Cryptocurrency exchange giant Binance announced Tuesday that it will launch its own “tailored blockchain” in an apparent first step toward building a decentralized exchange (DEX).
The Hong Kong-based company — which regularly ranks as a top-three cryptocurrency exchange as measured by daily trading volume — made the announcement in a blog post, explaining that Binance Chain will “mainly focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets.”
“Binance was growing too quickly, and too busy to start anything else,” CEO Changpeng Zhao said on Twitter. “So, all we could do is, to just start one more Binance.”
The company said that it made the decision to launch Binance Chain after conducting extensive research into currently-existent DEX frameworks.
Decentralized Exchanges allow users to trade cryptoassets without entrusting their coins to third parties, whose centralized platforms provide hackers with lucrative attack vectors and have collectively lost more than $1 billion worth of assets to thefts during the industry’s short history.
The most well-known DEX is EtherDelta, which uses smart contracts to allow users to trade ERC20 tokens, which all run on the Ethereum blockchain. DEX platforms are not completely safe since their website servers are centralized, but they are much less vulnerable to large-scale thefts than conventional exchanges.
The reason that currently-existent DEX platforms are not more widely used is that by-and-large, they can only be used to trade assets that run on a common blockchain. Technological upgrades such as the Lightning Network (LN) promise to make cross-blockchain trades — called atomic swaps — more accessible, but these technologies are not yet production-ready.
It is not yet clear how Binance’s DEX will operate, although it appears that it will exist alongside the company’s centralized exchange for the foreseeable future.
“Centralized and Decentralized exchanges will co-exist in the near future, complementing each other, while also having interdependence,” the company said, adding that more details about Binance Chain would be released in the coming days.
Binance Coin (BNB), which is currently built as an ERC20 token, will be reissued as Binance Chain’s native asset, and Binance — the post says — will “transition from being a company to a community.”
Notably, OKEx — another top-three cryptocurrency exchange based in Hong Kong — recently launched its own utility token and has said that it will create its own public blockchain, tentatively dubbed OKChain, as well.
Featured image from Shutterstock.
Last modified: June 11, 2020 10:06 AM UTC