On June 17th, Binance announced that it is launching a Bitcoin-backed BEP32 token (called BTCB) on its native blockchain (Binance Chain), and it promised to issue several more such crypto-pegged tokens.
According to Binance, such “pegged tokens” will be fully backed by the coin being “wrapped”, i.e. Bitcoin in the case of the new BTCB token. Trying to be transparent, Binance is publishing the “reserve addresses” so that anyone can easily check that the reserves are really there. According to Binance, inspecting the blockchain is a much easier way to conduct an audit than inspecting cash reserves in a bank.
There is a going to be a new trading pair on Binance.com corresponding to this newly launched token: BTCB/BTC. Apparently, “large buy orders” will be “maintained” on this trading pair on Binance.com, and the price spread will be around 0.1%. This means that people can easily “convert from the pegged token back into the native coin on Binance.com.”
How Binance maintains the 100% backing:
“If this buy order is filled, a new order will be placed while an equal amount of funds will be deposited from the reserve address into Binance.com. The sum of the buy order and the funds on the published reserve address will be bigger than the total supply of the pegged token, ensuring there is always 100% backing.”
- the BTC reserve address is 3LYJfcfHPXYJreMsASk2jkn69LWEYKzexb
- Binance has “just reserved 9001 BTC and minted 9001 BTCB.” (You can verify this claim using the Binance Chain Explorer tool.)
- The BTCB/BTC trading pair will be listed Binance.com in a day or so (and Binance “will issue a proposal for DEX listing as well”).
The primary benefit of introducing these new crypto-pegged tokens is that it allows users of Binance’s decentralized exchange, Binance DEX, to indirectly trade popular coins that would otherwise not be available on this platform.