- Centralized exchanges are struggling to keep up with DeFi token launches
- Binance has introduced a program called Innovation Zone which will be listing projects that are deemed to carry higher risk
- Users will have to acknowledge the risks before they are allowed to trade tokens listed through the Innovation Zone program
Centralized exchanges struggle to keep up as DeFi boom continues
The DeFi (decentralized finance) boom has many parallels with the ICO (initial coin offering) craze of 2017, with hyped up digital assets hitting the markets on a daily basis. However, the cryptocurrency landscape has changed drastically – during the ICO fever, centralized exchanges had the power to dictate which assets could be traded, and when they would be made available to users.
With the rise of decentralized platforms like Uniswap, new tokens can be listed immediately without the token’s issuer having to receive approval from anyone. This puts centralized exchanges in a bit of a conundrum, as they are struggling to keep up with the demand for new tokens.
Typically, exchanges would wait a while before listing a cryptocurrency to see if the project meets their listing criteria – now, this puts them too far behind the competition, and they are forced to list hyped up tokens just days or even hours after their launch. SUSHI and UNI are great examples, as they were listed by centralized exchanges shortly after they were launched.
Binance introduces “Innovation Zone” to list riskier DeFi projects
Binance, arguably the most popular cryptocurrency exchange in the world, is trying to address this issue with a new feature they call the “Innovation Zone”. Binance CEO Changpeng “CZ” Zhao introduced the Innovation Zone in a blog post earlier today:
“Our team has created the Innovation Zone, which will allow users to trade newer token offerings from the comfort of their Binance account, while at the same time protecting less suited users from being exposed to the “risk” that comes with trading them.”
In practice, the Innovation Zone will be listing newer DeFi projects that are likely display more price volatility than the typical Binance listings. The first token to be listed through the new program is SUN, a DeFi token on the TRON blockchain.
Before being allowed to access the Innovation Zone, users will have to correctly answer two questions, essentially acknowledging the risk they will be taking on by trading assets listed in the Innovation Zone. Users will have to acknowledge that the likelihood of incurring a loss when trading these assets is higher than 50%, and that they are responsible for any trading losses themselves.
“We hope by asking the very explicit questions above, we will be able to filter out those who should not be trading Innovation Zone projects from the more advanced traders who have the right mindset, risk management, etc. This way, we satisfy both groups of users.”