- Binance has launched an analog of the Uniswap decentralized exchange.
- The Binance Liquid Swap platform offers users multiple liquidity pools with instant token swaps.
Binance cryptocurrency exchange announced the creation of a pool of automated market making Binance Liquid Swap. The latter works according to the same model used by the decentralized exchange (DEX) Uniswap and its analogs: users can quickly exchange tokens or become liquidity providers by adding assets to the pool.
With the growth of the decentralized finance (DeFi) sector, DEXs are gaining in popularity. According to Dune Analytics, trading volume on non-custodial exchanges has grown by 193% over the past 30 days, exceeding the $ 14 billion mark.
Information about trading volumes on the DEX market. Source: Dunde Analytics
The success of decentralized protocols could raise legitimate concerns for traditional digital asset exchanges. For example, the daily trading volume of DEX Uniswap, which accounts for over 70% of the market, has already exceeded $ 840 million, which is $ 300 million more than that of Bithumb or Bitfinex.
Can it be a Uniswap killer?
Binance, apparently, has decided not to fight new competitors, but to join them. The Binance Liquid Swap platform offers multiple liquidity pools with instant token swaps. In a statement, the exchange claims that this approach will ensure high exchange rate stability and lower fees – until October, Binance will charge 0.04% of the transaction amount, after October 4, the commission will be 0.1%.
Initially, liquidity providers will have access to three trading pairs: BUSD/USDT, BUSD/DAI and USDT/DAI. In this case, interest income will be paid in any of the assets of the corresponding pool.
The transaction fee and price between the two cryptoassets available in each pool on Binance Liquid Swap will be determined by the number of assets in the liquidity pool. Operators who exchange or add funds to the liquidity pool will affect the price of their crypto assets, in the same way, that operators who add and withdraw funds from a liquidity pool participate in building the market.
Note that recently, Binance has launched several DeFi-oriented products at once. Last week, the Binance Smart Chain (BSC) blockchain was launched, which is compatible with the Ethereum virtual machine and is able to run decentralized applications.
The exchange also announced the launch of perpetual futures contracts, the underlying asset of which is the DEFI Composite Index. The latter includes a basket of DeFi tokens listed on Binance.
The event will certainly affect the Defi market, but it is not clear yet what market share it can take.