The leading global cryptocurrency exchange “Binance” launched an automated DeFi-styled market pool for cryptocurrency investors to offer them with instant token swapping functionality. Binance officially brought this new trading platform from the decentralized finance (DeFi).
The platform will allow the money maker to deal with smart contracts. The cryptocurrency exchange system announced that it is an automated market maker (AMM) pool. The users are not only allowed to trade with funds but can also host liquidity pools. For the first time, an AMM pool is attached to the centralized trading exchange system.
Binance Liquid Swap Product
The AMM pool product called “Binance Liquid Swap” will allow the users to keep their crypto funds in the pools for providing liquidity to the market. In return, they will earn the interest and share from the pool trading commission. They implemented an AMM model for pricing to provide users with stable pricing and low fees.
The AMM exchange model uses a predefined algorithm for pool liquidity to make markets. The exchanges provide liquidity to the pools regardless of the user’s token prior order size. The reward system and trading fee are yet to be disclosed.
To start, the AMM pool provides the following trading pairs :
The security of the product is strengthened due to the Binance platform and also because of its move into the DeFi space with the launch of Binance Smart Chain. The smart chain is a highly performing Ethereum virtual machine. It is compatible with blockchain and works in parallel with the Binance chain. It offers users with smart contracts and allows them to stake a Binance coin.
Binance Jump in DeFi
In Binance, the liquid swap transaction fees and prices on AMM depend upon the asset number in each liquidity pool. The prices vary when currencies are added, removed, or swapped in the pool. The trader’s share in the pool will be collected every 7-day as an annual percentage yield (APY). The profit generated will be turned into assets for the respective pools. Binance introduced AMM pools to centralized exchange systems for more safety, security, and credibility.
As the decentralized Ethereum pool is highly risky due to huge market price fluctuations; hence, Binance went for the centralized approach, which would most probably minimize the big margin loss. The Binance is working to deliver instant swap liquidity in order to attract more participants and to incentivize the pool contributors for the community benefit.
Binance designed this new DeFi “Binance Liquid Swap” having different liquidity pools so that users can earn income instantly and easily without much effort. The centralized AMM pool offers users to buy, stake, and trade their crypto assets. The instant swapping functionality will be executed via a centralized platform.
The users will be able to earn through interest and trading commission from the shares. This centralized platform is able to provide stable transaction prices and lower fees. The DeFi products perform better in the market if more investors are involved in providing liquidity to trade. Hence, to attract more liquidity providers, Binance is providing rewards in return.