Binance, the leading cryptocurrency exchanges by trading volume, is making one more venture into DeFi with a new token swapping liquidity platform. This will be Binance’s centralized version of Uniswap. According to the official announcement, this platform will allow users to reap the benefits of DeFi services from their existing Binance account.
Binance Liquid Swap: Instant Liquidity
The swap platform is called Binance Liquid Swap and is based on liquidity pools. Similar to how Uniswap works, each trading pair will have its own liquidity pools, where the ratio of the two pool tokens defines the market price. According to the official post, Binance Liquid Swap gives more constant prices and reduces fees for bigger transactions.
The platform will be an centralized Automated Market Maker (AMM), and it includes various pools of liquidity that enable its users to exchange crypto assets. This could be aimed directly at Uniswap. At the moment, Uniswap is one of the leading token swapping protocols and decentralized exchanges. According to its website, it has more than $1.8 billion in liquidity.
In Binance Liquid Swap, the transaction charges depend on the number of assets in the liquidity pool. These prices vary when users swap, add, or withdraw funds in the pool. In other words, users can become a market maker by directly adding tokens to the pool. In this way, they can gain interest and a part of the transaction fees. Binance will make this function available through its already existing platform.
Binance Liquid Swaps will start by launching three trading pairs of USD pegged stablecoins, the three pairs will be:
Binance CEO, Changpeng Zhao, stated the new products are intended to draw more volume:
“We hope to further the growth of the DeFi marketplace and empower our users with more earning power and easier liquidity through a centralized AMM pool with the credibility, safety, and security provided by Binance.”
The official blog post further stated that users can buy crypto using their local currencies, including credit and debit cards and P2P, and more easily access DeFi products and services. The exchange further added that it is now possible for users to carry various crypto activities such as spot, margin, and futures trading, as well as savings, staking, P2P, and more in just a few clicks.
Binance Liquid Swap is the second step taken by Binance in the world of DeFi. Just a few days ago, On September 1, the crypto exchange launched the ‘Binance Smart Chain’, a new Ethereum smart contract friendly blockchain.