Binance launches decentralized automated market maker (AMM) trading platform - Binance Exchange Pool

The cryptocurrency exchange Binance has jumped on the decentralized finance (DeFi) trend by launching an automated market maker (AMM) trading platform - Binance Liquid Swap.

Binance Liquid Swap

Binance launched a centralized version of an automated market maker (AMM) liquidity pool today, allowing users to inject liquidity into the pool as liquidity providers and share trading fee income proportionally. The liquidity pool is called " Binance Liquid Swap," which has different liquidity pools and real-time token exchange functionality. Binance describes it on the platform as:

"Binance Liquid Swap is based on liquidity pools, each pool contains two tokens, and the relative quantity of tokens determines their price. As long as there are corresponding tokens in the pool, trading can be conducted. Binance Liquid Swap can provide more stable prices and lower costs for larger trades."

However, this description may not be entirely accurate. The current challenge with AMM is precisely the issue of slippage. When a single trade volume is too large and the pool depth is insufficient, serious slippage issues can easily arise. In contrast, order book trading allows users to submit limit orders, enabling them to buy or sell tokens at specified prices. Nonetheless, if there is sufficient depth, AMM trading platforms, due to using different algorithms or predefined formulas, concentrate liquidity in the same market. Therefore, regardless of order size, AMM trading platforms do help provide liquidity.

From the current trading interface, Binance Liquid Swap only opens three types of liquidity pools for liquidity providers, all of which are stablecoins, including: USDT/BUSD, BUSD/DAI, and USDT/DAI, and the platform supports single-sided liquidity. Users simply choose the pool they want to join, and the platform will automatically allocate funds in proportion.