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Binance is a decentralized exchange for trading bitcoins, ether and other cryptocurrencies. The platform was launched in September 2017 and in just a few months has become the most popular cryptocurrency exchange in the world. The exchange achieved success thanks to the simplicity of trading, the large number of trading pairs and low fees, as well as the interesting features of the BNB internal coin.
Next, we will consider the key features of this service and tell how to use this knowledge to launch your own cryptocurrency exchange using the Binance clone script.
This approach will greatly simplify the development and allow redirecting the freed up resources to the marketing promotion of a new project.
Instructions for launching the exchange
consists of five simple steps.
Step 1: Binance Business Model
From the very beginning of its work, Binance Exchange
has positioned itself as the simplest and safest platform for decentralized trading of virtual money
for a large number of trading pairs. For this, the project team created two trading modes (interfaces):
- Basic for beginners. The interface contains basic information on the selected trading pair (course, simple basic charts) and allows you to create an order to buy coins at the rate you specified or the market rate.
- Advanced for experienced traders. Interface with a large number of indicators that are needed for a deep technical analysis of the market.
The service provides the services through a website and a mobile application that supports sixteen languages
(Western and Eastern Europe, as well as Turkey and East Asia). Without verification, the maximum withdrawal amount per day is limited to 2 BTC. After checking, the limit can be increased to 100 BTC
(you need to provide a passport, confirm the phone number and address) and more (you need personal communication with the exchange administration).
The dynamics of the trading pair BNB / USD
The exchange has its own cryptocurrency BNB, with which you can reduce trading commissions by 50%. The coin is not tied to Binance,
so it can be traded on other exchanges, such as ether or bitcoins. In addition to BNB, the exchange also created the BUSD cryptocurrency, the rate of which is tied to the US dollar.
The project team plans that traders will not store money in bitcoins or dollars, but in BUSD. This way you can reduce the risks associated with high volatility of the cryptocurrency exchange rate, because of which traders hold funds in USD, losing part of the profit on commissions when transferring one currency to another.
Step 2: Exchange Features and Functions
. The main problem of the cryptocurrency market and exchanges in particular is security. The most high-profile theft of money on the network is hacking crypto-exchanges: Mt. Gox in 2014 - $ 450 million, Bitfinex in 2016 - $ 65 million, Bithumb in 2017, 2018 and 2019 - $ 58 million, Binance in 2019 - $ 40.5 million. Therefore, when creating your own cryptocurrency exchange
, you need to do everything to secure money and user data, especially on exchanges such as Binance, where users store crypto on internal hot cryptocurrency wallets and / or in a common pool.
You need to secure the system from hacking from the side of:
- Users. This requires two-factor authentication using Google Authenticator or Authy, IP address tracking during registration and login + confirmation of new addresses, strong encryption when transferring data from the system to the user and vice versa. In addition, you need protection against phishing, DDos-, XSS- and CSRF-attacks. You also need to think about what to do if hackers cloned or “restored” the user's SIM card using technical support of the telephone operator (there are precedents).
- Service systems. Most hacks of crypto exchanges are hacking of a hot wallet (pool), where user funds are stored. At the same time, hacking, as a rule, occurs through phishing of administrator accounts or through hacking of third-party services, with which you can then hack into the main system. Binance was hacked using a combination of phishing and virus attack (according to a press release).
- High-frequency traders. What the problem is and how to deal with it is described in Michael Lewis’s book, Flash Boys: The High-Frequency Revolution on Wall Street. For the cryptocurrency market, this is very important.
In addition, you must remember to comply with the safety rules prescribed in the legislation of the chosen jurisdiction. Sometimes this only applies to compliance with KYC and AML, but often it also affects the technical component: transferring funds through a special service, compliance with GDPR, etc.
. In the summer of 2019, the Binance exchange officially launched an improved trading engine for margin trading, which, according to a press release, will almost instantly coordinate orders and press indices, which will improve the site’s liquidity. Along with this, Margin Wallet appeared on the exchange, the main feature of which is commission-free transactions when transferring funds to the main Binance Wallet. Margin trading is implemented as a separate option in the old user-friendly interface.
The basic trading interface of the Binance crypto exchange
Creating your own cryptocurrency exchange
using a clone script, you need to focus on the following properties of the trading engine:
To create liquidity
- Bandwidth and speed. The Binance trading engine allows you to process 40,000 transactions per second upon reaching finality within 0 to 4 seconds. High speed is achieved due to the fact that transactions are performed on the Binance blockchain, and not on the blockchain of the currency of a trading pair. Operations on third-party blockchains are performed only when depositing and withdrawing funds from the exchange.
- Usability and design. Since you will make your exchange based on a clone script, your design and interface will be identical to Binance. The only thing you need to do is change the color scheme and adjust the texts in order to avoid copyright issues.
- Available types of orders and the flexibility of their settings.
on your platform, it is better to buy liquidity from a third-party provider, engage market makers or connect to other exchanges. This will slightly increase the size of trading commissions, but this way you will be sure that orders on your exchange will be executed within a few seconds or minutes, and not hours or even days.
. In addition to security features and a trading engine, a clone script for a cryptocurrency exchange like Binance should include the following:
- Registration / Login. These functions are needed both to create a personal user profile, and for primary protection against unauthorized access to the service, hacker attacks and other illegal actions. For this reason, this function should not only be simple and understandable for any person, but also have several levels of protection. It is advisable to immediately determine the IP address and subsequently monitor its changes, as well as connect two-factor verification. For even greater security, YubiKey hardware identification technology can be used.
- Check / Verification. According to the status of identity verification, all Binance users are divided into three levels. The first one is issued after registration and requires only confirmation of e-mail, the second one requires verification of the name, surname and country (a scan of the passport is needed), the third one is issued after personal communication with the administration of the service.
- Deposit / funds withdrawal. This function allows you to transfer cryptocurrency funds from external to the internal wallet of the exchange, buy cryptocurrency for fiat money and withdraw money earned. If you follow the Binance path, then when you launch your cryptocurrency exchange, you need smart contracts (atomic swaps) to work with the maximum number of cryptocurrencies and with the most popular traditional methods of depositing / withdrawing funds (PayPal, Amazon Pay, bank transfers and cards).
- Statistics and analytics. Needed for professional traders for technical market analysis. You can almost completely repeat the similar Binance functionality, but it is better to analyze the feedback of traders about this platform and add the functions, indicators and charts they need.
- Help and feedback. Basic background information on what and how to do on the exchange, as well as technical support contacts or an online feedback form. It’s optimally, if the training will be presented in the form of video instructions.
- Additional features. In addition to the basic things, you can also implement demo accounts, pamm accounts, additional security features and much more, which will improve the user experience and distinguish your exchange from competitors.
. Functionality for managing the exchange. Includes tools for tracking the status of the exchange, users, referrals, wallets, transactions, content, etc., as well as statistics and analytics. At Binance, some of these functions are automated: algorithms track the behavior of users, and if they commit something strange or unusual, the system will immediately notify the administration and may even freeze a wallet and / or cancel a strange / atypical action.
. Most Internet users connect to the network using a smartphone and prefer to access web services through applications rather than a browser. The Binance team understands this, so in April 2019, the service added the possibility of buying and selling cryptocurrency through the Binance Exchange application, which is available on Android and iOS.
Binance Exchange Mobile Application Interface
The functionality and design
of the mobile application largely repeat the functionality and style of the web service. Everything is just customized for smartphones, that is, it is simplified, and there are no some tools and indicators for technical analysis.
Step 3: Binance Monetization Model
Margin Trading Binance Commissions
Binance Cryptocurrency Exchange
makes money on commissions from trading transactions within the service and commissions for withdrawing funds from a deposit (replenishment of a deposit is free). The size of trade commissions is one of the lowest in the industry - from 0.0150 to 0.1% of the transaction amount. For margin transactions, commissions can be further reduced by conducting more transactions - up to 20% discount for the most active traders. The withdrawal cost depends on the cryptocurrency and the amount, for example, when withdrawing bitcoins, you need to pay 0.0000025 BTC, ether - 0.01 ETH, dash - 0.002 DASH.
The Binance cryptocurrency exchange
also earns on its token, selling it to those who wish to save on trading commissions. During the crowdsale in 2017, the company raised $ 15 million. According to the roadmap, the money will be spent on spot trading (done), margin trading (done), futures (done), anonymous instant exchange and a decentralized cryptocurrency exchange.
In addition to implementing these monetization methods, you can also:
- Enter a fee for creating an order. This will increase the profitability of the cryptocurrency exchange, as well as reduce the likelihood of market manipulation by creating a huge number of orders for the game to increase or decrease. The fee should be very small (0.0001%).
- Add premium features. On many exchanges, to access certain indicators and charts, you need to subscribe - from $ 5 / month. In addition, money is also taken for quick technical support, connecting pamm accounts, training in trading and connecting trading bots.
- Take money for listing a coin. Before adding the possibility of tracking with a new cryptocurrency, good exchanges check the startup for legality, reliability, relevance and prospects. Large sites take a lot of money for this: from 10 to 20 thousand dollars for listing on small sites, up to 50 thousand dollars - medium, from 100 to 300 thousand dollars - on the top ten exchanges.
Step 4: Marketing strategy
Share of Binance Users countrywise
Most of the new traders receive Binance
through referral traffic and search engines. The service offers 20% of the commission from transactions of attracted users with the possibility of increasing the share to 40% for accounts with 500 BNB. Referral links are mainly posted on thematic sites and forums. Social networks are relatively underutilized due to restrictions on advertising trading and cryptocurrency investments.
Primary Target Audience:
- Attracted through advertising on sites dedicated to trading on Forex and stock markets. Visitors are told about the great volatility of the market, which creates "ideal conditions for making money on trading."
- Crypto enthusiasts. Attracted through training materials and airdrops.
- Teams of blockchain startups (initiators involved in the promotion, and clients) who need to transfer funds from new less popular cryptocurrencies to main ones (bitcoin, ether) in order to sell them for fiat. They need low commissions and the availability of the desired currencies in the listing.
Step 5: Development Approaches
White Label Products
. Ready-to-run Binance clone scripts. The developer is responsible for the development, technical support and updating of White Label solutions, you only need to buy a product and configure it for yourself, which will require from a week to a month in real time. Deployment is also usually done by the developer, you have only management and marketing. Cost - from 100 to 50 000 dollars per month. Some functions and services may be sold / connected separately.
Open source software
. This is completely free software with no restrictions on use for commercial purposes. Usually it is created by novice programmers and crypto enthusiasts who want to show themselves or contribute to the development of the market. Such software should be used with caution, as there are no guarantees of its reliability and security.