The largest cryptocurrency exchange in the world, Binance, has created its own centralized version of an automated market maker (AMM) pool, named BSwap, or Binance Liquid Swap.
Launched on September 4, Binance’s take on the Uniswap decentralized exchange (DEX) will bring token swap functionality, and allow users to provide liquidity in return for an annual percentage yield and a share of the protocol’s trading fees.
Binance’s own Uniswap clone launches with three crypto assets initially available for trade: Binance USD (BUSD) Dai (DAI) and Tether (USDT), according to an official announcement.
Users will be able to deposit the coins listed above and start earning interest in return for providing liquidity. Binance says the use of an automated market-making protocol will provide lower fees, stable prices, and instant liquidity. For the first month following the launch of BSwap, trading fees will be cut to 0.04%, before returning to the standard rate of 0.1%.
AMMs work by automating the trading process so that no two traders ever have to wait to find each other. Instead, trades are executed via smart contracts, and private reserves are replaced by voluntary liquidity pools.
Binance’s latest foray into the decentralized finance (DeFi) space follows its recent listings of DeFi forks, Sushi (SUSHI), and DFI.Money (YFII) – both forks of Uniswap and yearn.finance (YFI) respectively. Wrapped Bitcoin (WBTC) – an Ethereum-based token that’s interchangeable with Bitcoin – was also listed in September.
Binance, like many other centralized exchanges, is being forced to rapidly adopt DeFi tokens or else risk being left behind by crypto’s hottest new item. However, the eagerness of centralized exchanges to adopt technology which was created for the sole purpose of making them obsolete could end up being wildly misplaced.
Even after a near 20% shortfall in trade volume in the past 24 hours according to its dashboard, Uniswap still records more daily trade volume than all but the largest centralized platforms. And with $1.9 billion worth of liquidity locked in – even despite numerous Uniswap clones – Binance will be hoping to siphon off some of that custom.