16 September 2020

Binance CEO, Changpeng Zhao (CZ), is known for his ambition. The giant exchange is undoubtedly his greatest accomplishment, having taken only two years to dislodge established heavyweights like Bitfinex, Bitstamp, and is now at par with Coinbase, the USA’s premier exchange.

True to form, Zhao has a clearly defined roadmap for the future. Binance is spreading its tentacles to the United States, Africa, and the Caribbean where after complying with country-specific rules, they are building a fiat on-ramp that enables traders to buy and sell supported cryptocurrencies straight from their bank accounts.

But this isn’t about trading or buying LAND.  Binance is building a self-supporting ecosystem whose chains are linked by BNB. The crypto exchange extravagantly sunk $400 million into CoinMarketCap—a crypto tracker, and overtly stated their ambition of foraying into DeFi. Strategic, and amid the first wave of decentralized exchange revolution back in early 2019, Binance Chain was launched, and pinning the Tendermint chain was the Binance DEX. 

A year later, the Binance Smart Chain (BSC) was activated. The BSC runs parallel with the Binance Chain and DEX. This is where Changpeng Zhao plans to tap the wildly popular and lucrative DeFi industry using this “scalable smart contracting platform.” Days later and in a chess move, Binance announced the Launchpool, the CEX sly move aiming to tap into DeFi, feed BNB, and pump the coin to new highs after months of stagnation. 

The Launchpool is nothing more than the centralized exchange’s weak attempt to tweak its business model to capitalize on trending events. This time, Changpeng Zhao doesn’t want to miss out on DeFi, a juggernaut where over $8.5 billion is locked, under management by Ethereum-based open finance dApps.

Like the Launchpad–which came after governments’ crackdown of initial coin offerings (ICOs), the Launchpool is Binance’s ploy to clip DeFi and feed BNB bulls in the name of enabling coin holders farm newly issued deflationary tokens, minted depending on demand.  Given this bold move, the price of the new tokens will most likely rise depending as the protocol gains traction. Meanwhile, since BNB is the coin staked, there is artificial scarcity (because of staking terms at least until Sep 16 when the staking window closes) leading to a pump as currently witnessed. If DeFi pumped ETH, CZ reckons, then it shall pump BNB.

As ETH and BTC struggle against a seller choke-hold, BNB leads in the top 10. The coin is up a massive 33 percent against the USD in the last week of trading. And there could be more. A candlestick arrangement in the daily chart suggests a moon-sling despite today’s pullback. At the time of writing, BNB is trading at around 2020 highs, displacing Bitcoin Cash (BCH) and Chainlink (LINK) to sixth.

Figure 1: Binance Coin (BNB) Daily Chart for Sep 15 by TradingView

Even though the momentum of the last few days is cooling off and correcting the over-valuation of Sep 14, odds are, this pullback will be another ramping point for buyers aiming for better prices.

Considering the turn of events in the past few days and the participation levels as judged from trading volumes, the breakout above Feb 2020 highs could mark the beginning of another bull rally. This can push BNB back to June 2020 highs of $43. BNB rallying seems to be lifting ETH and BTC whose prices are now treading above important liquidation levels at $370 and $10,500 respectively.

DeFi and CEXes are technically not meant to be. They aren’t compatible but Binance is trying to merge the two by building a bridge for farmers and token holders to benefit. If they succeed, its native coin BNB will likely print a one year high and close above $45. Still, staking ends on Sep 16 and thereafter, the Launchpool will do its magic but its fate depends on the reception by the wider farming community.

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Edmund McCormack
Tech industry veteran and blockchain technology investor. Simplifying cryptocurrency for almost a decade.

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