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Binance Curb on Zero-Fee Trading May Cost Market Share, Boost TrueUSD Stablecoin: Kaiko Research Head

According to Kaiko’s head of research, Binance’s market share may decrease after the world’s largest cryptocurrency exchange by trading volume eliminated the majority of zero-fee trading after only nine months.

On Wednesday, Binance gradually stopped offering $0 fees for buying and selling bitcoin (BTC) with a number of asset pairs, retaining the promotion exclusively for the stablecoin TrueUSD (TUSD). The decision made by Binance could signal a significant change for centralized crypto exchanges, ending Binance’s hegemony. According to Kaiko data, zero-fee trading pairings have made up almost 60% of total trading volume on the platform. It might also highlight TUSD’s position as Binance’s preferred stablecoin.

In a market crash last summer when exchanges were struggling with low trading volumes and declining earnings, Binance stole considerable market share from competitors by launching zero charge trading for some BTC pairings globally. Clara Medalie, research director at cryptocurrency market data company Kaiko, emphasized how the measure helped Binance increase its market share from 50% last July to 72% when compared to the most liquid exchanges.

Zero-fee trading is unsustainable in the long run, but it allowed Binance to quickly obtain a significant amount of market share, Medalie wrote in an email to Coindesk. “We could anticipate a short-term decline in market share without zero costs for the majority of BTC pairs.” Once authorities took action against Binance USD, TrueUSD has gained in prominence (BUSD). The New York Department of Financial Services (NYDFS) ordered Paxos, the company that produces BUSD under the name of the exchange, to discontinue the stablecoin last month. The supply of BUSD then dropped sharply from $16 billion to $8 billion.

TUSD appears to have been chosen by the exchange as a potential successor, according to Medalie. TUSD more than doubled in market capitalization after the announcement of BUSD’s phaseout, reaching $2 billion, CoinGecko data showed. The intellectual property of the stablecoin was purchased by a little-known Asian investment firm called Techteryx. Archblock, formerly known as TrustToken, manages the stablecoin. TUSD was reportedly created by Justin Sun, the founder of Tron and a crypto billionaire, however the company has previously rejected these claims.

 

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