Binance Blog is announcing that the leading Crypto trading platform is offering a new Tokens on the Binance Chain.
The official press announcement further introduces a Bitcoin-pegged Token that is designed as a self-styled Stablecoin in the BEP2 format so that the Binance Chain can support it.
In the coming days, the Bitcoin-pegged Crypto codenamed as BTCB is set for trading on Binance and later on Binance DEX.
Additionally, Binance is revealing that more Crypto-pegged Tokens are in the pipeline in a project that is ongoing and set for conclusion in the “coming days”.
How Does A Stablecoin Work?
Stablecoins are fully backed by a native product or commodity that are mostly stored in a reserve. The role of the backing is to not only give Cryptos a distinct intrinsic value but to also cushion them from the usually-volatile Crypto market particularly against bear cycles.
The role of Blockchain technology cannot be emphasized enough as its role is to audit the reserve easily and more efficiently than any traditional bank could ever achieve.
In this model, the Binance Stablecoin, BTCB is 100% pegged on Bitcoin reserve that is being audited by the Binance Chain DLT platform.
Later on, a trading pair for the new Token such as BTCB/BTC is set to be rolled out on Binance.com for investors to access.
Trading Arrangements For BTCB/Crypto Pairs
The market pairs for BTCB that are set for deployment on Binance.com will be maintained by the system which will keep records of large orders.
Because large orders are prone to a wide price variance that can distort the forces of supply and demand of orders, the Binance Chain will also maintain a steady price spread of 0.1% that will proffer an easier option for prospective BTCB hodlers who seek to convert the BTC-backed Token into the native Binance Coin (BNB).
In regards to the model of backing BTCB on BTC, the Binance Chain will be depositing Bitcoin Tokens in a reserve address bearing a unique public key- 3LYJfcfHPXYJreMsASk2jkn69LWEYKzexb- after an order is fulfilled to consistently ensure that the collateral fully backs the new Stablecoin.
Additionally, there will be some funds in the reserve address that will ensure that the sum of the buy order BTC and the Crypto back-up that has been set aside are bigger than the total supply of the BTCB Tokens in supply to maintain the minimum reserve above 100%.
Benefits Of BTCB
Binance believes that the main benefit of proffering Crypto-backed Digital Assets is that it will increase the number of coins on the Crypto exchange. This is set to trigger a sharp surge in trading volume and liquidity on Binance DEX factor that will increase the preferability of Binance DEX to investors.
Further, the use of Cryptos to back Tokens will offer a higher degree of transparency on the Stablecoin model as everyone will be able to audit the reserve to ascertain the volume of assets backing up a Token.
As at press time, there are already 9001 BTCB in circulation that is backed up by 9001 BTC. Meanwhile, the first pair which is BTCB/BTC is set to be live on Binance.com in the course of the week according to the Binance team that is led by CEO Changpeng Zhao.