Leading crypto exchange Binance is reportedly ready to launch its decentralized exchange (DEX), a move that will see the platform migrate its Binance Coin (BNB) token off the Ethereum blockchain.
The news came from Binance CEO Changpeng Zhao, who revealed the move during a Q&A live stream on February 7. He said that the firms DEX’s testnet, which is built on Binance Chain would launch within the next one or two weeks.
Binance launched its BNB token via an initial coin offering (ICO) in 2017, raising $15 million. The ERC20 token is being migrated to the Binance Chain where it will be used as ‘gas’.
Zhao noted that they built Binance Chain using Cosmos’ Tendermint protocol as its architecture provided what the Binance team wanted.
In his explanation, the exec noted that the exchange’s developers forked Tendermint and then “chopped” several features off, including smart contracts.
This is because Binance prefers to have a platform with a high throughput than one that is merely feature-rich.
The network will utilize the Delegated Proof-of-Stake (DPoS) and Byzantine Fault Tolerant (BFT) consensus protocols and has an interface that allows project teams to issue new tokens.
Projects seeking to list tokens on the Binance Chain will pay a listing fee initially set at about $100,000, with CZ saying that the high listing fee is meant “to reduce the number of spam or scam projects.”
Token issuers will have the option of paying the fee via their new tokens or with BNB, with the latter having a discount.
Although the upcoming DEX is non-custodial, Binance is set to be in control of the network and its validators, at least in its early stages.
According to Zhao, the testnet will be launched with 11 validator nodes only, but that number will increase over time to reduce the exchange’s influence.
Changpeng said that, although Binance Chain is likely to have fewer validators than it is on a few other public blockchains, the key factor remains performance. Each of the nodes “will be rather large” he added.
Notably, Binance Chain’s block generation will be one block per second and the network is touted as capable of handling “a couple thousand” transactions every second.
As CZ put it, the DEX’s high throughput means that the platform can, at the moment, easily handle the existing transaction volume on Binance.com.
With scaling to higher transactions per second possible, the Binance DEX is expected to succeed where other decentralized exchanges have struggled over recent months.
Poor scaling and lack of liquidity have been cited as reasons why many decentralized exchanges continue to struggle as volume drops.
Binance wants to change the scenario with its platform, even as blockchain research firm Diar, released a report showing that DEX volumes in January 2019 have dropped to a new low of $49 million.
Early access for the DEX has already been given to wallet developers, blockchain explorers among other tools, CZ said.
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