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Binance Continues Delisting Crucial Liquidity Pools Bringing the Era of User Rewards to an End

Last Updated October 10, 2023 9:46 AM
James Morales
Last Updated October 10, 2023 9:46 AM
Key Takeaways
  • Since August 29, Binance has announced the removal of 52 liquidity pools from Binance Liquid Swap.
  • Following the closures, Binance users have fewer options to earn rewards.
  • For example, Binance Liquid Swap no longer supports any Enjin or Monero liquidity pools.

Just six weeks after the removal of 39 liquidity pools from Binance Liquid Swap, the global crypto exchange has closure of 13 additional liquidity pools.

Binance insists the changes are designed to concentrate liquidity, reduce slippage, and provide users with better transaction prices. But the delisting frenzy could drive participants from the abandoned pools elsewhere.

What is Binance Liquid Swap?

First launched in 2020, Binance Liquid Swap is the exchange’s take on DeFi-style yield farming. 

Similarly to decentralized exchanges like Uniswap, participants earn rewards by contributing crypto to liquidity pools. 

Each liquidity pool contains two different tokens. Liquidity providers earn a percentage of each swap in transaction fees as well as additional BNB rewards.

However, in recent weeks, Binance has dramatically cut back its Liquid Swap program.

Opportunities to Earn Reduced as Binance Cuts Back Liquidity Pools

Many of the delisted pools contained the BUSD stablecoin, which Binance is set to retire in February. However, a number of non-BUSD pools will also be removed from the platform.

For example, in a statement announcing the latest delistings, the company said  that the HFT/USDT liquidity pool will be closed on October 17. After that date, Binance Liquid Swap will no longer support any HFT swaps.

Following a previous round  of pool closures, tokens, including Pepe coin (PEPE), Enjin (ENJ), and Monero (XMR), have been completely removed from Binance’s liquidity farming platform.

Meanwhile, Liquid Swap options for major tokens, including Avalanche (AVAX) and Sushiswap (SUSHI), have been reduced to just the most popular pools. In both instances, following recent closures, only USDT-paired liquidity pools remain.

Why is Binance Closing Pools?

When Binance debuted Liquid Swap, it was widely seen as a response to the growth of DeFi platforms, which threatened to encroach on Binance’s trading volumes.

In the three years since its initial foray into yield farming, Binance has managed to amass some fairly impressive liquidity pools. However, they are still small compared to those operated by DeFi giants like Uniswap and Curve Finance.

For example, the largest pool on Binance Liquid Swap is the BTC/WBTC pool, which currently contains 203 BTC and 582 WBTC, worth nearly $22M USD.

On the other hand, the largest Curve liquidity pool contains a massive $4.24B  in stablecoins. Meanwhile, Uniswap’s USDC/ETH pool currently holds assets worth $206.7M 

Going forward, Binance’s recent run of pool closures suggests a change of strategy to focus on only the most popular pools. 

Even after the latest removals, at the time of writing, 35 Liquid Swap pools contained assets worth less than $100,000. 

Facing the prospect of its least popular pools drying up, further removals could be on the horizon for Binance.

For now, Liquid Swap users can redeem their assets from the retiring liquidity pools before October 17. After that, deposits will automatically be redeemed to users’ spot wallets based on the pools’ prevailing composition ratios.

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