Binance Challenges Low Capital Projects to Boost Liquidity and Trading

The Binance executive admitted that the crypto exchange representatives contacted digital assets projects with low liquidity tokens on the platform. The previous week’s activity involved investigating details on the deployed market-making relationships. 

The Binance executive admitted the inquiry sought whether the projects would contribute the tokens towards its saving product. He added that the outreach targeting the projects with low liquidity constitutes a part of the exchange’s risk management initiative.

Binance Outreach to Projects With Low Liquidity Trading

The move by Binance to question the crypto projects with apparent low liquidity tokens constitutes its efforts to investigate market manipulation. Besides, the lead crypto exchange platform by transaction volume aims to boost trading. 

The past week’s engagement targets ascertaining the low-liquidity projects’ interaction with various market makers. In particular, Binance asked if the projects would consider allocating 1-5% tokens to the savings account. Binance indicated that the savings account would reward the projects with interest yields.

The outreach campaign, whose content appeared in a Thursday, August 24 Tweet by Napgenus Ursus’s profile, sought the percentage of the projects willing to contribute towards the savings products.

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Binance Monitoring Projects Susceptible to Market Manipulation

The initiative targets projects with limited crypto outfits whose tokens listed with the Binance platform have lower liquidity trading pairs. Also, the risk management initiative targets projects with small market capitalization compared to the general marketplace. The Binance spokesperson said the selection of the projects arises from their susceptibility to suffering market manipulation. 

The primary purpose of unveiling the risk management outreach is to challenge the project teams to initiate the recommended steps toward enhancing liquidity protection. The executive admitted that engaging the input of market makers constitutes one mechanism that would guarantee the projects the elusive liquidity protection. He considered market makers as providers of liquidity who willingly purchase assets at defined prices to enable the exchange to function smoothly. 

The Binance spokesperson indicated that projects suffering low liquidity should consider allocating the tokens towards the saving pools, including the Binance Savings. The executive described Binance Savings as allowing users to borrow passes through margin or loan. 

Reviewing the Binance Savings Product

Doing so would allow users to inject liquidity into the prevailing market actively. However, he termed the contributions towards the savings pool as a voluntary engagement.

The Binance Savings pool allows users to leap rewards from tying tokens. Nonetheless, the interest charged varies relative to the period committed. The move by Binance comes at a time when such products are facing increased regulatory scrutiny. 

The regulatory crackdown comes following the sudden implosion of crypto lenders, including Voyager Digital, Celsius, and BlockFi. Surprisingly, the three firms offered supernormal crypto deposit rates before plunging into bankruptcy.

Binance Battling Various Lawsuits Against Regulatory Agencies

Beyond the savings product, Binance is battling regulatory pressure from the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Each regulatory agency confirmed filing multiple changes, citing the leading crypto exchange operator led by its chief executive, ChangPeng Zhao. 

A review of the cases shows that the CFTC alleges that Binance contravened US federal laws by failing to register the exchange service. The Garry Gensler-led SEC alleges it misled the US customers regarding the asset’s safety. The SEC accuses Binance of orchestrating fraud and market manipulation. Binance has since then dismissed the complaints, instead illustrating its efforts to foster compliance with the existing rules and cooperating with the regulators.

Glass Markets founder Matt Batsinelas acknowledged the Binance outreach as timely to ensure it monitors the exchange liquidity. The analyst added that the outreach would enable the trading avenues to attain greater oversight over the conduct of market makers.

Batsinelas likened the outreach unveiled by Binance as the net positive to ensure the market makers provide the necessary liquidity. He echoed Binance’s executive that digital assets projects should be devoted to protecting users, particularly the capitalization and liquidity levels.

Binance executive confirmed that the outreach aligns with its risk management initiative to guarantee a safe and secure user trading ecosystem. He commended the cooperation portrayed by various project teams as willing to exhaust their contributory input.

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