The modern cryptocurrency industry offers the community a fairly wide variety of trading platforms, which can be separated into two major categories: centralized (company-managed) and decentralized (DEX). Unregulated services attract traders with the ability to handle digital assets independently with a high level of security. However, centralized platforms do not want to give up leadership in the field of cryptocurrency trading. Currently, there is an unseen battle for the user’s interest. Binance - the leader of the centralized crypto market took a great move and introduced its own DEX solution.
What is DEX?
A decentralized exchange (DEX) is an exchange that operates on the basis of a distributed ledger, does not store users’ funds and personal data on its servers, and acts as a simple search mechanism for orders to buy or sell user assets. Trading on such platforms takes place directly between participants (peer-to-peer) without third parties (intermediaries).
DEX uses its own servers to store data on bids and orders for the buy or sale of assets, but the private keys are held by the users themselves. The central server has nothing to do with wallet accounts; if one wallet is hacked, the others will not be harmed because they are not linked to each other.
The Binance DEX
Binance DEX is a decentralized version of the Binance cryptocurrency exchange. This is the perfect use case of the Binance Chain network. It was originally launched on 20/02/2019, offering users the ability to access the platform on the test network. Everyone was given free 200 BNB (testnet) to trade in a few hundred virtual pairs. The platform was relaunched on the Binance Chain mainnet on the 23/04/2019. The ability to create wallets and transfer real BNBs and other tokens converted to the BEP2 standard has become available. A few days after the first listings, a trading opportunity appeared. Binance DEX is the next phase in the evolution of cryptocurrency exchanges, which contains all the best features of its centralized ancestor, mixed with the benefits and security of decentralized trading platforms.
The team’s goal was to create a reliable and transparent financial system that will bring a new level of community freedom by offering much greater control over their own assets. Binance DEX offers trading tools and a native web wallet for the Binance blockchain. Via its interface, anyone can create a new BNB wallet with the usual functionality for receiving/sending crypto assets. Due to the fact that DEX is built on top of the Binance Chain, which is fast and robust to workloads, it can easily handle the same trading volumes as a centralized platform. Another important aspect is the recording of all trading operations on the blockchain, which provides a complete verifiable ledger of transactions. Unlike centralized exchanges, there is no need to register on Binance DEX to access trading tools and send/receive functions. All you need to do is create a new BNB wallet.
Interface and functions overview
After unlocking the wallet, the user is taken to the “Exchange” tab, where he can access Binance DEX trading operations and the traditional GUI, divided into several zones:
- List of trading pairs
- Trading history
- A section with the tabs “Open Orders”, “Order History”, “Trade History” and “Balances”, that displays details about the user’s actions
- Orders book
- Forms for creating limit orders
- A regular chart window for the selected trading pair, which contains an option to change the time period and a menu for adding technical indicators. It also has a TradingView dashboard.
With its help, users can draw lines, fractals, make notes, add wave marks, etc. In addition, it is possible to view the market depth formed by the placed orders (the “Depth” button). Anyone can explore the asset markets on Binance DEX at any time. Trading is available for the native cryptocurrency Binance Coin (BNB), as well as several trading pairs with BTC, ETH, and stablecoins. Only one type of order can be created on the platform - limit orders. There are no stop-losses and buy/sell orders in the functionality. Moreover, limit orders are valid for a period of time and are removed from the order book after the first midnight (UTC) after 72 hours from the date of creation. When the order is executed, the seller’s assets are instantly transferred to the buyer’s wallet, without waiting for a new block to be generated on the network. The DEX Binance charges small fees for all transactions to transfer funds or create or cancel an order. The fee’s size is calculated on the basis of the nominal value of a transaction at a rate set by the validators, which is adjusted. Transaction fees are standard and payable in BNB only. At the moment, commission fees vary from 0.00005 to 0.0005 BNB depending on the type of transaction
Each user has an option to offer a BEP2 token for listing on Binance DEX.
This is done by running a special script in the node with the commands that create an application in the blockchain for consideration by the validators of the possibility of the specified token listing. In this case, the initiator makes a deposit of 1000 BNB, which shall be returned to him both in case of acceptance of the proposal and in case of an insufficient number of votes “for”. In case of a positive outcome, the user must create a listing transaction, paying a fee of 2000 BNB. After that, the new token will appear in the list of available trading pairs.
Anyone can use decentralized exchange from anywhere in the world without any restrictions. Binance DEX is rapid, convenient, and secure. The assets of the customer are under their exclusive responsibility. Binance Dex is still expanding its functionality (for example, the possibility of stacking will be implemented in the near future).