Binance Drops to #4 In Trading Volume After Launch Of Singapore-based CoinBene
24 hour trading volume on new Singapore-based exchange CoinBene is approaching $2 billion, according to Coinmarketcap. With Hong Kong-based exchange Bit-Z also rising to $1.5 billion in trading volume, this has pushed major players like Binance into the number four position in terms of 24 hour trading volume.
CoinBene is known for its trans-fee mining revenue model, where users pay trading fees and receive the exchange’s native tokens in return.
Under this model, you pay your trading fee in BTC or ETH, then receive a certain value of tokens back.
FCoin, a cryptocurrency exchange launched in May by a former Huobi CTO, was the first to implement this unique trans-fee mining model. Under this model, exchanges can issue their own tokens as a means to incentivize users to trade on the platform.
Trans-fee mining works in a different way from the traditional fee-taking model used by most of today’s cryptocurrency exchanges. Instead of charging users directly for trading, trans-fee mining issues the exchange’s own tokens to users in return for their normal transaction fees in cryptocurrency.
FCoin, the exchange launched in May, shares 80% of its crypto fee profits with its FT token holders.
Both CoinBene and Bit-Z are using this trans-fee mining model. The markets have clearly decided they like it, as the two exchanges have both surpassed Binance in terms of 24 hour trading volume.
As of mid-day on Tuesday, CoinBene sits in the top position with $2.2 billion of trading volume over the past 24 hours. Bit-Z, meanwhile, holds down second place with $1.25 billion of volume, with OKEx in third place with $913 million.
Binance, meanwhile, is a distant fourth with a trading volume of $602 million, followed by Huobi, Bitfinex, ZB.com, Bibox, HitBTC, and Upbit in the top 10.
The trans-fee mining model has been criticized by other members of the industry. Some see it as a way to get around ICO regulations. The exchange is essentially conducting an ICO: they’re accepting “trading fees” (in BTC and ETH) and then giving users 80% or 100% of the value of their trading fees in native platform tokens.
Binance CEO Zhao Changpeng took specific issue with the model. Here’s what he said on Weibo last week:
“You pay transaction fees to the platform with BTC and ETH. Then the platform pays ‘100%' back to you with its token. Isn't it just buying platform token with BTC and ETH? How is this different from an ICO?” -Zhao Changpeng, Binance CEO
Zhao also took issue with the potential for manipulation over the long-term:
“If an exchange doesn't get revenue from transaction fees and solely profits from the price of its token. How would it survive without manipulating the token price? Are you sure you want to play against a price manipulator? The same price manipulator who controls the trading platform?” – Zhao Changpeng
Binance was launched in 2017 and quickly rose to the top of the markets in terms of trading volume. The exchange has spent most of the last year in the top 3 positions in terms of 24 hour trading volume. However, the two biggest trans-fee mining players have now taken the top two positions in the market, causing Binance to slide to the fourth position. We’ll see if this trans-fee mining model sticks around long-term, or if Binance will rebound into the top position once again.