Binance takes on DeFi with Uniswap competitor and liquidity mining

Published at: Sept. 4, 2020

Crypto exchange giant Binance is delving deeper into the world of DeFi-style products with its latest offering, an automated market maker called Binance Liquid Swap.

Aimed directly at Uniswap and its clones, Binance will launch an AMM liquidity pool that allows users to provide liquidity by depositing tokens. Just like the world’s most popular decentralized exchange, Binance Liquid Swap will also enable users to earn interest in addition to a cut of the trading fees for the pool.

It’s the first AMM pool product on a centralized exchange and will be integrated into the Binance.com exchange, allowing users to pool tokens in their wallets to earn rewards.

The AMM will use a pricing module instead of an order book to provide more stable prices and lower transaction according to the announcement. The company is prioritizing liquidity for its own tokens so the first pools offered on launch will be USDT/BUSD, BUSD/DAI and USDT/DAI.

Earnings will be accrued with a corresponding 7-day annual percentage yield (APY) with returns converted into the assets in the respective pools. Transaction fees and prices will be determined by the number of assets in the liquidity pools.

Binance CEO, Changpeng Zhao, stated the new products aimed to attract more volume and participants:

“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,”

Uniswap is currently the world’s most popular token swapping protocol and decentralized exchange with over $1.8 billion in liquidity according to its analytics dashboard, Uniswap.info.

Binance Liquid Swap is the second venture into DeFi the company has made within a week. On September 1, the crypto exchange took aim at Ethereum with the launch of ‘Binance Smart Chain’, a new Ethereum smart contract compatible blockchain interoperable with the existing Binance Chain.

The company said the blockchain was optimized for DeFi, with low-cost transaction fees that can be as cheap as 1 cent. The network is capable of producing a block every 3 seconds and offers staking rewards for the BNB token.

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