Binance to Introduce Derivative Coins Pegged to Bitcoin (BTC)
Binance will start introducing tokens pegged to leading coins, to create versions native to Binance DEX and allow the trading of those assets on the decentralized exchange.
Binance is planning to launch new types of tokens with values pegged to Bitcoin (BTC), and in the future, to other leading coins. The reason for pegging assets to other coins is the need to trade BTC and other leading coins on Binance DEX, the decentralized marketplace.
Binance admits that the solution relies on a centralized custodial reserve of coins. However, the exchange pointed out that atomic swaps and other decentralized solutions were not developed enough to facilitate large-scale trading and transfers.
“The main benefit of offering crypto-pegged tokens is that, obviously, this makes available to Binance DEX traders the many coins that have their own blockchains and aren’t native on Binance Chain. With the increase in the selection of tokens available on Binance DEX, there should be an increase in trading volume and liquidity,” Binance remarked.
Binance has found its own solution to trading coins from other blockchains through one wallet, without incompatibility. In the past, attempts at building a single marketplace to trade all coins have led to the creation of derivative coins.
Such derivatives of BTC, Ethereum (ETH) and other assets can be found on the Waves (WAVES) network, as well as the Next project. Traders would send their coins to special addresses, which would then produce a balance on the new network.
Unfortunately, in the past, BTC-derived assets were prone to the creation of fakes, or tokens with a similar ticker. Binance will take care of switching between coins and the new type of tokens operating on Binance Chain, the native blockchain making the DEX possible.
Binance DEX is just taking off, with unstable volumes and still a small number of tokens. Daily volumes reach the equivalent of $11 million, and currently, Mithril (MITH) is taking up more than 98% of total trading activity. In the past, coins like Harmony (ONE) were the most actively traded. The DEX is still catching up to the activity on Binance.com.
The leading exchange is in a process of diversifying its activity. Binance.com will close for US-based traders, expecting to launch a new US-based market to comply with local regulations.
Following the news of the new tokens, Binance Coin (BNB) rose by 5% net overnight, to $34.68.