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Despite CEO Changpeng Zhao stating potential risks, customers of the world’s leading exchange Binance have expressed firm support for the platform’s zero-fee trading.
Zero-Fee Trading to Pose Certain Challenges
Earlier this week Binance implemented a zero-fee trading feature across 13 spot BTC trading pairs. With this move, the company gained yet another edge over its competitors and unsurprisingly earned favor with its users. Eligible swap combinations include BTC/BUSD, BTC/EUR, BTC/USDC, and BTC/USDT among others.
Investors in various sectors and particularly the crypto space view swap fees as one of the biggest drawbacks to trading. Thus, it makes sense that they eagerly welcomed Binance’s introduction of 0-fee trading. In typical fashion Binance founder CZ asked traders for input regarding the platform’s latest venture.
0 fee trading @binance creates a few problems, wash trading, VIP tiers, etc. A thread 👇
Do you still want it? 😄 1/4.
— CZ 🔶 Binance (@cz_binance) July 8, 2022
The founder and CEO posted a Twitter thread outlining the problems that could accompany total 0-fee trading on the crypto exchange. According to CZ issues like wash trading could follow the complete removal of trading fees. Wash trading is a type of market manipulation that occurs when a trader conducts a string of buys and sells.
Consequently, wash trading could disrupt the company’s card tiers.
Binance Prepared to Modify Operations
CZ stated that one motive for wash trading could be to climb up Binance’s volume-based VIP tiers. Each tier grants users certain perks on the platform such as lower-trading fees. However, as pro poker player Brian Rast pointed out, without trading fees would there be a point to VIP tiers?
However, CZ wasn’t just going over the negatives of 0-fee trading. He was also considering what alterations the platform would have to make for the feature to run smoother. Hence, according to the founder, Binance could eliminate the trading volume of the 0-fee pairs from VIP tier calculations.
As a result of the proposed elimination, VIP tiers would be more difficult to attain; however, CZ had an answer to that as well:
No problem. We will adjust those [new issues] too.”
In addition, the Binance CEO noted that incorporating zero-fee trading would call for greater security measures. If people still carried on with wash trading despite the lack of incentive the detection would come in. Legitimate traders would not transact with themselves and that makes it easy to pinpoint wash traders.
Users Show Support For Zero Fees
The persons in question could employ multiple accounts but Binance reportedly has AI detection tools in place. Notably, these can be hard to integrate but CZ says the exchange already has AI experts in place. CZ paired the post with a poll cheekily asking users, “do you still want it?”
To bring 0-fee trading would take a lot of work on the platform’s part. CZ says they could avoid sparing such effort if customers do not want the feature. Hence, he decided to see what the poll would reveal about user sentiment.
We listen to our users,” he concluded.
The poll has drawn over 41,000 respondents with 65.8% voting in favor at writing time.