the number of coins being listed on the Exchange due to the rising temperature of the cryptocurrency market. And in fact, the Exchange had already listed 6 coins in one week in early August 2020.
Binance Smart Chain
The history of how Binance Smart Chain came about is because Binance Chain was introduced as a single purpose high-performance DEX. It is on-chain order matching and intended to be very fast- able to handle around 100 thousand orders per second with 1-second confirmation. But in order to achieve this level of performance, they had to take out the smart contract capabilities from Binance Chain- but was a highly popular feature with users. Hence Binance Smart Chain was released as a parallel chain which supports Ethereum compatible smart contracts, so it supports solidity and is Ethereum Virtual Machine (EVM) compatible.
Hence a key feature of the Binance Smart Chain is that it is compatible with Ethereum-based smart contracts. Also it will be fully open-sourced so anyone can deploy contracts on the platform. So, if you have a DeFi contract that runs on Ethereum, you can port it over to Binance Smart Chain and it will run there too. Binance Smart Chain is meant to be an easy way for users to deploy smart contracts on Binance Chain without any additional learning curve. In terms of performance, Binance Smart Chain is lower performance than Binance Chain, but it should still be higher than Ethereum 1.0.
CZ also revealed that the team is designing a staking mechanism for BNB on Binance Smart Chain. The staking mechanism and mainnet for Binance Smart Chain should be launched end of August or early September 2020.
Binance DEX vs Binance CEX
According to CZ, most users opt for the centralized Binance exchange i.e. Binance.com rather than Binance DEX as it is much easier to log in and has more customer support. Therefore, he believes that although the future belongs to DEX, they are more focused on CEX as it has a larger user base currently.
CZ also highlighted that the Binance platform will continue to invest in DEX and Binance Chain developments and also support and fund other external projects.
Binance exchange aims to attract a lot of users towards crypto. CZ believes that currently, only 0.1% of people hold crypto. If this increases to 1%, the industry will grow 10 times and Binance will benefit too.
Binance Card: Swipe ($SXP) partnership and what’s next
The Binance Card enables users to manage their funds, card security, and spending with just a few clicks. Once you receive your new card, you’ll need to add funds by transferring your BTC or BNB from your Binance.com wallet to the Binance Card wallet. And you’re ready to go!
CZ shared that Swipe ($SXP) is the main provider for the Binance card and the two teams are partnered for the purpose of developing the Binance card. He believes this partnership and the Binance Card itself is very strategic because it finally allows people to spend their cryptocurrencies directly. This eliminates the need for people to have to take the extra steps of transferring their cryptocurrencies into a stable coin, taking the stable coin elsewhere to turn into fiat currency and finally depositing this currency into the bank accounts to pay for their purchases. Essentially, this allows people to stay 100% in cryptocurrencies.
Binance has recently shipped out their Binance cards to select areas in Europe, which allows users to shop and spend their cryptocurrencies on Binance directly. As for other locations, the Binance team will be rolling out the cards region by region. The technology to issue these cards is there, but the Binance team need to make sure it complies with the regulations in every region. The workflow is in motion, so it will only be a matter of time when Binance cards will be issued in other countries.
Is Binance Running Its Own Bitcoin Lightning Node?
CZ says that Binance.com is not running any Bitcoin lightning nodes since they haven’t gone that far. However, CZ is very supportive of lightning nodes and most of the 2nd layer solutions. He reveals that there is some work to be done before Binance can run its own lightning node, for example they are still busy with the integration of SegWit, a Bitcoin implementation that is intended to increase transaction throughput of the network. This is a large project for them because the Bitcoin wallet itself is already not very high performance. They already had to build a huge infrastructure to deal with all the wallet addresses for all the users on the Exchange- and in fact most users have more than one address. The team has a lot of legacy to deal with in order to move forward, however they are working on it. And at the same time, the team also needs to focus on other aspects of running the Exchange such as listing new coins for users etc.
Stablecoins: USDT and DAI
In terms of what is happening with USDT and the fact that new USDT is being minted, CZ himself does not know any further information out of what is publicly available. He does however see that having only one popular stablecoin is very risky particularly if something were to happen to the custody of the bank account etc. So it would be beneficial for the industry to diversify into multiple stablecoins and offer more choices to users. For example BUSD, which is actually managed by their partner PAXOS. This is so that the risk is also diversified since there is less reliance on one entity or bank account etc.
As for the DAI stablecoin, CZ considers it does have an innovative approach to issuing stable coins and Binance is supportive of it and excited to see where it goes.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. We also take a deep dive into popular DeFi topics such as Yearn.finance ($YFI), Balancer ($BAL) and ($COMP).
The DeFi series on this website also covers topics not explored in YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency
Learn about Yearn.finance ($YFI) and all its various hard forks and iterations:
- Yearn.finance ($YFI) farming with yEarn Pool
- YFII Yield Farming- the controversial $YFI Fork
- YFFI Yield Farming – Another fork of the popular yield farming Dapp
- Andre Cronje, Founder of yEarn.Finance ($YFI) talks DeFi with FTX
For in-depth information other specific DeFi projects, check out our DeFi token guides:
- 0x ($ZRX) guide: The future of cryptocurrency exchanges?
- AAVE ($LEND)
- Ampleforth ($AMPL) review: The essential guide to this DeFi protocol
- Bella Protocol ($BEL): One-click crypto banking
- Balancer Finance Guide and Review ($BAL)
- ChainLink ($LINK) guide: A key link in the DeFi space
- Compound Finance ($COMP)? A guide to hacks and tips on the latest DeFi platform
- Cream Finance ($CREAM): What is it?
- Curve Finance ($CRV) guide
- DeFi Money Market and DMM Governance ($DMG) guide
- FalconSwap ($FSW) Guide
- Fuse Network ($FUSE): What is it?
- Hedget ($HGET): Does it live up to the hype?
- Kusama ($KSM): How is it Polkadot’s wild cousin?
- Linear Finance ($LINA): The future of synthetic exchange platforms?
- Mantra DAO ($OM): The DeFi project that’s all about community
- OIN Finance ($OIN): DeFi’s first foray into Ontology
- Orion Protocol ($ORN) explained
- Polkadot ($DOT): Everything you need to know about the DeFi darling of China
- RAMP DeFi: How does it unlock the value of staked assets?
- Rio DeFi ($RFUEL): The next frontier of finance?
- Serum ($SRM): First look at FTX’s new DEX for the DeFi wave
- Solana ($SOL) explained
- SushiSwap ($SUSHI) explained
- Synthetix ($SNX): Everything you need to know about this top DeFi project
- THORChain ($RUNE) information and guide
- Trustswap ($SWAP) explained- Next generation of DeFi transactions
- YF Link ($YFL): Combining the best of ChainLink ($LINK) and Yearn Finance ($YFI)?
- YFV Finance Yield Farming
Tutorials and guides for the ESSENTIAL DEFI TOOLS:
- MetaMask Guide: How to set up an account? PLUS tips and hacks for advanced users
- Uniswap review and tutorial: Beginners guide and advanced tips and tricks
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel and (for now) FREE weekly newsletter so you can be notified as soon as they come out!
The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur.