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

6th anniversary of Binance: A warm spring after the crypto winter?

On July 14th, Binance, founded in 2017 by Changpeng Zhao, is about to celebrate its 6th birthday. When Binance was first established, it was not considered outstanding compared to other leading trading platforms. However, with a firm commitment to executing an internationalization strategy and an influx of new users, Binance quickly became the world’s largest cryptocurrency exchange.

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

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, second only to Ethereum and Tron. This data reached a peak of nearly $22 billion in May 2021.

Although the achievements of 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 2022, with the sharp decline in cryptocurrency prices, centralized liquidation of high-leverage market participants has been carried out. We have witnessed Terra go from a market capitalization of billions to zero overnight, and we have also witnessed the collapse of FTX. Although Binance also saw a large outflow of funds due to extreme panic in the market after FTX collapsed, it eventually withstood the pressure, completed all redemptions, increased market confidence, and prevented further market collapse.

Many people seem to be involved in the subsequent story when the entire market seems to have lost its direction and become abnormally quiet. But many people seem to have overlooked one thing, that this moment should be a rare opportunity.

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

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

Compared with the past trend-setting public chains and projects, the Launchpad of the past two years may be confusing to many people, as Binance’s choices do not seem to be in familiar fields or popular market segments.

Some in the market argue that for projects that dare to issue tokens during a period of market calm, there should be more tolerance.

Leaving aside the issue of returns, before new public chains, blockchain games, metaverse and other concepts really took off, Polygon, Axie Infinity and The Sandbox were not favored by everyone. But when they really took off, the potential of this market was finally seen. Personally, although I cannot imagine what kind of new business models token issuance in the fields of education, identity, and data can bring, I believe that no one can predict the market trend perfectly, and no one can predict what kind of products will cause qualitative changes. These projects that have “transformed” traditional fields other than finance may not have immediate impact, but they are still good attempts.

The monetization of knowledge and data, and the decentralization of identity, these underlying constructions may not be attractive targets for attracting large amounts of funds, but they are still touchstones for pushing Web3 towards the mainstream. Binance also stated that it is focusing on these areas to promote the adoption of Web3 and ultimately achieve global free flow of finance, rather than just focusing on immediate interests. The so-called tolerance hopes that the market can give these projects some time, rather than making impulsive judgments based on the current environment.

Under FUD, how will Binance handle it

In the first half of the year, Binance was successively sued by the US Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC). Afterwards, several countries announced investigations into Binance, and Binance also withdrew its compliance applications in some European countries. Various bad news has caused FUD to rise in the market for a while, and everyone has begun to speculate whether the content of the US regulatory agency’s lawsuit is true, and whether Binance will become the next FTX.

As of today, Binance still has the most compliance licenses among global cryptocurrency exchanges. The SEC has no evidence to support the charges it has listed, and Binance has hired lawyers. Zhao Changpeng said in his previous Twitter blocking that he is still looking for a solution.

Furthermore, according to community speculation, the US regulator’s “shooting the first bird” behavior is not simply targeting Binance, but the entire cryptocurrency field. The cryptocurrency community has also expressed its support for Binance through various channels.

In addition, as for the impact of regulatory pressure on Binance, we can explore it from some data. According to The Block’s data, Binance still accounts for about 50% of the monthly trading volume of exchanges, although it has fallen from the peak of over 60% (some analysis speculates that this is mainly due to the end of Binance’s zero-handling fee for BTC). It is almost 4 times that of the second-place Upbit. In addition, after the regulator’s investigation of Binance, this ratio has hardly changed much.

Within a few days of the news of being investigated by the regulator, Binance did experience some capital outflows. However, according to data provided by Twitter user TVBee, the outflow at that time was less than that of Silicon Valley Bank’s bankruptcy and the FTX explosion period, 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 negative. Rules need to be standardized for money laundering, tax evasion, market manipulation, and other behaviors. However, if regulation is imposed on the cryptocurrency industry, it will surely take time to explore and adapt.

Waiting for the flowers to bloom

After surviving 2022, we ushered in the first half of 2023, which saw a good performance in the cryptocurrency market. However, it should be noted that the short-term effects of regulation, whether emotional or practical, cannot be eliminated, and coupled with the uncertainty of the macro market, it may take time for Web3 to return to the “crazy bull market” of 2020 and 2021.

Currently, various noises are constantly heard, but compared with the uncertainty of Web3 in 2018 and 2019, there have been earth-shaking changes, mainstream adoption, new concepts and tracks. The so-called bull market in 2021 may eventually cause the market to be over-leveraged and backfire, but a mature market needs to experience such pains. We still need to give Binance and the industry some time. Those who walk a hundred miles will be half ninety. I hope everyone will not fall in the darkness before dawn, and also look forward to Binance’s seventh year bringing more imagination to the entire industry and ecology.