What is Binance?
What is Binance?
Binance is an ecosystem that includes a centralised cryptocurrency exchange with the world’s largest trading volume, the BNB Chain blockchain platform, an education hub, investment and charity funds, an NFT marketplace and other products.
What is the Binance exchange?
The first and main product of Binance is its cryptocurrency exchange, which launched in 2017.
It offers a range of instruments: spot trading in digital assets and margin trading, derivatives, and a section for P2P exchange. Users can also earn passive income via staking and yield farming, issue a debit card, and access other services.
According to the official site, as of April 2022 Binance supports more than 600 cryptoassets and over 40 fiat currencies. The platform has 90 million registered users.
In a survey conducted at the end of 2021, the exchange was the most popular among ForkLog readers — more than 70% of respondents traded on it.
Binance does not disclose financial data. Various estimates put its 2021 revenue at $14.6bn–$20bn. According to media reports, in 2021 the company’s internal valuation was $200bn.
The exact number of employees is unknown, but in early 2022 CEO Changpeng Zhao said the remote workforce numbered about 4,000.
Who founded Binance?
Binance was founded by Changpeng Zhao. He is the company’s chief executive and its largest shareholder.
Zhao was born in Jiangsu, China, later moved with his parents to Canada, and graduated from McGill University. After graduating he interned at the Tokyo Stock Exchange, where he developed software for high-frequency trading. He then worked for several years at Bloomberg.
In 2005 Zhao founded his first company, which developed algorithms for high-frequency trading.
He entered the crypto industry in 2013, becoming one of the first employees of Blockchain.com. He served as chief technology officer at the OKCoin exchange.
Since Binance’s launch in 2017 Zhao has served as its chief executive.
In 2022 Changpeng Zhao topped Forbes’s ranking of the richest figures in the blockchain industry. The magazine put his wealth at $65bn.
Is Binance safe?
Binance guarantees users compensation in the event of large-scale hacks of the exchange. In 2018 the company created a special fund called the Secure Asset Fund for Users (SAFU). From it, in particular, stolen cryptocurrencies worth $40m were compensated in 2019.
A share of users’ fees is allocated to SAFU. According to official data, as of the end of January 2022 the fund stood at $1bn. The fund’s assets are held in BNB, BUSD and BTC.
What is BNB Chain?
BNB Chain is an EVM-compatible blockchain launched by Binance in 2019. In February 2022 it became a single blockchain platform after the merger of BNB Beacon Chain (formerly Binance Chain) and BNB Smart Chain (formerly Binance Smart Chain).
BNB Chain uses a Proof-of-Staked Authority consensus mechanism and is geared towards decentralised applications with large user bases. The network’s main development areas are decentralised finance (DeFi), non-fungible tokens (NFTs), blockchain gaming (GameFi) and metaverse applications (MetaFi).
At the end of 2021 Binance launched a $1bn fund to support BNB Chain. Developers aim to bring the total number of users of applications built on this blockchain to 1bn.
Which popular applications run on BNB Chain?
- PancakeSwap — a decentralised exchange (DEX) based on an automated market maker. It ranks third by trading volume among DEXs.
- Venus — a protocol for creating decentralised markets and issuing tokens and algorithmic stablecoins.
- Era7: Game of Truth — a tactical strategy game using NFT cards.
- Cream — a lending protocol that allows borrowing tokens issued on BNB Chain.
- Biswap — a decentralised exchange.
What are BNB and Binance USD (BUSD)?
BNB is the native coin of the Binance ecosystem. It is among the top 10 by market capitalisation. It runs on the BNB Chain network.
Main uses of BNB:
- Discounts on trading fees on Binance.
- Payment of transaction fees on BNB Chain.
- Staking.
- Payment for goods and services at selected services and online stores.
- Participation in token sales on Binance Launchpad.
- Payments with the Binance Visa Card.
- Using liquidity pools and decentralised protocols on BNB Chain.
- Donations to Binance Charity.
Binance USD (BUSD) is a stablecoin project founded by Binance and US company Paxos. The asset is pegged to the US dollar at a 1:1 ratio. BUSD ranks fourth by market capitalisation among stablecoins. It operates on BNB Chain and Ethereum.
The price stability of BUSD is ensured by dollar reserves held by a specialised company operating in the United States. It is regulated by the New York State Department of Financial Services and undergoes monthly audits. The amount of reserves matches the number of Binance USD stablecoins in circulation.
What other products are part of Binance?
In addition to the crypto exchange, the Binance ecosystem includes:
- Binance Labs — a business incubator that supports entrepreneurs, projects and communities developing blockchain start-ups using BNB Chain. Its portfolio currently includes more than 120 projects.
- Binance Academy — an educational portal with a library of tutorials and videos on trading digital assets, blockchain technologies, projects and companies.
- Binance Charity Foundation — a non-profit charitable organisation that runs programmes to fight poverty.
- Binance Launchpad — an exclusive platform for token sales. Major projects launched on Binance Launchpad include Axie Infinity, The Sandbox and Celer Network.
- Binance Research — a crypto-market research unit that publishes studies and provides professional data.
- Binance NFT — a marketplace featuring all types of digital artworks and collectibles.
- Binance Card — a Visa crypto debit card.
- Binance Pay — a cross-border cryptocurrency payments service.
Binance has also acquired several crypto projects that continue to operate, retaining their brands and autonomy:
- CoinMarketCap — the most-visited aggregator of digital-asset trading data.
- Trust Wallet — a cryptocurrency wallet supporting a large number of digital assets.
- WazirX — India’s largest crypto exchange.
Why is Binance criticised?
Binance provides access to trading for users in almost all countries. From the start, however, it has faced criticism from authorities and regulators in certain jurisdictions for lacking the necessary licences and permissions.
The company does not disclose its legal structure, the exact number of offices or staff. Founder Changpeng Zhao and company representatives long denied that it had a headquarters.
Back in 2018 the platform announced a “move” to Malta, then dubbed the “blockchain island” for its favourable crypto laws. However, in early 2020 the Maltese regulator said Binance did not hold a licence to trade digital assets.
In 2019 US authorities officially banned Binance from operating in the country. It then opened a separate platform, Binance US, for users in the United States. In 2022 American law enforcement began an investigation into the alleged links between Binance US and trading firms affiliated with Changpeng Zhao.
Throughout 2021 Binance faced a barrage of criticism from regulators in countries including Malta, the Netherlands, Italy, Poland, Singapore, South Africa and Malaysia. Officials often warned citizens that the company lacked the necessary permissions.
Amid the regulatory pressure, the head of Binance published an open letter stating that the digital ecosystem would be transformed into a regulated enterprise with a centralised business structure. He also outlined plans to localise services in some countries and to deepen cooperation with law enforcement.
Further reading
What are decentralised exchanges (DEXs)?
What are short and long positions?
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