Binance Issues a Bitcoin Pegged BEP2 Token on the Binance Chain with More Pegs in the Works

BNB-BINANCE-BEP2

Leading cryptocurrency exchange Binance has recently created a Bitcoin pegged token based on the Binance Chain BEP2 standard that will be available for trading on both the Binance.com and Binance DEX platforms.

An announcement post published by the exchange on its blog on Monday, June 17th states that more crypto-pegged tokens on the BEP2 standard will be minted in the coming days with the aim of increasing liquidity on the newly launched decentralized Binance exchange. As expected, Bitcoin will be leading the way as the exchange plans to launch crypto-pegged tokens for most of the leading cryptos according to market caps.

bep2 binance tokens

Early Monday morning, Binance CEO Changpeng Zhao (CZ) posted on twitter stating that an internal transfer of 9001 BTC would be made and that no one should FUD over any alarming transaction.

He stated that more details about the transaction were to follow and indeed the details have emerged. The 9001 BTC (an equivalent of about $83 million) is the BTC reserve for the BTC-pegged crypto token. The Monday post claimed that Binance had already minted the new crypto-pegged token dubbed BTCB. “We have just reserved 9001 BTC and minted 9001 BTCB.”

Binance explains that the crypto-pegged tokens will be backed 100% by their native cryptocurrencies, for instance as revealed the BTCB token is backed by an equal amount of BTC i.e., 9001 BTCB: 9001 BTC. Follow-up pegged tokens will also be minted similar to this initial mint. In addition, Binance claims that it will post all reserve addresses to the public for easier verification and audit on the status of the token metrics.

So, how will the stability of these pegged tokens be maintained? Binance states that:

“Large buy orders will be maintained on the trading pair on Binance.com, with a price spread of around 0.1%. This provides an easy way for anyone to convert from the pegged token back into the native coin on Binance.com. 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.”

As opposed to fiat-pegged tokens such as Tether [USDT], Circle’s USD Coin [USDC] or True USD [TUSD], Binance states that crypto-pegged tokens are easier to verify and audit. For instance, if you would want to verify the reserves of the BTCB token, Binance has provided the reserve address here. The main benefit for launching a slew of crypto-pegged tokens on the Binance ecosystem is that, according to Binance:

“obviously, this makes available to Binance DEX traders the many coins that have their own blockchains and aren’t native on Binance Chain. With the increase in the selection of tokens available on Binance DEX, there should be an increase in trading volume and liquidity, This would further increase the utility value of Binance DEX.”