As the industry's top player and the pinnacle of the pyramid, Binance, has recently faced an increasingly intense market FUD. Simon, who is labeled as the CEO of MoonrockCapital, claimed that Binance charges 15%-20% of the total token supply as a listing fee, which sparked a huge wave of discussion in the market, with both supporters and opponents. Some emotional individuals even believe that Binance may be the biggest cancer in the industry, while opponents believe that this is not Binance's responsibility, but rather the problem of the project parties or the industry's own development problem.
Ultimately, Binance's CEO publicly responded: If a token does not pass Binance's screening, no matter how much money or listing fee, it cannot be listed on Binance, and the token distribution is public, so Binance could not possibly charge such a high proportion of the token distribution.
Regardless of who is telling the truth behind the verbal battle, or whether it is just a business competition. At least from the CEO's response, we can see the CEO is using her own reputation to save Binance's reputation, actively and promptly responding to such doubts, and the CEO has won the respect of the community with her candid and direct attitude in the past and present.
However, such doubts are not the first and will not be the last, which also highlights Binance's development dilemma in recent years, facing regulatory crackdowns externally and community doubts internally. The real crisis has never been hidden in the surface challenges, just as what defeats Binance will definitely not be another Binance.
I. Is FUD really just a rumor: "Victim Mentality" and "Who is the Enemy"
Assuming the CEO's response is true, the FUD is just the dark side of business competition, but unfortunately the public does not have the ability to think independently, otherwise they cannot be called the public. From countless historical examples, an obvious truth is: the destruction of rumors does not depend on the public's self-awakening, but on irrefutable facts, and the guidance of KOLs only temporarily disrupts the senses, which does not mean the disappearance of doubts, and they may even be the cause of the next more intense FUD.
When attributing all FUD to the conspiracy of business competition, the implicit victim mentality is not conducive to eliminating the controversy. Perhaps there are competitors who are fanning the flames, but this may not be the whole story. When the platform has sufficient convincing evidence, no one will choose to challenge an industry leader with such a thankless approach, only when you have flaws in your own can this method be effective. This is the most obvious business logic.
When facing FUD, first look for problems within yourself, rather than suspecting competitors first, this is the attitude a great company should have. The real enemy has always been your own arrogance, not others. If FUD is seen as a business tactic, it actually ignores the real underlying crisis.
II. 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 for now, is still the largest liquidity center in the industry. Whoever controls the liquidity controls the pricing power, this is an eternal truth in the financial world. However, from a longer-term perspective, the short-term pricing power is generally determined by institutions/exchanges, but in the long run it will always return to the users. If the pricing power is abused, the speed of this transfer of pricing power will be further accelerated.
A prominent sign of the abuse of pricing power is the tolerance of projects with extremely unbalanced token distribution and poor reputation. Among the projects listed on Binance, there are many low-circulation, high-market-cap projects, and Binance itself takes a large proportion of the tokens. This turns into a situation where investment institutions, project parties, exchanges, and market makers control the vast majority of the tokens, and retail investors can only passively hold the bags. The recent Scroll project is an example.
The initial circulation only accounts for 19% of the total circulation, and there is also 5.5% for Binance mining, with the remaining tokens subject to different unlock schedules. A simple arithmetic problem, with such a large and persistent selling pressure, who will take it up? Assuming the project party has a good reputation and its own ability to generate cash flow, the selling pressure will also be partially fed back, further smoothing the entire price curve. The actual situation is that the data was almost halved in a short period of time after the airdrop and TGE, and what's worse, this collapse of the fundamentals could be 100% predicted even before the Binance listing.
The questions are:
1) Everyone knows this is a case where the fundamentals are certain to remain poor, the token distribution is extremely unreasonable, the reputation is poor, and it is easy to form persistent control and selling pressure, why did Binance choose to list it?
2) From the perspective of interests, which side is Binance's screening mechanism standing on?
Combining these two questions, we can at least clearly conclude that at least from the perspective of interests/user experience, Binance gives the impression of not standing with the users or at least not standing with the majority of users' interests.
If Binance truly stands on the side of user interests, no competitor can smear Binance, because the sustainable wealth effect is the greatest truth in the crypto world.
A more significant contrast that reflects the role of users as the ultimate pricing power is the Grass project, whose fundraising amount is less than 1/10 of Scroll, but the current total market value is over $1 billion, while Scroll is over $500 million.
Even in the face of selling pressure from token unlocking, Grass's early circulating supply was not proportionally large, but its fair and sustainable airdrop has won the project a good reputation among users, which is ultimately reflected in users' continuous buying, the project continues to increase incentives for users, and in turn feeds back to users.
The same macro environment, the same projects with different fates. It clearly reveals that no matter how top-notch the technology, how dazzling the financing background, even with the boost of a top exchange, if users don't buy in, the speed of the collapse of this harvesting chain will only get faster, and each collapse is consuming the foundation of Binance's foothold, and the transfer of pricing power will also accelerate accordingly.
2. The transfer of liquidity: human nature chases greed, but the premise is fairness and transparency; on-chain DEXes have unparalleled advantages.
Whether the crypto world is a big casino or not, it certainly applies the basic rules of casino survival: we're not afraid of you making money, we're just afraid of you not playing. Contrary to the intuition of most people, the legitimate casinos in Macau almost always put a lot of effort into the fairness, justice and transparency level, in order to allay the concerns of gamblers. Casinos make money not by cheating, but by constantly amplifying their statistical advantages.
Decentralization has a stronger advantage over centralization in terms of fairness, transparency, and justice. The growth of Dex is mainly constrained by the interaction experience, but the impact will be minimized in the face of the wealth effect. Data confirms this. According to data from The Block & defillama, as of October, the ratio of spot trading volume of Dex to Cex has risen to a historical high of 13.84%, and this ratio is steadily expanding.
Not to mention the recent hot MEME, platforms like Pump.fun have spawned several MEME tokens worth over $1 billion, with daily trading volume exceeding $1 billion and over 670 transactions per day.
The data behind this reflects that liquidity is being gradually snatched by on-chain Dex or MEME-like hotspots, although the on-chain risk is higher for new players, few question the problems of decentralized platforms, as they provide a relatively fair gaming environment.
The key difference between Cex and Dex is that the foundation for the establishment of centralized exchanges is that users hand over the power to screen tokens to the platform. Either you have an indiscriminate or relatively low threshold, or you set a relatively high threshold but have sustainable value. The worst case is that you set a high threshold but choose a junk project.
There is also a misconception that some centralized exchanges tend to fall into the elite agent model, they do not think the projects they choose are junk, the personnel responsible for such business mostly have impressive resumes and institutional backgrounds, they are overly superstitious that capital can change the world, have unrealistic fantasies about technology, and naturally tend to believe institutions, or think they can see the future direction of the industry, calling it: this is the direction of the industry.
Still taking Scroll as an example, apart from the technology seeming very advanced and the financing very strong, what is its real value, and is it truly irreplaceable. If it is not irreplaceable, what is the logic for choosing it. So-called strict screening mechanisms, if not considering the reputation of the project and the vision of the founding team, what is the meaning of this screening.
Binance's listing signifies the success or failure of a project, this is the power given to Binance by users, if this power is not well used, then user doubts are naturally justified.
III. Some Discussion: Binance's Crisis and the Industry's Crisis
Behavioral economics heavyweight and Nobel laureate Richard Thaler has a famous theory: people's weighing of pros and cons in decision-making is unbalanced, with greater consideration of "avoiding harm" than "seeking benefit".
From "anti-VC coins" to "MEME fever", this theory is vividly manifested. As far as the visible and foreseeable future is concerned, the risk of buying VC coins continues to increase, and if the time cost of being trapped and the upside space of high valuations are included, the profit space also becomes infinitely narrow, so for ordinary users, Binance's VC coins have become an event where "harm" outweighs "benefit".
You may say that Binance is just a trading venue, like a casino, an objective and neutral third party, and trading naturally has winners and losers. However, the objective facts cannot replace the objective facts. The real objective fact is: even a casino would not introduce a game where ten out of ten people lose. In the case of VC coins, there is a consensus that almost no retail investors have won, and this is undisputed at this stage.
Furthermore, in terms of project screening, if a truly objective and neutral exchange, the rules should be transparent, like the NYSE and Nasdaq. Currently, in this industry, the listing of top exchanges is still a black box, it relies on people's guesses and inferences, and therefore has supreme power; some exchanges have a semi-transparent listing, providing a near-zero threshold state (you can list by paying money). Both are unacceptable, because the former will specialize the power, even without corruption, it is easy to breed arrogance and a small circle of interest groups; the latter will monetize the power, charge exorbitant tolls, and easily increase project costs, thereby slowing down innovation.
From a broader background, the current industry crisis is obvious. Without greater liquidity spillover, BTC is gradually being controlled and priced by Wall Street capital, independent of the entire crypto market. Other altcoins, either like Ethereum, cannot find a breakthrough direction, or have completely turned to MEME. A sense of worthlessness pervades the entire crypto world, especially when most value coins have been repeatedly disproved, more users have lost confidence in whether projects are actually being built, after all, even the largest exchange chooses to believe these so-called project parties rather than users, this confidence and sense of worthlessness collapses faster, the rise of MEME itself is a loss of confidence in the narrative value of the so-called industry development.
As the de facto industry leader, Binance should shoulder more responsibility and user expectations, rather than shifting the problem to its peers, it should face the loopholes in its own mechanisms. What users need is fairness, and it's damn fairness. Like Scroll, Binance took away a large proportion of the chips at almost no cost, it is hard to say this is fair, and it is also hard to say this is beneficial to the project and industry development.
From the perspective of traffic and status, you can say there is no problem, but don't forget where the traffic comes from, and an old saying: water can carry a boat, and it can also capsize a boat.
Do we still need Binance? Undoubtedly, no one denies Binance's huge contribution to the industry. We also still believe in the professional ethics of CZ, He Yi and other industry pillars, but as mentioned earlier, this is not an individual problem, it involves the problem of the entire mechanism operation and the ecological problem of the macro environment, how to solve these problems is still pending, and there is not yet a 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 confidence in "value coins" and the entire industry.
From Binance's own perspective, whether users can do without Binance, whether its irreplaceability is declining, this is a question worth pondering by Binance's management, especially in the context of continued growth in Dex trading volume, persistent MEME heat on-chain, tightening regulation, and intensifying competition in the industry.
Remember, in history, no company has gone bankrupt because of too many rumors, most of them have decayed due to the confirmation of the rumors and finally succumbed to arrogance.
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