Leading digital currency exchange Binance has delved deeper into the decentralized finance (DeFi) pool with the launch of its liquidity swap trading platform.
Binance recently disclosed that its users would be able to enjoy the benefit of DeFi services with the new liquidity swap platform. The new platform enables users to make trades/swap crypto assets within a range of liquidity pools from their existing Binance accounts.
Introducing #Binance Liquid Swap!
Instant liquidity via Automated Market Maker with 0.04% transaction fees for the first month.
Binance Liquid Swap advantages:
— Binance (@binance) September 4, 2020
The new initiative is called Binance Liquid Swap (also labeled as Binance BSwap) and is based on liquidity pools. It is an automated market maker (AMM). It is also the first AMM service to launch on а centralized exchange. The AMM enables users to swap crypto assets within a range of liquidity pools.
Additionally, the exchange, via an official blog post, noted that Binance Liquid Swap would provide more stable prices and lower fees for transactions when placed in comparison with traditional order book trading.
At its launch phase, Binance Liquid Swap enables liquidity providers to use the following three trading pairs:
Also, the pricing model in charge of the automated market maker relies on the number of assets in the liquidity pool.
Additionally, the digital currency exchange noted that the earning model relies on a corresponding 7-day annual percentage yield (APY). The profits are converted into the assets from the respective pool. Prices and fees change when you swap, add, or withdraw funds in the pool.
Binance Liquid Swap platform aimed to attract and empower users
Binance CEO Chanpeng Zhao explained that the new trading platform is aimed at attracting more participants as well as trading volumes.
He noted that the exchange hopes to enhance the growth of the DeFi marketplace. In so doing, it intends to empower its users with more earning power and easier liquidity. The vehicle for this empowerment is a centralized AMM pool with credibility, safety, and security provided by Binance.
Binance Liquid Swap to compete with Uniswap
Reports have hinted that the new Binance DeFi initiative would compete with Uniswap and other decentralized finance-focused platforms.
Uniswap is one of the world’s most popular token swapping protocols. It recently hit over $1.9 billion in liquidity. (At the time of writing, liquidity has dropped to $522 million.) Uniswap now has to compete with a rising giant in the DeFi space.
Notably, this is Binance’s second major move into the DeFi sector. Initially, on September 1, the exchange announced the launch of Binance Smart Chain. This project is a blockchain that allows for the creation of smart contracts on the Binance-branded blockchain as well as new staking mechanisms for BNB.
Binance DeFi other developments
It’s important to note that the leading digital currency exchange has also been unveiling other crypto-related initiatives.
Recently, in a bid to enhance business development in India, Binance, in collaboration with WazirX, established a DeFi-focused platform. Both companies are partnered to co-sponsor a DeFi-centric hackathon called Build for Bharat.
Additionally, the Binance Futures team set up the DeFi Composite Index Futures contract. This is Binance’s first composite index product and is established to enable users, all from a single contract, to track and actively participate in the fast-growing DeFi market.
Overall, the leading crypto exchange continues to strengthen its place in the decentralized finance community. For more interesting information on DeFi, check out the Altcoin Buzz YouTube channel.