April 24, 2019, | AtoZ Markets – Binance is one of the world’s largest cryptocurrency trading platforms which has announced plans for a decentralized exchange. The decentralized exchange or DEX will be known as the Binance chain. This was exciting news for Binance investors and the general crypto space. But what is Binance chain? And what is Binance chain hoping to achieve?
Binance chain difference
Binance Chain is a blockchain project started by Binance exchange and has since involved a whole community. The project will ensure the creation of a blockchain that will serve as an alternative marketplace for issuing, using, and exchanging virtual assets in a decentralized way.
The first use case for Binance Chain is Binance DEX, a new decentralized exchange (DEX) that aims to carry over the best features of the current Binance exchange in a decentralized manner, while also providing the benefits and security of a decentralized exchange.
Binance chain is an ambitious update by the Binance company in which they have their own blockchain mainnet with a decentralized exchange to run alongside their current exchange. The update will have the Binance token as the native token on its own blockchain rather than running on the Ethereum blockchain. Binance also showed that decentralized exchanges will run alongside centralized exchanges in the near future. One of the main issues with the Binance chain right now is that decentralized exchanges have poor liquidity, low user base and therefore have low trading volume. Binance is looking to address this problem by launching its own DEX.
As a public blockchain, Binance Chain will focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets. Also, it will increase performance, ease-of-use, and liquidity.
The DEX which needs more computational power for many computers to verify and record trades will be slower and have higher fees than that of a centralized platform. However, the Binance chain is much more of a focus on anonymity for users and will allow the trading of a greater range off assets.
Binance Chain advantages
The idea of a decentralized exchange has already been implemented by Binance community. The Binance DEX is looking like one of the first mass-adopted solutions in the DEX area. In conclusion, here are the main advantages of Binance Chain:
- Private keys under the user’s control
- Decentralized order book
- Matching with a one-second block time
The combination of these three factors can take the cryptocurrency market to a new level.
Token burns and increased utility pushing BNB higher
Binance Coin’s incredibly strong recent performance is the validation of steps Binance has taken to add to its coin’s value. Regular rounds of token buybacks and burns have been one of the many effective methods Binance has used to push BNB’s price higher. The last token burn was in mid-January. During this time Binance destroyed 1,623,818 BNB which is roughly equivalent to $9.4 million worth of tokens. In the previous token burning events, Binance destroyed 2.5 million BNB tokens at once. In total, the company has destroyed 10,824,471 BNB over six rounds of quarterly token burns.
Extra: Since Binance blockchain announcement, they have also built a few extra tools:
Simple supply demand game! The fewer tokens there are, the more valuable each individual token becomes. Each quarter, Binance allocates 20% of its quarterly profits to buying back tokens to be burned. This process is set to continue until 100 million BNB has been destroyed. In other word, they will burn 50% of the total BNB tokens that ever existed.
The company built Binance DEX on the Binance Chain where users will have to use BNB as a fee for transactions. After launching the Binance Chain, they will burn as many BNB coins as they did while they were on the Ethereum Network. The BNB burning process will continue until they hit their whitepaper goals. All BNB users will need to transfer their tokens to the Binance Chain to maintain their BNB token balance.
What can users do on Binance Blockchain?
- Send and receive assets
- Release your own token
- Burn/mint and freeze tokens
- Create trading pairs on Binance DEX and trade assets
Most importantly, there will be no mining on the Binance Chain. Binance сhain uses a BFT (Byzantine Fault Tolerant) and PoS (Proof-of-Stake) consensus. This is like some popular blockchain systems, such as EOS or NEO coin.
Please share your thoughts with us in the comment box below.