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Review on Binance DEX by Jerry Siegel

Binance DEX Complete Overview

Binance was founded in 2017 and today it's the largest cryptocurrency exchange. Within a few months after its launch, the exchange gained immense popularity and was one of the most striking examples of the successful Ethereum-based ICOs in the history.

Binance DEX is a decentralized exchange developed by Binance. Binance DEX operates on Binance's own blockchain (Binance Chain), which is recording and confirming all internal transactions and exchange operations. Testnet was launched on February 2019.

Binance Chain:

Binance blockchain launched on a fork of the Cosmos blockchain. Instead of the standard SDK, Binance decided to launch on the Cosmos fork under the name Tendermint Core, which allows it to scale vertically to meet the needs and volumes of DEX. The blockchain itself is not very complex one and is designed more for high scalability than for an abundance of different features, such as smart contracts etc.

Moreover, technically, it is not Bitcoin itself that goes through Binance Chain, it's the wrapped BTC.B token, which makes transactions go faster than if it were original BTC. When the BTC.B token is withdrawn to the bitcoin address, the same amount of BTC is converted, while the funds in BTC.B are debited from user wallets.

Delegated Proof-of-Stake (DPoS):

Binance uses DPoS and the choice of protocol is obvious. Several nodes are selected, which are confirming transactions while receiving gas fees. Thus, the Binance blockchain is more comparable in structure to XRP or NEO. Yes, there is little decentralization in this, but all transactions go through quickly.

"FUNDS ARE SAFU" (really?):

Now all funds will be stored on the addresses of the users themselves. When registering, you are offered to unlock the wallet with one of 4 options. There is an option of integration with hot and cold wallets like Trust Wallet and Ledger Nano. All funds and private keys will be kept by users, which increases the security of funds (on paper).

Here's some things that you should know, if you are considering trading on this exchange:

-How does DEXes work?

Each action on Binance DEX (Buy, Sell) is assigned a Txhash, which is recorded on the Binance Chain blockchain. Each order is assigned a Txhash, which can be traced on the explorer. Binance Chain is already able to scale their blockchain to the extent of the current transaction volumes of the centralized version.

-What about tokens liquidity?

Given that this is Binance, there should be no problems with liquidity and trading volumes. We will see how the things will go in the future.

-Listing tokens?

All coins and tokens will go through a tight selection by Binance DEX, with an increased listing fee. All this is done in order to reduce the number of scam projects and ensure high liquidity of assets on the exchange.

-Launching tokens on Binance?

Tokens can be issued on the Binance blockchain. To issue a token, it is not necessary to create a smart contract, you just need to specify a few basic parameters, everything is extremely simple. At the expense of applicability: Binance can scale, but the tokens themselves will be extremely simple (compared to smart assets on Ethereum, Waves etc).

My Overall impression:

Overall, I have good expectations for Binance DEX. This is a huge step forward for the entire crypto community. Entering the DEX party, Binance are providing a higher level of protection, while maintaining liquidity and high volumes, which are very rare for DEXes. Binance DEX may very well serve as the gateway for institutional investors in the future.

Pros & cons

  • Token issuance is available. Specify a few basic parameters and you good to go. But the tokens themselves will be extremely simple, if we were to compare them with Ethereum-based tokens.
  • Some people find it discouraging that users can only hold BTC.B and not the real Bitcoin on Binance DEX. And we have to rely on Binance entity to process BTC.B into BTC withdrawals. Some even might say that the whole point of DEX is neglected because of this. But I guess current solutions is not advanced enough to offer instant decentralized exchange of the real assets. This kind of "synthetic" solutions is the choice of many DEXes.
  • Low volume by the centralised standards. But by the DEX standards it's pretty good.
  • By the utopian blockchain standards all we got is famous CZ's "FUNDS ARE SAFU" and low decentralisation levels. But the work continues and this may improve over time. I will update my review then.