Binance has cut trading fees on its ETH/BUSD pair to zero, as CEO Changpeng Zhao tries to onboard the next billion users.
Binance cuts trading fees to zero
Binance CEO Changpeng Zhao has spoken openly about his plans to onboard the next billion people to crypto via Binance over the next few years.
He believes that digital assets like Bitcoin and BNB are a force for good in the world. He has spoken in particular about how Bitcoin grants people a higher degree of property rights than they have ever had before, and the asset in extremely scarce, which is important in an inflationary environment.
Binance had already cut trading fees to zero on a few of their other pairs, such as BUSD/BNB, but this move hopes to invite in the Ethereum crowd to trade more actively on Binance in preparation for the merge in September.
The idea of zero fees on trading was originally popularised by Robin Hood, and was one of the reasons that the app was able to gain such a strong market share.
A race to the bottom for fees across all platforms
Binance isn’t the only crypto company that has been trying to reduce fees for its users.
Strike, run by Jack Mallers, has also cut fees to zero in an attempt to onboard new users. In fact, when people use the Strike app, the only fees they will pay at all are transaction fees on the Bitcoin Lightning Network (which is often less than a cent).
This trend has also been shown with a few other wallet providers, who have been forced to either make their services completely free to use or to add additional functionality.
Many of the best and most popular Bitcoin wallets on mobile are completely free to use, and are built solely to be a public service rather than to be profit-generating. In order to generate profit from an asset that is designed to remove middlemen, one has to either build a company like Swan Bitcoin and offer a range of other services, or facilitate speculation.
A lot of trading speculation around the merge
Almost since Ethereum’s inception, there has been a plan for ETH 2.0 and an eventual move to PoS. Finally, after many years, it appears that that time has finally come.
In preparation for this news event, a lot of traders and speculators are flocking to ETH.
This has been reflected in the trading volume of ETH versus other blue chips staples of the industry: relative to Bitcoin’s market cap, ETH’s transaction volume and transaction counts are both far larger.
Binance does well either way
In the bear market so far, there have been many companies that have gone bust and lost all their money. Celsius, Voyager, BlockFi, Nexo, Babel, 3AC, etc., all left themselves overexposed and were caught unprepared when the tide changed.
Binance, on the other hand, was prepared for any eventuality. There are many reasons for this in terms of CZ’s planning and preparedness in such an event, but it is also worth noting that exchanges like Binance can still turn huge profits when stablecoins are more in demand than assets.
At the moment, most of Binance’s revenue is derived from stablecoins, which are comparatively not as risky as most of the alt coins in the space (perhaps with the exception of algorithmic stablecoins like UST).
This also provides Binance with uneven advantages compared with most of their competitors, since they have their own stablecoin offering in BUSD.
In the race of crypto companies to try and onboard more users than all their competitors, and to establish as much market dominance as possible, it seems that Binance is currently leading the way, and their economy of scale will make it increasingly difficult for competitors to rival them.
CZ has stated that the move of offering lower and lower fees to their users (funded by other parts of the company as well as capital raises) is one of the best ways to onboard new users, and he is keen to keep lowering fees as much as he can on other pairs, too.
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