Binance Takes Latest Step Into The DeFi Space With $100 Million Support Fund For Binance Smart Chain Projects
Crypto exchange Binance has launched a new program aimed towards helping users access DeFi products while still capturing the advantages that come from working with a centralized exchange.
Binance CEO Changpeng Zhao announced during the company’s World of DeFi summit on Thursday, September 10 that the exchange will offer $100 million in grants to support DeFi projects on the company’s decentralized Binance Smart Chain.
Zhao stated that strong projects can earn up to $100,000 in funding and that the governance party for funding will be made up of the decentralized community that built Binance Smart Chain. The announcement also promises selected projects access to the exchange’s extended resources including the opportunity be listed on the exchange. The new fund is the next in a series of steps by the centralized exchange to break into the DeFi space.
The Binance Smart Chain white paper was released on April 17, 2020 and touts dual-chain architecture which allows developers to build dapps and digital assets. On Friday, September 4 Binance announced Project Token Canal, an initiative aiming to connect Binance Smart Chain with other public blockchains including BTC (BTCB), ETH, XRP, LTC, BCH and ONT. The Token Canal Project uses Binance’s liquidity to guarantee the conversion from and to the original tokens using the exchange’s own credibility and infrastructure.
In addition to Project Token Canal, over recent months Binance has launched its own automated market maker (AMM) called Launchpool which allows users to turn a profit by staking tokens for yield farming. Earlier in September, it also announced Binance Liquid Swap which is essentially an AMM exchange. The platform was designed again to help crypto users tied to the centralized exchange participate in DeFi trends.
Thursday’s announcement argues that Binance’s secure custody service allows tokens on other public blockchains to be connected to the Binance Smart Chain. The vision for the platform is that it will act as a one-stop shop for cross-network transfers. Borrowing from DeFi, Binance also introduced a reward system for BNB holders participating in staking. Those who choose to stake will receive BNB tokens from Binance Smart Chain validators.
Despite the attention DeFi projects like Yearn Finance and Uniswap/SushiSwap have captured over recent weeks, Binance’s announcement emphasized that the centralized platform does not feel threatened by the growth of the DeFi space.
“For some people, the emergence of DeFi represents a shift away from centralized blockchain platforms,” the announcement reads. “This could be interpreted as a threat to services such as Binance. We beg to disagree. For us, DeFi is an opportunity to offer better solutions to the blockchain world.”
Zhao attempted to amplify this point in a recent tweet by highlighting two advantages of centralized finance over DeFi. He pointed to vetted projects and tokens as one advantage and also noted that DeFi limits users to one project while BNB staked on Binance can earn multiple yields or tokens simultaneously.
Overwhelmingly, crypto Twitter turned on Zhao’s attempt to coin a new phrase “CeFiDeFi” which generated a slew of memes and jokes. Many countered his points by saying that some of the most successful DeFi projects never needed to rely on a centralized exchange to gain support in the community.
By Emily Mason