Written on the 6th Anniversary of Binance Will there be a warm spring after the crypto winter?

On Binance's 6th Anniversary Will there be a warm spring after the crypto winter?

Binance will celebrate its sixth birthday tomorrow, but looking back at the past year, the road has not been smooth.

By: Babywhale, Foresight News

On July 14th, Binance, founded in 2017, will celebrate its sixth birthday. Six years ago, Changpeng Zhao founded Binance. Although Binance was not outstanding compared to other leading trading platforms at that time, it quickly became the world’s largest cryptocurrency exchange as a large number of new users poured in, thanks to its firm execution of internationalization strategy.

In the early years, major exchanges issued so-called “platform coins”. Among them, Binance’s BNB became one of the most successful “platform coins” with the support of LaunchLianGuaid and Binance Smart Chain (now known as BNB Chain). LaunchLianGuaid launched projects such as Polygon (MATIC), STEPN (GMT), Axie Infinity (AXS), and The Sandbox (SAND), which performed well in the previous bull market.

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On the other hand, BNB Chain has also become a force to be reckoned with in the public chain field. According to DefiLlama data, at the time of writing this article, the total locked value of BNB Chain is close to 3.5 billion US dollars, second only to Ethereum and Tron. This data reached a peak of nearly 22 billion US dollars in May 2021.

Although the achievements made in the past are obvious to all, the past year has been a bumpy one for Binance and the entire Web3 field.

Layout in the “bear market”

Since the beginning of 2022, with the sharp decline in cryptocurrency prices, there has been concentrated liquidation of market participants with high leverage. We witnessed Terra going from a market value of billions to zero overnight, and also witnessed the collapse of FTX. Although Binance also experienced a significant outflow of funds due to extreme market panic after the collapse of FTX, it ultimately withstood the pressure, completed all redemptions, increased market confidence, and prevented further market collapse.

Many people may have been involved in the subsequent story, and the entire market seems to have lost its direction and become unusually quiet. But many people seem to overlook one thing, which is that this moment should be a rare opportunity.

When the market fell into panic last year, Binance launched a $1 billion “Industry Recovery Fund” to support projects or companies that encountered difficulties. The fund received support from Tron DAO, Huobi, GSR, and others. Since then, there has been a continuous stream of projects applying for support from the fund. Currently, companies including the Korean exchange GoLianGuaix have received support from the fund.

In addition to providing financial support for projects in the industry, Binance has also been committed to exploring new increments for the industry and cooperating with institutions worldwide for related educational activities. In late May of this year, Forbes reported that Binance launched a blockchain-related course project at Austral University in Argentina. The content includes the basic principles of blockchain and cryptocurrencies, decentralization, Web 3.0, metaverse, and trading and risk management. There are many similar initiatives, which are not listed here one by one.

In addition, during the time when the Web3 market financing plummeted, Binance Labs still maintained a relatively high investment frequency. In the past year, Binance Labs has led investments in projects including Web3Go, smart contract platform Neutron, NFT gaming platform Gameta, and more. From an investment perspective, Binance Labs’ investments in the “bear market” are more inclined towards platforms, infrastructure, security, and other directions, laying the foundation for another potential outbreak in the future. According to Binance’s 2022 year-end review report, Binance invested over $500 million through Binance Labs to support Web3 and blockchain innovation.

As for BNB Chain, Binance has launched the zkBNB, a zero-knowledge proof-based BNB Chain expansion solution, which aims to provide storage services and serve as decentralized storage infrastructure for a third chain apart from BNB Beacon Chain and BNB Smart Chain called BNB Greenfield, as well as the recently launched opBNB, a Layer 2 network based on the OP Stack. Similar to Ethereum, BNB Chain has established a “main chain + side chains + Layer 2 network” model. The transaction cost and confirmation speed of BNB Chain itself are relatively high, and the side chains and Layer 2 networks are obviously established as infrastructure to support applications with higher speed and cost requirements, allowing BNB Chain to gain a competitive advantage in the numerous new public chains and “new new public chains” in the future.

In addition, the DeFi trading volume on BNB Chain has recently shown significant growth. According to DefiLlama, at the time of writing this article, the DEX daily trading volume on BNB Chain has reached nearly $525 million, second only to Ethereum and more than twice that of the third-ranked Arbitrum.

Although Binance has been active during the market calm period, Binance LaunchLianGuaid has sparked considerable controversy.

The reason is that since the beginning of last year, Binance LaunchLianGuaid has launched four projects, namely the Move to Earn application STEPN, gamified social learning platform Hooked Protocol, identity platform SLianGuaice ID, educational content platform Open Campus, and the recently launched data platform Arkham.

Compared to the past phenomenon-level public chains and projects, LaunchLianGuaid in the past two years may puzzle many people, as Binance’s choices do not seem to be in well-known fields or hot market tracks.

There is a voice in the market that wonders if there should be more tolerance for projects that dare to issue tokens during a calm market period.

Setting aside profitability, before concepts such as new public chains, blockchain games, and metaverses truly exploded, Polygon, Axie Infinity, and The Sandbox were not favored by everyone. But when they truly exploded, the market potential was revealed. Speaking for myself, although I cannot imagine what kind of new business models can be brought about by projects issuing tokens in fields such as education, identity, and data, I believe that no one can perfectly predict the market’s direction, and no one can foresee what kind of product will trigger a qualitative change. These projects that have “transformed” traditional fields other than finance may not have an immediate impact, but they can be seen as a good attempt.

The monetization of knowledge and data, the decentralization of identity, these underlying constructions may not be the targets that attract a large amount of capital, but they are still the touchstones that promote the mainstreaming of Web3. Binance also stated that focusing on these areas is to promote the adoption of Web3 and ultimately achieve global financial freedom of flow, rather than just focusing on immediate interests. The so-called tolerance hopes that the market can give these projects some time and not make impulsive judgments based on the current environment.

How Binance handles itself under FUD

In the first half of the year, Binance was successively sued by the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC). After that, several countries also announced investigations into Binance, and Binance also withdrew its compliance applications in some European countries. Various bad news caused FUD to spread in the market, and everyone began to speculate whether the contents of the lawsuits filed by U.S. regulatory agencies were true and whether Binance would become the next FTX.

As of today, Binance still has the most regulatory licenses among global cryptocurrency exchanges. And the SEC has no evidence to prove the charges it listed, and Binance has also hired lawyers. Zhao Changpeng stated on his Twitter SLianGuaices that he is still looking for a solution.

Moreover, according to community speculation, the behavior of U.S. regulatory agencies targeting Binance is actually not simply targeting Binance, but the entire cryptocurrency field. The cryptocurrency community has also expressed support for Binance through various voices.

In addition, as for the impact of regulatory pressure on Binance, we can explore it from some data.

According to data from The Block, Binance’s share of monthly trading volume in exchanges is still around 50%, although it has declined from the peak of over 60% (some analysis speculates that the main reason is the end of Binance’s zero transaction fee activity for BTC), it is still nearly 4 times that of the second-place Upbit. In addition, after the regulatory investigation of Binance, this proportion has hardly changed much.

Within a few days after the news of the regulatory investigation came out, Binance did experience a certain outflow of funds. However, according to data provided by Twitter user TVBee, the outflow of funds at that time was smaller than the bankruptcy of Silicon Valley Bank and the period of FTX’s collapse, and it quickly began to flow back.

From various data, it seems that we do not need to worry about Binance experiencing the same thing as FTX. In fact, regulation is not necessarily negative. Rules are needed to regulate money laundering, tax evasion, market manipulation, and other behaviors. However, if regulation is to be applied to the special industry of cryptocurrency, it will still take time for exploration and adaptation.

Waiting for Blooming

After enduring 2022, we ushered in a strong performance in the first half of 2023 in the cryptocurrency market. However, it is worth noting that the short-term impact of regulation, whether in terms of sentiment or actual effects, cannot be eliminated. Coupled with the existing uncertainty in the macro market, it may take some time for Web3 to return to the “crazy bull market” of 2020 and 2021.

Currently, there is a constant stream of various noises, but compared to the uncertainty of Web3 in 2018 and 2019, there has been a revolutionary change. Mainstream adoption, new concepts, and tracks may have led the market to be over-leveraged and backfired in the so-called bull market of 2021, but a mature market needs to go through such pains. We still need to give Binance and the industry some time. The journey of a thousand miles begins with the first step. We hope that everyone won’t give up in the darkness before dawn, and we also look forward to the seventh year of Binance bringing more imagination to the entire industry and ecosystem.

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