Caused controversy: Binance launched its own leveraged token two months after FTX was delisted

Binance officially launched its own developed leveraged tokens on May 12 after delisting its own invested FTX leveraged tokens for “protecting users”, triggering discussions and controversies in overseas media.

Founded in early 2019, FTX is a digital currency derivatives exchange that provides services such as contracts and leveraged tokens, with a valuation of US$1 billion. After receiving investment from Binance, its leveraged tokens were fully listed on the Binance Exchange.

Leveraged Token is an innovative product of FTX, that is, a currency with its own leverage. For example, FTX’s BULL is three times long BTC, and FTX’s leveraged token BEAR is three times short BTC. At present, FTX has listed 130 leveraged tokens. Of course, there is still a very complicated automatic adjustment mechanism behind it.

In March 2020, Binance delisted FTX’s leverage because it was found that users did not understand the operating mechanism of FTX’s leveraged tokens. After listening to the opinions of the community, it had to be delisted in order to protect users.

However, just less than 2 months later, Binance listed its own leveraged tokens. However, compared to FTX, Binance emphasizes the security of its own leveraged tokens, such as:

1. Binance Leveraged Token (BLVT) is developed by Binance in response to user needs and user feedback. Compared with other leveraged tokens not issued by Binance, Binance Leveraged Token reduces the risk factor and fee rate, which is more in line with the encrypted asset market demand.

2. The target leverage ratio of Binance leveraged tokens is kept between 1.5 times and 3 times. The true target leverage ratio of Binance Leveraged Tokens is undisclosed and constantly changing.

3. At present, Binance only has two leveraged tokens: BTCUP (long BTC) and BTCDOWN (short BTC).

Larry from Theblock had discovered that Binance was planning to list BTCUP’s leveraged tokens as early as May 8, and made complaints in a consistent acerbic tone.

Previously, FTX CEO Sam also expressed his protest in the form of likes. The tweet he liked said: It would be funny if Binance would launch such a fraudulent two-way option after delisting FTX's leveraged token.

In all fairness, Binance’s leveraged tokens are relatively lower-risk than FTX’s products, but as a company invested by Binance, you can also choose to communicate with FTX and launch some low-risk products first. In addition, leveraged tokens are created by FTX after all. Binance first delisted FTX products and then listed its own products. It will inevitably make the outside world think that it is not only imitating, but also deceiving customers.

The "imitation" of Chinese cryptocurrency companies has aroused strong resentment in overseas communities. For example, there is sympathy in China for the theft of Dforce, but overseas voices are mostly "gloating" because of suspected code plagiarism. If things go on like this, do companies still have the motivation to innovate?