Binance, the world’s largest crypto exchange by daily trading volume, is set to release a beta version of its DEX (decentralized exchange) by early 2019. We’ve told you how Binance has decided to support and launch a fiat-enabled trading platform in Singapore a few days ago. We think Singapore was massively bullish, what do you think about Binance testing the waters for a DEX?
Changpeng Zhao, the CEO of Binance, better known to the community as CZ, said on Saturday: “Just had a productive meeting for Binance DEX, where BNB will be native gas, and the exchange don’t control user funds. Aiming for a public beta end of the year/early next year. Yes, we work on Saturdays, non-stop.”
Why DEX?
In July, on CNBC, CZ stated that he personally believes decentralized exchanges are the future of crypto. In the long term, CZ explained that users will be able to utilize non-custodial wallets (a key component of centralized exchanges) to trade cryptocurrencies in a peer-to-peer manner with full control of their funds.
“I believe that decentralized exchange is the future – I don’t know when that future will come yet – I think we’re at an early stage for that so I don’t know if it’s a year, two years, three years, or five years – I don’t know but we got to be ready for it,” he said.
As a centralized cryptocurrency exchange, most of Binance’s and other centralized exchanges revenues and profits are generated by the fees charged by the exchange. But DEX’s can also charge a native fee embedded into the smart contracts utilized by the platform to broadcast transactions to the public blockchain networks of the different coins, such as Ethereum.
In October of last year, Ethereum co-creator Vitalik Buterin praised a model utilized by EtherDelta, a DEX, to attract developers and incentivize them to maintain the platform. “I think the EtherDelta model for developers getting paid is underrated,” he said.
At the time, a South Korean cryptocurrency user recommended Binance to Buterin on Twitter, mentioning its incredibly low 0.05% fee. Buterin responded that in order to use centralized exchanges, account creation was necessary. On DEX’s, users can utilize existing wallets like MetaMask or MyEtherWallet to trade.
Speaking on DEX’s, specifically EtherDelta, Buterin further explained: “That requires setting up an account. I like EtherDelta precisely because it doesn’t. Just visit the site with MetaMask on and start using it. Not slow at all. I don’t give a damn about split-second trading. To me, speed includes login, deposit, withdrawal, logout time.”
Which will win? Which do you use? DEX or centralized exchanges?
CZ reaffirmed that he believes that Binance will still probably be a more secure alternative to DEX’s because of its existing strong architecture and infrastructure. For reference, Binance has never been hacked since its launch in 2017.
CZ further noted that the real merit of using DEX’s is in the freedom and control of the user’s funds. On DEX’s, users do not have to create a new account, go through KYC, or file withdrawal requests. Everything trade-wise is done on the blockchain with a non-custodial wallet, IE a wallet that the user owns and controls.
Eventually, as the adoption of cryptocurrencies increases and fiat becomes less relevant in the cryptocurrency exchange market (when do you think that’ll happen??), traders will likely shift to DEX’s from centralized platforms.
CZ stated that he does not know when that migration will happen – but he confidently said that Binance and its team will be ready for it.
What do you think? Do you think this is even more bullish news? What do you think of Binance launching a DEX on top of releasing an exchange that supports fiat/crypto pairs in Singapore? Do you think we’ll see another bull run soon? Let us know on Facebook by joining our community here!
