Binance’s chief has little shrift for trans-free mining, arguing that it’s a “damaging” approach…
Over the past year, we’ve seen a growth in what are being called trans-free mining exchanges. The ‘trans’ in the title stands for transaction, and as it sounds, no traditional transaction fees are involved in the trades concerned. Instead, there’s a token, and traders are rewarded with said tokens when they make trades. Hence, the mining aspect of the name. The more you trade, in theory, the more tokens you get.
It’s a new model, useful for getting immediate short-term attention, but it’s an approach that’s increasingly become open to criticism. Questions have been raised, for instance, over traders simply buying, selling, then buying again in rapid succession, simply to mine more tokens. That, and of exchanges who use it to boost volume, and thus shoot up the rankings themselves.
The co-founder and CEO of the world’s largest cryptocurrency exchange, though, is firmly on the side of those not impressed. Chatting to CryptoGlobe, Binance chief Changpeng Zhao – known as CZ – was adamant when asked about the threat to his own business of trans-free mining.
“I think now it’s very clear that it’s damaging. It’s not a threat”, he said.
“The exchanges will try to do that. The volume at the exchanges that have tried that have all come down. It’s a very complex way of raising money”.
“The law of supply and demand tells us that since there’s always more platform tokens being issued, you can almost guarantee that the price will go down over time. So, the way it’s done is not correct”.
Exchanges that have dabbled with trans-free mining include Coinex, Bitforex and Fcoin. It goes without saying that Binance will not be joining their ranks. The full interview can be read here.