- Binance has launched a new token pegged to bitcoin
- The token pair will be available on binance.com
Binance is known to be one of the most popular and innovative companies within the cryptocurrency space today and made headlines recently for such developments as their upcoming US exchange . One thing they have shown interest in the addition of tokens to their roster, especially stablecoins, as they announced their own GBP-pegged stablecoin earlier this year. Now they have introduced a whole new type of stablecoin as they announced on June 17 that they will be introducing a bitcoin-backed token on Binance chain and will also potentially be traded on Binance DEX. This is part of their efforts to introduce crypto tokens on Binance chain and this new token is only one of many that will be coming in the near future.
According to the official announcement, the new token BTCB is 100 percent backed by a native coin which is held in Binance reserves and the reserved addresses are publicly disclosed so that anyone can audit them. The use of blockchain also has the advantage that it is a much easier way to audit a crypto reserve as opposed to a traditional bank balance.
A trading pair will be created on the official Binance website between the stablecoin and the native token, in this case, BTCB/ BTC.
Any large buy orders will be maintained on the trading pair on binance.com and there will be a price spread of 0.1 percent. This way, conversion from the pegged token to the native token will be easy and if a buy order is filled, a new order will be placed while an equal amount of funds will be deposited from the reserved address unto binance.com
No fractional reserve
The sum of the buy order and the funds on the published reserve address will be larger than the total supply of the pegged token and this way there is certainty of 100 percent backing at any given time which has been a critical issue in the crypto community following the revelations regarding tether.
According to Binance, the biggest benefit of this development is that Binance DEX traders will have access to coins that have their own blockchain and aren’t native to Binance chain. A larger token roster for Binance DEX will also lead to more traders coming in and thus, an increase in trade volume and liquidity and the overall value of Binance DEX will be achieved.
“While this approach is more centralized than atomic swaps, we believe it provides a higher degree of ease-of-use to most traders,” the post says, noting that this centralized approach is not exclusive to cross chain atomic swaps or decentralized approaches.