Binance wants to be an enterprise service platform? CZ expects cloud services to become the largest source of revenue within five years
Text | Qin Xiaofeng Editor | Mandy Wang Mengdie
Produced | Odaily (ID: o-daily)
Text | Qin Xiaofeng Editor | Mandy Wang Mengdie
Produced | Odaily (ID: o-daily)
Exchanges have always been a highly competitive "place of contention" in the encryption trading industry. In the bull market, new exchanges are born almost every day, and soon they die in batches.
The word "liquidity" has always been a difficult dilemma for small exchanges, and the lifeblood that top exchanges strive to maintain.
Recently, Binance announced the launch of cloud services to provide technical and liquidity support for customers who want to create platforms related to blockchain technology.
Binance founder and CEO Changpeng Zhao said in an interview: "For small trading platforms, liquidity is a chicken-and-egg problem. Without liquidity, it is impossible for them to acquire users."
Why is Binance eyeing the cake of "enterprise service providers"? Can "providing cloud services" be the key to breaking the exchange competition? Several exchanges have launched similar plans before, but little progress has been made. How does Binance expand this market? Is the "cloud service" provided by Binance different from the existing technology service providers in the market?
Odaily will try to answer these questions with this article.
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Binance Cloud’s small goal: revenue surpasses that of the main site within 5 years
Binance is very busy in 2019, leading IEO, developing the contract market, OTC business, and acquiring dozens of companies, and has been expanding its boundaries vertically and horizontally.
However, the "open platform" plan and the promotion of "Binance Cloud" seem to be more valued than the general new branch business.
After the release of Binance Cloud, CZ spoke again, saying that in the next 5 years, Binance Cloud will replace Binance Exchange and become the largest source of revenue.
Many readers may not have a clear idea of Binance’s revenue. Based on the past 10 BNB burning records, Odaily calculated the revenue of Binance since its establishment, as shown in the figure below:
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Statistics show that since its establishment, Binance has accumulatively earned more than US$1.23 billion, with an average annual income of close to US$500 million. With the promotion of the Binance Ecosystem, the income of the main station is still rising.
To exceed this income in the next 5 years, it seems that Binance attaches great importance to this enterprise service business and must invest heavily.
What exactly is Binance Cloud
Simply put, Binance Cloud provides technical support to help users quickly open their own exchanges, and provides services such as OTC fiat currency transactions, spot transactions, and futures transactions. All the user has to do is to prepare audit materials, operation and maintenance, and funds, and wait for the audit to be approved before launching their own exchange.
On February 17th, Binance released an announcement to reveal the true content of "Binance Cloud": "Binance Cloud" is a one-stop cloud solution for specific fields. By providing partners and customers with Binance's cutting-edge technology, security The uniqueness and the high depth and liquidity of the whole station enable its partners to launch an independent digital asset trading platform through the platform.
Simply put, Binance Cloud provides technical support to help users quickly open their own exchanges, and provides services such as OTC fiat currency transactions, spot transactions, and futures transactions. All the user has to do is to prepare audit materials, operation and maintenance, and funds, and wait for the audit to be approved before launching their own exchange.
"After reaching a cooperation agreement and submitting information for verification, Binance Cloud Platform technicians will configure the background. Under normal circumstances, it will be officially launched within 3-5 working days." Binance responded to Odaily.
At the same time, Binance Cloud will launch its first fiat currency trading platform in early March 2020. Changpeng Zhao also revealed in an interview before that there are four other companies that are waiting.
This also means that for exchanges, Binance Cloud is not a one-shot deal like buying a system from a system service provider, but a long-term comprehensive service. With the development of small exchanges and the growth of the ecology, Binance can also make long-term profits.
The layout of Tencent Cloud and Alibaba Cloud deduces from the Internet industry the importance of cloud business and the possibility of expanding in the future.
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Where is the market demand
Although Binance attaches so much importance to it, how many people will pay for it?
Exchanges are the most competitive in the cryptoasset industry.
According to incomplete statistics from market websites, the total number of crypto exchanges in the world currently exceeds more than 10,000, and only the top 10 rankings are basically fixed. Most of them have a short life cycle, average technical strength, and lack of initial users With a cold start, these can all become potential users.
"This (opening an exchange) demand is particularly huge, because even in the cryptocurrency winter of 2018 and 2019, hundreds of new trading platforms were born every day." Zhao Changpeng said.
With the recovery of the encryption market and the increase in the frequency of user transactions, the income of the exchange has also increased, and the opening of an exchange will also usher in a new wave of demand.
According to Binance official data, its global users exceed 15 million; users cover more than 180 countries and regions around the world. Especially in Africa and Southeast Asia, it is easier to accept cryptocurrencies because they do not have the heavy burden of traditional finance. At present, they are considered to be a blue ocean by the encryption market, and Binance has already laid out.
"Binance Cloud is more inclined to serve fiat currency trading platforms, especially those platforms that have not yet established a firm foothold in the target area or community." Zhao Changpeng said that he hopes to have an impact on regulators around the world through Binance Cloud Exchange, "These platforms It will operate in compliance, build good relationships with regulators, and even exert a strong influence on them.”
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What’s so good about Binance Cloud
In fact, there are already many trading technology providers in China, such as Gangsheng Technology, ChainUP, BHEX, etc., all of which have won many orders in the bull market.
First, and most importantly, as a trading platform, Binance has high trading depth and good liquidity, which can fully solve the problem of insufficient liquidity on small trading platforms.
Feixiaohao’s data shows that Binance’s BTC trading volume ranks second, and other mainstream currencies rank in the top five, among which TRON ranks first.
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(Non-small data, screenshot time at 0:00 on February 20, 2020)
At the same time, the highest daily trading volume of the Binance Futures trading platform once reached 80% of the daily trading volume of BitMex, which can meet the needs of contract exchange users for depth. In addition, Binance revealed that C2C is also expanding rapidly and will expand to dozens of markets around the world this year.
Second, Binance Cloud users can directly connect with the exchange to get better and more timely services. Previous transaction technology providers played more of a middleman role.
Third, Binance started as an exchange and has a deep understanding of transaction logic, which some transaction technology providers cannot match. Throughout the process, Binance can help Binance Cloud Exchange avoid detours by showing its own experience.
Fourth, Binance is more secure. The currency circle is mixed with dragons and snakes, and fraudulent incidents emerge in endlessly. The background information and development capabilities of some trading system providers may not necessarily be able to identify them.
At the same time, the source code of the trading system is controlled by middlemen, which is like choking the throat for small exchanges, and the security protection ability is worrying.
In the entire encryption market, Binance's brand still has considerable credibility. As Binance Cloud Exchange, system security is guaranteed.
"Binance Cloud provides full custody services for partners' client funds, and users' assets are isolated from each other on exchanges. Our partners cannot directly touch user assets." Binance said that even cloud trading In the case of evil in the exchange, the assets of other users in the ecology are still absolutely safe.
Fifth, in addition to providing technical support, Binance also provides brand endorsement. All Binance Cloud Exchanges have been crowned with the title of "Binance" ecological partners, and Binance will also review them.
"We will strictly check the application. Partners need to provide overseas entities that comply with local laws, exchange names, logos, domain names, SSL security certificate files that comply with Nginx-type servers, background administrator mailboxes, and other exchange display materials. In addition , also requires partners to do a good job of compliance in their registered places.” Binance responded to Odaily.
In addition, Binance Cloud Exchange will also be subject to certain restrictions on listing coins.
"Currently, the currency has been listed on the Binance Exchange, and Binance Cloud partners can freely list the currency. The currency that is not listed on the Binance Exchange, the partner needs to submit it to the Binance Cloud Platform for review. After the review is passed, it will be launched soon. .” This move also broke the market chaos of the cloud exchange’s unscrupulous cutting of leeks.
This also means that in the end, investors are all formal trading platforms that have passed Binance’s review, which is easier to gain favor and is conducive to the exchange’s new expansion. It is a win-win situation for investors and exchanges.
In addition to technical support, Binance Cloud will launch other supporting services in the future.
He Yi said before that the trading platform itself does not have any particularly strong moat, and anyone can open a trading platform.
In addition to competing hard power, soft power is also indispensable, and this should be the focus of Binance Cloud's next step. Only in this way can we gain more market share.
Generally speaking, Binance chose to do this after careful consideration, and it matches the current market situation and its own advantages.
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The "open platform" has accumulated strength for two years
In addition to revenue, the Binance cloud plan can also bring real traffic and depth to Binance itself, allowing the ecosystem to run more benignly.
The Binance team is not omnipotent, and they are not familiar with the local culture in some regions, and cannot be well connected to the local banking service system. At this time, by opening Binance Cloud Exchange and maintained by local operators, it can help Binance reach more incremental users.
"By providing Binance Cloud services, we are responsible for technology, security and liquidity, and our partners are responsible for users and local fiat currency access, so that we can accelerate the process of global popularization of cryptocurrency and will inevitably reach more The traffic channel.” Binance is not shy, “Whether (Binance Cloud) can help Binance build a competitive moat is worth looking forward to. More importantly, the sound development of Binance Cloud will create a new era for the cryptocurrency field.” Opportunities for new trading models will further promote the prosperity of the industry."
Binance said that the launch of the Binance Cloud project was in October 2019. However, the program dates back as far as two years ago.
In June 2018, "transaction is mining" was in full swing, detonating the encryption ecosystem.
At that time, Binance launched the "Digital Asset Exchange Open Alliance Program". Binance promises that members participating in the alliance will have access to the matching system, management system, cold wallet system, hot wallet system, fund settlement system, global multilingual customer service support, and global customer identification and anti-corruption services that Binance has accumulated in the field of digital asset transactions. Experience support in the money laundering system; in addition, Binance will also provide alliance members with full-process solutions such as R&D, operation and maintenance, and provide Binance's depth and liquidity.
This is the early prototype of the "Binance Cloud" plan. Only limited by technology and policies at the time, the plan was not fully formed in the end.
"When we proposed the 'Digital Asset Exchange Alliance Program' in 2018, we vaguely felt that this should be the right direction. After nearly two years, we finally turned this 'plan' into a more specific and operable project. That is the 'Binance Open Platform'." Binance responded to Odaily.
In fact, the "Binance Open Platform" plan this time is not limited to "Binance Cloud", but also has two main businesses: global brokerage project and C2C business:
Global Broker Project: Support the access of contract brokers. Binance will provide brokers with an order matching system, account management system, and settlement system. The trading platform can get 60% of the commission profit, higher liquidity and market depth. As an innovative "currency broker" business in the industry, it will open Binance's trading services to everyone, and it can also be understood as a Binance agent. The broker (broker) model is suitable for those who have a user base, traffic, and a certain team base. They can access trading services more easily and faster, and even your users do not need to perceive Binance.
C2C business: Binance C2C platform provides users with cryptocurrency trading services through customer-to-customer (C2C) or business-to-customer (B2C) models, and is committed to lowering the threshold for users to enter the cryptocurrency field and continuously improving user service experience.
