CEX crisis, Binance "lie down and win"
Author | Qin Xiaofeng
Editor | Hao Fangzhou
Produced | Odaily
Author | Qin Xiaofeng
Editor | Hao Fangzhou
Produced | Odaily
After suspending the withdrawal for 42 days, OKEx reopened the withdrawal service yesterday, and "Happy Beans" finally returned to real money.
But the resulting industry repercussions did not end. After this battle, many centralized exchanges fell into a crisis of trust, and runs, thunderstorms, and escapes emerged one after another.
During this turmoil, the business volume of Binance increased instead of falling: a large number of BTC flowed into Binance from major mainstream exchanges; Binance’s contract holdings once climbed to the top in the world; the platform currency BNB has continued to rise recently, hitting a new high this year. Many people joked that Binance is "lying down and winning".
Behind Liyingying is not only the blessing of fortune, but also inseparable from the "internationalization" and "compliance" strategy that Binance has always adhered to.
In the future, with the tightening of domestic regulation, the situation of exchanges will be more difficult. Can Binance continue to be a safe haven for assets?OKExsecondary title
1. A crisis of confidence broke out in CEX
October 16,
The announcement stated that some persons in charge of the private key are cooperating with the public security organs in the investigation and are in a state of being out of contact, resulting in the inability to complete the authorization. Therefore, it was decided to suspend the user's withdrawal of coins on the same day.
For the first time in the past two years, major exchanges have suspended withdrawals. Moreover, looking around the entire history of the development of the encryption market, this is one of the few accidents. Coupled with a series of incidents such as Zhao Dong's loss of contact before, it caused panic in the entire market.
The first problem caused by OKEx's suspension of withdrawals is the security of private keys. Previously, the industry generally believed that the private key authority of a centralized exchange should not be controlled by a single person, but multi-signature, threshold signature (TSS) and other technologies should be used to prevent single points of failure. But this incident seems to show that the reality is not as full as the ideal.
In order to verify the security of their own private keys, many exchanges such as Binance and Huobi spoke out immediately.
In terms of Huobi, co-founder Du Jun returned to Huobi to prove to the outside world the security of Huobi’s private key: “Huobi currently has 15 private key controllers, and adopts a multi-signature mechanism. problems and affect the security of platform funds.”
The founder of Binance, Changpeng Zhao (CZ), also posted that the Binance team has successfully held "fire drills" for the loss of key managers many times to ensure the security of all Binance users' assets.
“From the beginning, we specifically made sure that Binance’s funds were ‘not dependent on CZ’ because I travel a lot and are on airplanes a lot,” CZ said.
"Do not depend on CZ", this is the rule established by Binance in the past two years. In an exclusive interview at the end of 2019, CZ told Odaily that as the CEO of Binance, he controls the cold wallet, and his actual authority is less than one-fifth, and even his background management authority in Binance has been deleted.
Although centralized exchanges are trying their best to prove their innocence, they still cannot prevent the outbreak of a large-scale crisis of trust.
On October 21, DragonEx (Dragon.com) announced that due to the crisis of trust caused by the OKEX incident, it caused a run, and the level of platform reserves deteriorated rapidly. The team made a decision to suspend the recharge and withdrawal services of all currencies on the platform. In addition, some small exchanges also ran away after thunderstorms one after another, causing heavy losses to users.
Huobi, which is also a leading exchange, also suffered a shock and was not spared. From time to time, various "gossip" appeared on Weibo, claiming that Huobi executives were taken away to cooperate with the investigation, and Du Jun later refuted the rumors.
Due to the vortex of public opinion, other CEX platform coins are also affected. After the suspension of withdrawals from OKEx, HT dropped significantly.
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(HT price performance, sourced from Huobi official website)
Interestingly, after OKEx officially opened withdrawals yesterday, both Huobi and Binance offered an olive branch to OKEx users, intending to seize its users:
Binance recharges to send Tesla, 50 Ipnone12s, and 100,000 US dollars cashback coupons; Huobi launched the Global Station VIP Lighting Plan", users can quickly enjoy VIP preferential activity rates through asset recharges.
What the final effect will be depends on the announcement of the data results of the next stage.
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In this crisis of trust, most exchanges have been hit hard. But relatively speaking, Binance was less affected, and its business volume increased instead of falling.
In terms of contracts, the trading volume of Binance continued to rise and hit a new high.
According to Skew data, the daily trading volume of BTC on Binance rose from US$1.2 billion on October 16 to more than US$16 billion (on November 18), with a peak increase of more than 1233%. During the same period, BTC positions also rose from US$494 million to 1.2 billion US dollars, a cumulative increase of more than 140%. As follows:
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(Changes in the positions of the three major exchanges in the past three months, source Skew)Moreover, Binance's overall contract daily trading volume has also hit new highs one after another: on November 6, it exceeded 20 billion US dollars; on November 25, it exceeded 27.4 billion US dollars.
Additionally, Binance Asset Reserve is on the rise as a new safe haven.It shows that after the suspension of withdrawals from top exchanges, Binance’s average daily net inflow of BTC exceeded 2,000, not falling but rising.
Coindesk's calculations show
, From November 2nd to November 11th, a total of 18,652 bitcoins flowed into Binance from Huobi. Previously, from August to early November, the flow of Bitcoin was reversed, and it has been flowing from Binance to Huobi.
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(Bitcoin flowing from Huobi to Binance reached an all-time high since November 2, source: CrytoQuant)
Beijing Chain’s Chainsmap monitoring system found that one hour after the OKEx exchange reopened at 4:00 p.m. yesterday, BTC outflowed 5681.79 BTC, and Binance ranked first in the inflow of exchanges; outflow of 47087425.32 ERC20 USDT, Binance also ranked The top three inflow exchanges.
According to data from CoinHolmes, as of 10:00 a.m. today, crypto assets withdrawn from the OKEx exchange mainly flowed to exchanges such as Binance, Huobi, and Bitfinex. Among them, nearly US$250 million worth of mainstream encrypted assets flowed from OKEx to Binance, including 12,549 BTC, 29,539.773 ETH, and 13,396,736 USDT.
In 2019, Binance created a considerable wealth effect with IEO, and also promoted the platform currency BNB to achieve a 600%+ increase in the year. The market value once jumped to fifth place, becoming the most shining new star last year.
At the beginning of this year, many interviewees told Odaily that the benefits of BNB have been exhausted, and this year there will be no more BNB in the arena of platform currency. However, since the beginning of the year, BNB has increased by 143%, surpassing OKB (126%), HT (56%) and other mainstream platform coins.
At present, BNB is still the platform currency with the highest market value, and its leading position has not been shaken.
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3. The "controversial" Binance
Amid industry turmoil, why choose Binance as a safe haven for assets?
"In the past, everyone always said that Binance is a homeless person, and Zhao Changpeng is also a foreigner (Canadian nationality), and Binance is not safe. Now I find that those founders are useless in China, and they are frozen for you every minute. No matter how much you earn Money, it’s useless if you can’t bring it up. Looking back, Binance is a little more reliable.” Users who once dismissed Binance, this time they could not escape the “law of true fragrance” and started to download the Binance APP for transactions. And, there are many such examples recently.
In fact, most users are most concerned about the safety of assets.
Under the situation of stricter domestic regulation, the compliance of exchanges is still far away, and most domestic platforms are still in a gray area, which is full of crises. Binance, which is located overseas, is undoubtedly a good choice. After all, even without the Chinese market, Binance can still live well by relying on overseas markets, and users' assets are safe.Even if some exchanges follow Binance and choose to go overseas, they may face unacceptable conditions. Compared with Binance, which has already taken root in mainstream regions, it is difficult for these exchanges to go overseas. For example, in the United States, Binance has already established Binance US, which not only won the MSB license in the federal area, but also won the cryptocurrency regulatory licenses in multiple states.
"Forbes"
According to the report, in possession of a document compiled by Binance executives (called the "Tai Chi Document"), Binance "conceived an elaborate corporate structure designed to deliberately deceive regulators and take cryptocurrency investment from the United States." profiteering secretly".
Changpeng Zhao immediately tweeted to deny Forbes' report, and then Binance filed a lawsuit against Forbes and its two reporters in New Jersey, USA. No new progress has been made so far.
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4. Innovation and Efficiency
In the past three years, from spot products to futures, options, OTC, mining pools, cloud services, and public chains, Binance has built a diverse business system from zero to one. Binance is not just a trading platform, but a comprehensive blockchain enterprise.
Take the Binance public chain as an example. In December 2018, it announced the development of its own public chain, the Binance Chain. In April 2019, the mainnet of the Binance Chain was officially launched, and the DEX based on the Binance Chain was also officially launched at the same time. In May of this year, Binance Chain released the Binance Smart Chain again, which supports EVM, is compatible with Ethereum, supports cross-chain interoperability, and is fully connected with Binance DEX; in September this year, the Binance Smart Chain mainnet was launched to support the development of various DeFi projects.
In addition to efficiency, "innovation" is the only magic weapon for Binance to seize the market.
In 2019, Binance launched IEO for the first time, which attracted many exchanges to imitate. However, after the model was overthrown, many projects were broken and encountered rights protection, and disputes continued. Since then, Binance has slowed down the IEO progress, selected more high-quality projects, and avoided disputes. Even so far, the return rate of the Binance main station and the Binance DEX IEO project has always been at the forefront. As follows:
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