Binance looks to cement its industry leadership with free transactions
This article comes fromFT, original author: Scott Chipolina
Odaily Translator | Nian Yin Si Tang
Odaily Translator | Nian Yin Si Tang
Cryptocurrency exchange Binance is stepping up efforts to grab market share by expanding free transactions to include Ethereum, a move that comes amid one of the most anticipated events in the crypto market's short history - Ethereum before the merger.
The move to offer free ethereum transactions ahead of the ethereum merger underscores that Binance is in a new bear market attempt to lure customers to its platform. Earlier this year, Binance CEO Changpeng Zhaoexpressexpress
Some 90% of Binance's total revenue comes from transaction fees, which fluctuate with the price of bitcoin and other cryptocurrencies.
This summer, Binance began offering free cash trading on several bitcoin trading pairs, including euros and British pounds. In the ensuing eight weeks, BUSD’s market capitalization rose 8 percent to $19 billion, according to data compiled by CryptoCompare.
BUSD is one of the largest stablecoins in the world, trying to compete with Tether (USDT) and Circle (USDC).
Binance's move "may indeed represent some sort of 'go-to-market' strategy," said Sipho Arntzen, Next Generation Research analyst at Julius Baer.
Binance's latest move will last until September 26. It described the merger as "an important milestone for Ethereum and the larger Web3 ecosystem, and all users should have the opportunity to be a part of it". Widely used by cryptocurrency developers, Ethereum aims to make blockchains more useful than simple transaction databases.
Before Binance launched free transactions, the price of Bitcoin plummeted from nearly $70,000 to a low of less than $20,000, while the failure of the stablecoin TerraUSD triggered a sell-off, and several well-known companies in the industry were affected and even went bankrupt, including the lending institution Celsius. and BlockFi and the hedge fund Three Arrows Capital.
"This (free trading) approach has also appeared in the traditional financial space in the past. In this space, newcomers with sufficient funds hope to take advantage of the temptation of free commission trading for a limited time and dominate." CEO of brokerage firm GlobalBlock Digital Asset Trading Officer Rufus Round said.
Binance said it will "miss some fees," but the company "continues to have strong reserves."
Binance has strengthened its leadership in the cryptocurrency market this year. The exchange has a 55 percent share of the cash trading market, up nearly 10 percentage points since January, according to CryptoCompare. Its closest competitor, Coinbase, has less than 10 percent of the market.
In response to the plunge in digital asset prices, rival crypto exchanges have begun reconfiguring their long-term business strategies. Coinbase said nearly a fifth of its revenue in the second quarter came from services and subscriptions, even as the company posted a net loss of $1.1 billion.
“The temporary waiver of fees on major trading pairs can be seen as a concession to attract more traffic in the current low volume environment, (Binance) will increase traffic indirectly through other trading pairs and other product lines and products. Benefit,” said Peter Habermacher, CEO and co-founder of cryptocurrency-focused investment firm Aaro Capital.
However, FTX has put the rest of the crypto industry on notice as it struggles to attract clients with a string of high-profile sports sponsorships and an option to buy into struggling BlockFi.
"I can imagine that (Binance) is paying attention to FTX's expansion into various fields and thinks they need to step up their efforts." said Ilan Solot, a partner at venture capital firm Tagus Capital.
Even so, Julius Baer’s Arntzen said the free trades could be a sign that Binance expects the industry to remain a small market in the near term.
