Blockchain in the Real World: Binance/KuCoin

Part of Hydro’s mission is to take blockchain beyond the proof-of-concept phase. To that end, this series will take a look at some examples of blockchain technology being used in the real world. There are a variety of blockchain projects out there with live, working products and services you can use today, and we want to highlight them here!

Background

Binance and KuCoin are two of the larger exchanges in the crypto space right now. One defining factor about both of these exchanges is their use of ERC-20 tokens in their systems. While both tokens do not function exactly the same, I feel as though they are closely related enough to talk about both here.

Both tokens are used on the platform to reward their users for holding the tokens. On Binance, holding Binance coins (BNB) allows for decreased trading fees on the platform when paying with BNB. Users can also trade all coins against BNB. For KuCoin Shares (KCS), users are rewarded on the platform based on their KCS holdings on the site. This pays out 50% of all trading fees to KCS holdings on the platform.

Experience Using The Product

As a crypto enthusiast, I have used both of these platforms a decent amount. I will stay away from the overall usability of the platforms themselves and focus solely on their respective tokens and how they work.

The purpose of BNB is to reduce trading fees on Binance. In my experience, this system worked very well and the reduced fees are a great incentive to hold the token. I also at one time held a couple KCS on KuCoin that were given to me on sign up. I received a very small amount of other coins during this time.

There is no denying that the tokens on their respective platforms work exactly as they are advertised. The main concern that I have with these tokens is that they are purely used by their platforms for fundraising. Nothing about these tokens are truly required to be used by the platform to perform the day-to-day tasks of the exchanges. These tokens could be replace with a credit system or points system that would serve the same purpose without ever being a tradable cryptocurrency. I think it is important to know that these tokens are not required utilities to the platform.

Strengths and Challenges of Binance/KuCoin as they Currently Stand

As I stated earlier, these are two of the larger exchanges in the crypto space these days. As I write this, Binance actually has the most volume. Clearly both platforms have a lot of strengths. Speaking purely about the tokens, they work very well with what they are trying to do. They offer users discounts and shared trading fee payouts which are very popular among their users.

In my opinion, the major challenge that these tokens have is their ability to add real utility to their respective platforms. It seems as though Binance has taken a very active approach to this challenge as they recently announced their plans to create a decentralized exchange which would utilize the BNB token. This could be a major step for BNB and its utility in the platform. I will be closely watching as KuCoin and Binance build out their exchanges to see how their tokens play roles in their usage.

Altogether

Overall, I think that these exchanges have proven that they are very good at what they do. The real challenge for them, as they grow, will be to expand the utility of their tokens to be more than just a form of fundraising.

Note: I do not own BNB/KCS or have any relation to the teams.