Binance Dex is a non-custodial decentralized cryptocurrency exchange launched in April 2019 and headquartered in Malta. The team behind the project is the same one that started Binance - one of the world’s leading cryptocurrency exchanges. However, the venue’s operation is maintained mostly by its community. Changpeng Zhao, CEO of Binance, states that the reason for launching Binance Dex was that decentralized exchanges “are offering a trustless and transparent financial system.”
Binance Dex is a subsidiary of Binance and complements its ecosystem that also includes a startup incubator, a token launch platform, research portals, education centers, OTC trading desks, and a mobile wallet application. The exchange is an addition to the Binance Uganda and Binance Jersey trading venues which widen the Binance group’s market exposure to Africa and Europe respectively.
Binance Dex is a decentralized matching engine, developed on top of the Binance Chain that allows users to trade cryptocurrencies which are issued and listed there. All funds traded on Binance Dex are stored directly in users’ wallets, and they retain full control of their funds. The matching logic allows for all transactions to be recorded on-chain and within the blockchain nodes (on a P2P basis) which helps in the mission of establishing a more transparent, easily auditable and functional exchange. Binance Dex operates in the same way as traditional stock exchanges where orders with best bid prices are matched with orders with best ask prices (also known as “NBBO”).
Binance Dex was launched after a two-month testnet period. During that time, the exchange processed more than 8.5 million transactions over a simulated trading competition. The team also conducted a bug bounty program and a coding contest which allowed them to fix flaws, existing in the system at that time, update the platform, and implement additional enhancements.
According to the team behind the project, Binance Dex is capable of operating with one-second block times, which is similar to the speed of centralized exchanges. They also state that the exchange has the capabilities to handle trading volume, similar to the one that Binance deals with. To prove that, two months after launch, the Binance Dex’ team processed a transaction worth $1.2 billion, which took 1.1 seconds to be executed and cost $0.015 in trading fees.
Binance Dex allows for additional functionalities, such as the issuance of new tokens, freezing and unfreezing of tokens, proposing new trading pairs or trade existing ones, created by the community.
At the time of this writing, there are no reported cases about hacks of Binance Dex. However, there have been some controversies with the exchange soon after it was launched. Users from 29 countries, the USA included, were struggling to access the exchange website. Some industry analysts were quick to describe that as a proof that Binance Dex wasn’t, in fact, a decentralized exchange. However, Binance CEO Changpeng Zhao reacted quickly and cleared things out by saying that geoblocking was false and it was just the Binance website (www.binance.org) that was restricting access from some countries, while the exchange itself, was fully operational and accessible from all around the world.
When it comes to safety measures, the Binance Dax team have done their best to limit any potential DNS attacks, typical for hackers targeting decentralized exchanges, or other malicious activities, by providing tons of information on the best practices regarding trading specs, matching logic and anti-front-running. There is also a very detailed outline for Binance’s Disaster Recovery and Emergency protocols. At the time of this writing, there are up to 11 nodes securing the network reportedly, with Binance retaining the full control of its operations.