Binance to introduce Bitcoin-pegged token on Binance Chain
Popular cryptocurrency exchange Binance has announced it will be launching a Bitcoin-pegged token to be released on Binance Chain.
The news was announced in a recent Binance blog post which details how the exchange plans to launch a series of tokens on Binance Chain that will be pegged to leading cryptocurrencies.
The first of which will be a Bitcoin-pegged token – BTCB – that will be traded on Binance and eventually Binance DEX.
Pegged tokens are 100% backed by the native coin in reserve, which in this case will be Bitcoin. The reserve addresses will be published for anybody to audit.
A trading pair will be created on the Binance website between the pegged token and the native coin.
Large buy orders will be maintained on the trading pair on the Binance website with a price spread of roughly 0.1%. This in turn should provide an easy way for anyone to convert from the pegged token back into the native coin on Binance.com.
If a 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 main benefit of offering crypto-pegged tokens is that it will make the many coins that have their own blockchains and aren’t native on Binance Chain available to Binance DEX traders. With the increase in the selection of tokens available on Binance DEX, there should be an increase in trading volume and liquidity – further increasing the utility value of Binance DEX.
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