Binance has announced the launch of the first AMM protocol in a centralized exchange.
It's called Binance Liquid Swap and it's a group of automated market makers (AMM) that allows exchange users to place tokens in a pool for instant liquidity, faster transactions and interest.
In fact, users who deposit funds in liquidity pools can earn interest and profit from the fees generated by trading on Binance Liquid Swap.
This protocol is based on various liquidity pools that allow users to trade crypto assets using an AMM pricing module, rather than an order book, to provide more stable prices and lower commissions for small and large transactions.
Therefore, by becoming a liquidity provider and depositing tokens in Binance Liquid Swap, it is possible to obtain interest and profit from the operations that are carried out within the group.
When launched, instant trading functionality will be provided for the USDT / BUSD, BUSD / DAI and USDT / DAI pairs.
The transaction fee and the price of the two crypto assets available in each Binance Liquid Swap pool are determined by the number of assets in the liquidity pool. Therefore, traders who add funds to the liquidity pool and trade the assets will influence the price of crypto assets, in the same way that traders who add and remove funds from a liquidity pool participate in market making.
Binance CEO Changpeng CZ Zhao said:
“We look forward to driving the growth of the DeFi market and empowering our users with more earning power and easier liquidity through a centralized group of AMMs with the credibility, security and protection that Binance provides. We hope to foster further growth of the DeFi market with Binance Liquid Swap, enabling retail users to provide liquidity on instant exchanges as DeFi products attract more volume and participants. And, with an incentivized pool design that benefits our community, from the community ”.