Another salute to FTX! How is the Binance version of equity tokens different? FTX founder: They should still be in the testing phase

On April 12th, it was a significant day for Binance as its platform token BNB hit a historical high of $638, ranking third in market capitalization closely following Ethereum. Subsequently, in the evening, Binance announced a major product, "equity tokens." Following the incident with leveraged tokens and the controversy surrounding BSC adoption, this move undoubtedly signifies Binance's declaration of war against its main competitor, FTX.

What are Equity Tokens?

Equity tokens are tokens that track the price performance of traditional financial stocks, backed by physical stocks. Binance, like FTX, the exchange that first introduced such products, achieves this through a partnership with the asset management firm CM-Equity AG.

Simply put, all tokens are backed by stocks held by CM-Equity AG, a German regulated entity. The stocks are held in custody by a third-party brokerage firm, allowing users to benefit economically from holding physical stocks, including potential dividends.

How to Trade Binance's Equity Tokens?

According to a Binance announcement, the Tesla equity token trading pair "TSLA / BUSD" was officially listed at 9:35 pm on the 12th, priced, settled, and collateralized in BUSD. Within the first 7 hours of trading, the trading volume reached $9.8 million. As shown below, the trading of equity tokens is available at the bottom of the "Trading" section on the Binance website.

Users must pass Level 2 KYC verification, Level 3 for German users, and users from countries like China, the U.S., and Turkey are prohibited from trading.

Regarding the trading interface shown below, it is important to note that equity tokens do not have an order book function. Users can only input quantities and click on buy or sell. Additionally, trading is not 24/7 and the use of BUSD as the base currency may be less convenient.

How Does Binance's Version Differ from FTX?

As previously reported, FTX launched its Equity Token Market as early as October last year. Interestingly, both Binance and FTX partnered with the same service provider, CM-Equity AG, indicating a competitive relationship between the two.

While Binance has only introduced the "Tesla Spot Market," FTX offers a greater variety of equity assets, including spot and futures markets, with trading pairs in USD. FTX's order book and trading interface are similar to traditional crypto trading pairs, providing a more user-friendly experience.

Given FTX's early entry into this product, it is normal for FTX to have a more mature product. The founder of FTX also mentioned on Twitter that this is just a test product for Binance.

Three Voices in SBF's Mind Facing Similar Products

Shortly after Binance released its equity tokens, SBF, the founder of FTX, made comments on Twitter. He jokingly said, "Binance also has equity tokens now, FTX's Equity Tokens are done." He then objectively commented on the shortcomings of Binance's product:

Binance only has one equity token product, open for trading for 33 hours a week, with no futures and users unable to redeem the underlying stocks through CM-Equity.

Finally, SBF provided an "objective and proper official statement": "This is just a test version for Binance, and only through industry competition and challenges can the crypto industry progress further."

Broke: @binance has stocks, FTX's are dead.

Woke: Binance only has 1 stock, only 33 hours/week, no futures, and 3rd parties can't create with CM-E

Bespoke: This is just their beta. Only by competing and challenging each other to do better can we push the industry forward.

— SBF (@SBF_FTX) April 12, 2021

Controversy Over Leveraged Tokens

When discussing FTX and Binance, leveraged tokens cannot be ignored. In 2019, Binance made a strategic investment in FTX, listing its platform token FTT for free. Subsequently, Binance introduced leveraged tokens originally created by FTX.

However, in March last year, Binance CEO Changpeng Zhao CZ delisted all leveraged tokens issued by FTX, claiming that "most users do not understand this product." After research director Larry Cermak leaked the news, Binance confirmed that they would issue their version of leveraged tokens.

Although they seem to coexist peacefully, the leveraged tokens incident appears to be the catalyst for a divergence between the two parties. Subsequent events, including the popularity of Binance Smart Chain (BSC), have led to somewhat unfavorable comments from SBF.

Overall, FTX's performance since its launch has been remarkable, with rapid product updates and a favorite among many traders. However, according to previous reports, FTX's website ranks 16th in terms of traffic in the crypto field, still trailing behind Binance, which holds the top spot.

While Binance has achieved outstanding results this year, with the rise of BSC and BNB continuously hitting all-time highs, they have noticed the lack of equity tokens, a product they lacked compared to their main competitors. By releasing "equity tokens" just before Coinbase's direct listing, it is believed that "equity tokens" will be the next battleground for competition between the two parties after last year's leveraged tokens.