Binance, World’s Largest Crypto Exchange, Aims To Disrupt NFTs With Its DeFi Playbook

Forbes

Changpeng Zhao (CZ), chief executive officer of Binance.

© 2018 Bloomberg Finance LP

In June, Binance, the largest cryptocurrency exchange in the world, will launch its own marketplace and trading platform for digital collectibles called Binance NFT.

The news comes on the heels of Binance’s April 14 announcement that it would power the underlying technology for a new NFT platform launched in partnership with Media Publishares, publisher of Vogue and Esquire in Singapore, and VIDY, a blockchain-powered digital advertising company. 

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According to the press release, Binance NFT will offer a wide range of non-fungible tokens – from arts and gaming to sports and music – and will debut with two venues: a “Premium Event” category, featuring exclusive exhibitions and artist collaborations, and a “Trading market”, which will let regular users create their own assets. Additionally, while the marketplace will be powered by the company’s blockchain infrastructure, Binance Smart Chain (BSC), users will be able to deposit tokenized artworks from other platforms. 


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One potential advantage of the new platform is a lower fee structure than those of its competitors. Binance will charge a 10% fee for the premium sales, so creators will receive 90% of the profits, and a 1% processing fee on the “Trading market” sales or auctions, where NFT creators and depositors will also receive a 1% royalty payment on all subsequent trades of their works. 

Conversely, SuperRare, an NFT marketplace with a similar premium gallery offering, takes 15% commission on primary sales (creators receive 85%) and a 3% transaction fee on all purchases. The largest NFT marketplace OpenSea charges 2.5% on each sale. Another high-profile platform, Nifty Gateway, owned by the Winklevoss brothers, founders of the Gemini cryptocurrency exchange, takes 5% plus 30 cents of every secondary sale. Additionally, it is possible that Binance may offer further incentives for users who pay with its blockchain’s native token, BNB, in a similar fashion to trading discounts offered on its exchange.

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Over the past few months, non-fungible tokens, essentially digital certificates of ownership and authenticity, have soared in popularity, generating a record-high sales volume of more than $1.5 billion in the first quarter, according to industry tracker DappRadar. However, the market seems to be cooling. Trading volumes on OpenSea and NBA Top Shot are down by 21% and 62% respectively. The number of active traders is also steeply declining.

Still, Binance is uniquely positioned to face the market forces. Its blockchain for decentralized applications and digital assets, Binance Smart Chain (BSC), is currently the most used blockchain in terms of unique active wallets, averaging 105,000 in March. Additionally, BSC averages almost 8x the number of daily transactions on Ethereum (8.2 million vs. Ethereum’s 1.4 million on April 26). 

On April 22nd, BSC’s leading decentralized finance application, PancakeSwap, surpassed all of Ethereum in daily transactions. One reason for these trends is that gas prices, or transaction costs, on Binance Smart Chain were almost 14 times lower than Ethereum’s in the first quarter, according to DappRadar. On April 12, Binance’s native cryptocurrency BNB climbed above $600 for the first time ever. It is currently trading at $570 and is the third largest cryptocurrency by market capitalization. 

Last month, another cryptocurrency exchange Crypto.com, headquartered in Hong-Kong, launched an invite-only NFT platform featuring content from Snoop Dogg and Lionel Richie, among others.

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Binance was not immediately available for comment.

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Author: Nina Bambysheva, Forbes Staff


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