Author: IceFrog
As the industry's top player and the pinnacle of the pyramid, Binance has recently been facing increasing market FUD. Simon, who is marked as the CEO of MoonrockCapital on the X platform, announced that Binance would charge 15%-20% of the total tokens as a listing condition. This caused a huge stir, and the market discussion became increasingly heated, with both supporters and opponents. The most emotional people even believed that Binance might be the biggest cancer in the industry, while the opponents believed that this was not Binance's responsibility, but a problem with the project or the industry's own development.
Finally, Binance’s top female spokesperson responded publicly on social media: If you fail to pass Binance’s screening, no matter how much money or listing fee you pay, you will not be able to be on the Binance list. Token allocation is public, and Binance cannot charge such a high token allocation ratio.
Regardless of whose words are the truth behind the verbal battle between the two sides, or whether it is really just a business competition, at least from Yijie's response, we can see that Yijie is using her own reputation to save Binance's reputation, actively and promptly responding to such doubts. Yijie has won the respect of the community with her frank and direct attitude in the past and now.
However, this type of doubt is not the first, nor the last. It also indirectly highlights the development difficulties that Binance has faced in recent years, including regulatory crackdowns and runs from peers, as well as community doubts. The real crisis is never hidden in the superficial challenges, just as the one who defeats Binance will definitely not be another Binance.
1. Is FUD a rumor? “Victim mentality” and “Who is the enemy?”
We assume that what Yijie said is true, and FUD is the dark side of commercial competition. Unfortunately, the public never has the ability to think independently, otherwise they cannot be called the public. From countless histories, an obvious truth is that the defeat of rumors never relies on the public's self-awakening, but on irrefutable facts and truth. The guidance of KOLs only temporarily confuses the audience, and does not mean the disappearance of doubts. It may even be the cause of a more intense FUD next time.
When all FUD is attributed to the conspiracy of commercial competition, the victim mentality behind it is not helpful to eliminate the controversy. Maybe there is indeed a push from peers, but this may not be the whole story. When the platform itself has enough convincing evidence, no one will choose to use such a thankless method to challenge an industry leader. This method is only effective when you have flaws yourself. This is the most superficial business logic.
When facing FUD, first look for problems within yourself, rather than suspecting your competitors. This is the attitude a great company should have. The real enemy is always your own arrogance, not anything else. If you regard FUD as a business tactic, you will actually ignore the real hidden crisis.
2. Where does the crisis come from: the transfer of pricing power and liquidity
1. Liquidity determines pricing power, but the source of liquidity is users
Binance, at least so far, is still the largest liquidity center in the industry. Whoever controls liquidity controls pricing power. This is an eternal truth in the financial world. However, from a longer-term perspective, short-term pricing power is generally determined by institutions/exchanges, but in the long run it will always belong to users. If pricing power is abused, the transfer speed of this pricing power will be further accelerated.
A significant sign of the abuse of pricing power is the connivance of projects with extremely unbalanced chip structures and projects with extremely poor reputations. Among the projects listed on Binance, there are many projects with low circulation and high market value. In addition, Binance itself takes away a large proportion of the chips. This means that investment institutions, project parties, exchanges, and market makers control the vast majority of chips, and retail investors can only passively take over. Take the recent Scroll as an example.
The initial circulation only accounts for 19% of the total circulation, and 5.5% is used for Binance mining. The remaining tokens all include unlocking requirements at different times. It is a simple arithmetic problem. Who will take over such a large and continuous selling pressure? Assuming that the project has a good reputation and its own hematopoietic ability, the selling pressure will also be partially fed back, further smoothing the entire price curve. The fact is that after the airdrop and TGE, the data was almost cut in half in a short period of time. What's worse is that this fundamental collapse can be almost 100% foreseen before listing on Binance.
Here comes the problem:
1) Everyone knows that this is a situation where the fundamentals will definitely continue to be bad, the token distribution is extremely unreasonable, the reputation is extremely bad, and it is easy to form continuous control and selling pressure. Why did Binance choose listing?
2) Whose interests does Binance’s screening mechanism stand on?
Combining these two issues, we can at least draw an obvious conclusion. At least from the perspective of interests/user experience, Binance gives people the feeling that it does not stand with the users or at least does not stand mostly from the perspective of users' interests.
If we really stand from the perspective of user interests, no competitor can discredit Binance, because the sustainable wealth effect in the cryptocurrency circle is the greatest truth.
A more significant comparison reflects the role of users as the final pricing power, that is, the Grass project, whose financing amount is only less than 1/10 of Scroll. The former’s current total market value is US$1 billion+, while the latter’s US$500 million + .
Even with the selling pressure of token unlocking, Grass's initial circulation volume was not very large. However, its fair and sustainable airdrops have won the project a good reputation among users, which is ultimately reflected in the fact that users continue to pay, the project continues to increase incentives for users, and then continues to feed back to users.
The same environment, the same project, different fate. It clearly reveals that no matter how advanced the technology is, how brilliant the financing background is, and even if there is a bonus from the top exchanges, if users do not pay, the collapse of this harvesting chain will only get faster and faster, and every collapse is consuming the foundation of Binance, and the transfer of pricing power will also accelerate simultaneously.
2. Transfer of liquidity: Human nature pursues greed, but the premise is fairness and transparency; on-chain Dex has incomparable advantages.
Whether the cryptocurrency world is a big casino or not is not the point, but it definitely applies the basic rules of casino survival: they are not afraid of you making money, they are afraid of you not playing. Contrary to most people's intuition, almost all regular casinos in Macau will make great efforts in fairness, justice and openness to dispel gamblers' concerns. Casinos never make money by cheating, but by continuously magnifying statistical advantages.
In terms of fairness, transparency and justice, decentralization naturally has stronger advantages than centralization. The growth of Dex is mainly restricted by the interactive experience, but in the face of the wealth effect, the impact will be minimized. The data confirms this. According to data from The Block & Defillama, by October, the ratio of Dex's spot trading volume to Cex had risen to a historical high of 13.84%, and this ratio is steadily expanding.
Not to mention that due to the recent popularity of MEME, platforms like Pump.fun have successively produced several MEME tokens worth over $1 billion, with more than 670 transactions completed per day and an average daily trading volume of more than $1 billion.
What the data reflects is that liquidity is being gradually snatched away by hot spots such as on-chain Dex or MEME. Although the risks on the chain are higher for novice players, few people question the problems of decentralized platforms because they provide a relatively fair gaming environment.
The important difference between Cex and Dex is that the foundation of centralized exchanges is that users return the power of token screening to the platform. Either you set no threshold or a lower threshold for all, or you set a higher threshold but with sustainable value. The worst case is that you set a higher threshold but choose a junk project.
There is another misunderstanding here. Some centralized exchanges are prone to fall into the elite agency model. They do not think that they have chosen a junk project. Most of the people responsible for this type of business have good resumes and institutional backgrounds. They are overly superstitious that capital can change the world, and have unrealistic fantasies about so-called technology. They naturally tend to believe in institutions, or think they can see the future direction of the industry clearly, and they call it: This is the direction of the industry.
Still taking Scroll as an example, in addition to the fact that its technology seems to be very advanced and its financing is very impressive, what is its real value and is it really irreplaceable? If it is not irreplaceable, what is the logic of choosing it? What is the meaning of the so-called strict screening mechanism if the reputation of the project and the pattern of the founding team are not taken into consideration?
The listing of coins on Binance marks the success of a project. This is the power given to Binance by users. If this power is not used well, then users’ doubts are justified.
3. Some discussions: Binance’s crisis and the industry’s crisis
Chad Thaler, a master of behavioral economics and Nobel Prize winner, has a famous theory: people weigh the pros and cons in decision-making in an unbalanced manner, and consider "avoiding harm" more than "seeking benefit".
From "anti-VC coins" to "MEME fever", this theory is actually a vivid display. The risk of buying VC coins continues to increase within the range visible to the naked eye and telescope. If the time cost of being locked in and the upside of high valuation are taken into account, the profit space becomes infinitely narrow. Therefore, for ordinary users, VC coins on Binance have become an event where "harm" outweighs "benefits".
You may say that Binance is just a place to trade, just like a casino, it is an objective and neutral third party, and there are naturally winners and losers in trading. However, the objectivity of facts cannot replace objective facts. The real objective fact is that even casinos will not launch a game that will lose every time they bet. In the case of VC coins, almost no retail investors have ever won, and there is no dispute at this stage about the consensus on this point.
In addition, from the perspective of project screening, if an exchange is truly objective and neutral, its rules should be transparent, just like the New York Stock Exchange and Nasdaq. At present, in this industry, the listing of coins on the top exchanges is still a black box, relying on people's speculation and inference, so it has supreme power; some exchanges' listing of coins is semi-transparent, providing a state close to zero threshold (you can get listed by paying money). Both are undesirable, because the former specializes power, and even if there is no corruption, it is easy to breed arrogance and small circle interest communities; the latter monetizes power and charges high tolls, which is easy to increase project costs, thereby slowing down innovation.
From a broader perspective, the current industry crisis is obvious. Without greater liquidity overflow, BTC is independent of the entire crypto market, and it is gradually controlled and priced by Wall Street capital. Other copycats, like Ethereum, either cannot find a way forward or turn to MEME completely. The sense of worthlessness and nothingness shrouds the entire currency circle, especially when most value coins have been falsified time and time again, more users have lost confidence in whether the project is built. After all, the largest exchanges also choose to believe these so-called project parties, rather than users. This confidence and nothingness collapses faster. The rise of MEME itself is a loss of confidence in the so-called narrative value of industry development.
As the de facto industry leader, Binance should shoulder more responsibilities and user expectations. Instead of pushing the problems to peers, it is better to face up to its own mechanism loopholes. What users need is fairness, and it must be fairness. For something like Scroll, Binance took a large proportion of the chips at almost no cost. It is hard to say that this is fair, and it is also hard to say that this is beneficial to the project and the development of the industry.
From the perspective of traffic and status, you can say that there is no problem with this, but don't forget where the traffic comes from, and an old idiom: water can carry a boat, but it can also capsize it.
Do we still need Binance? There is no doubt that we do. No one denies the great contribution that Binance has made to the industry. We still believe in the professional ethics of CZ, He Yi and other industry mainstays. However, as mentioned above, this is not an individual problem. It involves the operation of the entire mechanism and the ecological problems of the macro environment. How to solve these problems is still unresolved and there is no clear path. What we expect is that Binance really stands on the side of users, using its influence and huge energy to reverse the current situation, so that users can rebuild their confidence in "value coins" and the entire industry.
From Binance's own perspective, whether users can do without Binance and whether its irreplaceability is declining are questions worth pondering by Binance's management, especially in an industry environment where Dex trading volumes continue to rise, on-chain MEME continues to be hot, supervision becomes stricter, and competition becomes increasingly fierce.
Remember, in history, no company has ever gone bankrupt because of too many rumors. Most of them go bankrupt because the rumors are proven true, and ultimately they fail due to arrogance.
