Binance Officially Launches Margin Trading Service

Siamak Masnavi

Binance, the world's largest cryptocurrency exchange (by adjusted/real trading volume), announced on Thursday (July 11) the official public launch of its Margin Trading service.

The first clue we had that Binance was planning to offer margin trading was discovered by Reddit user "enriquejr99" (who claimed to be a computer programmer) while experimenting with Binance's public application programming interface (API).

He revealed his findings on March 20 via a Reddit thread titled "Research: Margin trading features found on Binance API". As Cointelegraph pointed out on March 21, Binance "first promised in the feature rollout section of its white paper that margin trading would be implemented after spot trading and before futures on its exchange."

On May 8, during a Periscope Ask Me Anything (AMA) session, Changpeng Zhao (aka "CZ"), Co-Founder and CEO of Binance, confirmed that the rumors about margin trading on Binance.com were true:

Yes, we are working on a margin [trading] system that's rolling out actually very, very soon. We are going to first roll out [this system] to a few of our key clients, the large traders, so that they can help us test. They also have an agreement with us that, if there's a bug or something else [in the system], they will work closely with us [to fix those]. We will do a gradual rollout of the margin platform.

Margin trading is now available to all eligible users―with the exception of the residents of the United States and five other jurisdictions)―on Binance's centralized exchange platform (Binance.com), which is now sporting the new Binance 2.0 user interface:

Binance 2.0 Margin UI.jpg

The new Binance 2.0 platform also "allows its users to move funds easily from the Margin Wallet to their primary Binance Wallet without any transaction fees."

You can choose as collateral the following cryptocurrencies:

Binance Marginable Assets.png

Margin trading fees can be paid with Binance Coin (BNB).

Yi He.jpg

Yi He, co-founder of Binance, has this to say:

“Though the current cryptocurrency market and legacy platforms for margin trading poses greater risks and benefits at the same time, we are confident that its development coupled with more knowledge on proper risk management will help realize greater benefits in the long run. With margin trading being one of the most requested services from our community, this is a testament to the large market demand from retail and institutional traders alike and its promising possibilities in the future.

As for CZ, he said:

This is another step in providing an inclusive cryptocurrency trading platform catering to the needs of both advanced institutional traders and retail traders under the same roof. We are providing a new tool in the financial services and cryptocurrency markets to help amplify trading results of successful trades.

To learn more about margin trading in general, you might wish to consult Binancy Academy's introductory guide "What Is Margin Trading?". Binance Academy also offers "Binance Margin Trading Guide", which is a guide to opening a margin trading account. And finally, there is the Margin Trading FAQ.

All Images Courtesy of Binance

Trans-Fee Mining Exchanges’ Trading Volumes Dropped 30% in December

According to figures from CryptoCompare’s December 2019 Exchange Review, the trading volume of cryptocurrency exchanges using the controversial transactions-fee mining (TFM) revenue model dropped by 30% in December.

Other statistics from the report show that TFM exchanges traded a total of $108.87 billion in December, representing 25% of the total volume from all exchanges.

The largest TFM exchange, Bitforex, saw its volume rise roughly 5% and was responsible for $35.65 billion in trading volume. The other two biggest TFM exchanges weren’t as fortunate, as CoinBene traded $27.3 billion but was down 11.6%, while Bibox traded $18.26 billion and saw its trading volume drop a drastic 38.9%.

First popularized by FCoin, TFM exchanges have become increasingly popular over the last couple of years. TFM exchanges have their own native token, which is given to users as a reward every time they perform a trade.

Due to an increased profit margin, a growing number of traders are electing to use this type of exchanges. Reports have also shown that exchanges that adopt the TFM model have their volumes grow substantially, despite unusually thin order books and low traffic.

Despite the success, many industry experts criticize the TFM model as being financially and ethically dubious. They believe it fosters dishonest activity, as it creates a great incentive for traders to collude and participate in wash trading to increase their earnings.

Another significant claim is that adopting a TFM model is a way of bypassing conducting Initial Coin Offerings (ICOs), as the exchange can release their own token without having to go through the lengthy regulatory process necessary for the token sale.

Featured image via Pixabay.