June 18, 2019, | AtoZ Markets - In its recent blog post, the leading global crypto exchange Binance, has announced, that the company will be launching tokens on Binance Chain that will be pegged to leading cryptocurrencies. The Binance Bitcoin-pegged token will be traded on the crypto platform and proposed for trading on Binance DEX
Binance Bitcoin-pegged token: how does it work?
According to the crypto company’s announcement, Binance Bitcoin-pegged token (BTCB) will be 100% backed by Bitcoin (BTC).
The Bitcoin reserve addresses will be published on the public blockchain for anyone to audit.
A trading pair will be created on Binance.com between the Binance Bitcoin-pegged token and the native coin- BTCB/BTC. Binance CEO Changpeng Zhao in his Twitter earlier today has announced BTCB/BTC listing on Binance.
The company explained, that this will simplify the conversion for users from the Binance Bitcoin-pegged token back into the native coin on Binance.com. Large buy orders will be maintained on the trading pair on Binance.com, with a price spread of around 0.1%.
If the buy order, as Binance post details, is filled, a new order will be placed while an equal amount of funds will be deposited from the reserved address into Binance.com.
The sum of the buy order and the funds on the published reserve address will be bigger than the total supply of the Binance Bitcoin-pegged token, ensuring there is always 100% backing.
Binance Bitcoin-pegged token: benefits
As the crypto exchange explained, that offering Binance Bitcoin-pegged token makes available to Binance DEX traders the many coins that have their own blockchains and aren’t native on Binance Chain. Thus, as the post further details, the increase in the selection of tokens available on Binance DEX will affect an increase in trading volume and liquidity.
As a result, the utility value of Binance DEX would also increase. Although this approach is more centralized than atomic swaps, according to Binance, it provides a higher degree of ease of use for most traders.
Binance encourages other projects’ teams to follow their approach and issue Binance Bitcoin-pegged token of their own coins on Binance Chain.
For Binance Bitcoin-pegged token, the BTC reserve address is: 3LYJfcfHPXYJreMsASk2jkn69LWEYKzexb
The company have just reserved 9001 BTC and minted 9001 BTCB. https://explorer.binance.org/asset/BTCB-1DE
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