Binance "operates" on new coin's "hidden disease"

Two tokens that were airdropped by HODLers continued to fall after being listed on Binance, causing users to question; a new token on Launchpool modified the community airdrop ratio before it was about to open, angering the community group. Recently, three new assets, RED, GPS and SHELL, that were launched on Binance in succession exposed the "hidden disease" of the project circle, and Binance, which has the obligation to review, showed its "scalpel".

On March 6, Binance urgently stopped the listing of RED, and this action brought a turning point for community users who were defending their rights to the Red Stone project. However, the tough attitude of the top exchanges is not only this, but also more explosive.

On March 7 and 9, Binance exposed that a market maker of GPS had sold 70 million GPS in a row, which was judged as "illegal", and it was found that the market maker also participated in the market making activities of SHELL. The profitable account of the market maker was frozen by Binance, and it received a market making ban from the platform. After that, the two project parties came up with user compensation plans such as buybacks.

Three consecutive new currency storms also officially opened the curtain of Binance's rectification of the in-site market, and the "voting to add/delist coins" mechanism was added to the new asset review system. Not only that, Binance has updated the frequency of adding "observation tags" to the listed tokens to "monthly", and will continue to review the performance of the assets on the site, and will remove them if they do not meet the rules.

When the crypto asset market enters a downward trend, although popular tokens and new assets have potential traffic effects, the world's largest crypto asset trading platform has decided to tighten the opening and strictly enforce the market access threshold, which also sounded the alarm for the project parties that "listing on Binance is the end."

Abnormal K-line questioned  Binance found illegal market makers

The weirdness is exposed from the K-line.

In early March, the GPS (GoPlus Security) token airdropped by Binance HODLer fell all the way after entering the Binance spot trading market. After listing on March 4, GPS opened at about $0.104, closed at about $0.068 that day, and soared to around $0.151, which is its highest point on Binance so far. Since then, GPS has continued to fall, falling to a low of about $0.032, and now it is only $0.038, nearly halved from the closing price on the first day, and 74.83% from the highest point.

This blockchain project, which mainly engages in Web3 security business, is not very safe in the secondary market. However, in more than a week, it has completed the trend that some old cryptocurrencies in the crypto circle need to experience a bull and bear market to get out of.

Users who participated in GPS secondary market transactions criticized it, and also began to doubt the HODLer airdrop product, because the token project SHELL (My Shell) that was launched through the airdrop channel in February also followed the same trend, and also halved from the first day's closing price of around US$0.59 to around US$0.257.

Compared with the other two HODLer airdrop projects, GPS and SHELL showed a "waterfall" trend (data as of March 10)

KAITO and LAYER, which were previously listed on the HODLer airdrop, rose and fell with the market. In comparison, the waterfall trend of GPS and SHELL appeared abnormal. Many users raised doubts on social platforms, "Is the project party selling on Binance?"

Until March 7, Binance announced that it had exposed a "big melon" and GPS was pinned with an "observation label" because the price of GPS fell sharply after it was listed on the spot market, and a market maker made abnormal market behavior. Binance quickly decided and froze the market maker's account directly.

According to Binance's investigation results, from 21:00 on March 4th, Beijing time to 17:55 the next day, the market maker sold about 70 million GPS in 21 hours, and there was no pending order to buy during this period; after the spot trading was opened, the market maker continued to sell tokens, with a cumulative profit of about 5 million USDT, becoming the largest beneficiary.

As soon as the news came out, the market was in an uproar. Users seemed to have found the reason why GPS kept falling, and Binance's investigation was not over.

On March 9, Binance officially announced that the market maker was also responsible for the market making activities of the MyShell (SHELL) project. Although Binance has not yet announced the name of the market maker, it has clearly determined the behavior of the market maker as "illegal" and has dealt two heavy blows to it: removing the market maker from the shelves and prohibiting it from conducting any market making activities on Binance; confiscating the relevant income of the market maker and using it to compensate users of the GPS and SHELL projects.

Binance's heavy blow also caused the project party to take remedial actions.

On March 10, MyShell stated that after receiving the Binance investigation report, it had terminated its relationship with the abnormal market maker and introduced several new partners to ensure stable liquidity. All Binance accounts related to the market maker have been suspended, and all remaining assets will be transferred to the new market maker. In addition, all stablecoins sold by the market maker will be used to repurchase SHELL within 90 days, and the official will publish the wallet address related to the repurchase for community verification.

On March 11, GoPlus Security stated on the X platform that the 4.34 million USDT generated by GPS transactions in the original market maker account frozen by Binance will return to the control of the project party after completing the regulatory process, and use these funds to repurchase GPS tokens within 90 days, and all repurchased tokens will be permanently destroyed. In addition to the repurchase, GoPlus Security will allocate an additional $2 million to compensate users who made net purchases during the illegal market maker activity period on Binance. This compensation plan includes spot and leverage users.

Binance's move to deal with the anomalies of the two projects has received many praises from users. Its move against GPS and SHELL market makers can also be regarded as a kind of self-defense for platform users. Some users believe that Binance has only torn off a corner of the fig leaf of the problematic projects. "GPS and SHEL have long entered other exchanges, but the market maker problem has not been discovered. Is it waiting to be listed on Binance to cut off the users here?"

People hope that platforms as providers of trading venues can more strictly review and supervise the entire process of project tokens entering the market, and Binance is adopting these voices.

Community voices must be heard, and users vote to "list/delist coins"

On March 7, Binance announced the optimization of the listing/delisting policy, adding the "vote to list coins" and "vote to delist coins" mechanisms to achieve community co-governance. It stated that the platform will not profit from listing coins, and will continue to disclose the marketing expenses of each project in the listing announcement, and will airdrop to Binance users in batches according to the token unlocking time.

Another Binance new coin event may have promoted the introduction of the new mechanism.

On March 6, the modular blockchain project RED (Red Stone) was suddenly stopped by Binance 20 minutes before it was originally scheduled to be officially launched for spot trading. The reason was that "RedStone (RED) unexpectedly changed its community airdrop allocation at the last minute", that is, the project party initially promised to distribute 9.5% of the total supply of tokens to the community, but the proportion was temporarily reduced to 5%.

At this time, RedStone's sudden increase in airdrop acquisition conditions resulted in a large number of community members who worked hard on on-chain transactions and tasks not receiving airdrops. The outrageous operation was causing the community to be furious, and the complaints were obviously transmitted to Binance.

After Binance showed a tough attitude towards the project team's temporary change of the economic model, RedStone compromised and released an additional 2% from the "Ecosystem & Data Providers" fund pool to compensate some community contributors who failed to receive airdrops.

On the day when the RED incident was resolved in stages, Binance added the "community co-governance" dimension to the listing/delisting process.

Binance stated that the community provided many valuable opinions on listing coins, and the platform always attaches importance to the voice of the community. After testing and evaluation, it was decided to fully optimize the listing mechanism. "Voting for listing/delisting coins" will give users more rights to participate in decision-making. The core goal is to provide users with opportunities for value discovery while ensuring the quality, innovation and compliance of the project.

According to the specific mechanism announced by Binance, users whose parent account holds no less than 0.01 BNB can vote for their favorite projects. Projects with high votes and that have passed due diligence will be listed on Binance, and the platform will select projects from the market and Alpha observation area to enter the voting pool; for projects with no product development updates, no community and project maintenance, no regular progress announcements, additional issuance, or major risk behaviors, Binance will include them in the main site's "Risk Observation Zone (Monitoring Zone)", and will mark projects that do not cooperate in providing token-related information. Users can express their intention to delist projects that are already in the "Risk Observation Zone" through voting.

This means that listing on Binance is not the end of the project's development, and it is very likely to be delisted due to user voting.

In addition, Binance also clarified the new asset listing channels in the governance content, mainly including:

Binance clarified 4 new listing channels and pre-market trading mechanisms

It is worth noting that Binance included the "pre-market market" that was tested when RED was launched in the governance link of listing, but decided to cancel the daily limit designed for pre-market trading. Some traders analyzed that this move is conducive to reducing the platform's intervention in prices and making the price discovery of new assets more market-oriented.

Binance said that the "pre-market market" can provide users with an opportunity to obtain Launchpool token transactions on the one hand, and "also provide users with early value discovery opportunities before the tokens are officially listed on the spot market." At the same time, Binance reminded that although pre-market trading can provide users with opportunities for strategic layout and early profit, participating in pre-market trading requires understanding its eligibility requirements and potential risks.

Listing on Binance means meeting the requirements? Multi-dimensional review has just begun

Binance's move on the three problematic projects also indicates that the world's largest trading platform will select new assets more strictly starting this year, and the process of strict review is not limited to listing.

On March 4, Binance announced that the frequency of adding "observation tags" to listed assets will be adjusted from irregular to "monthly", that is, new projects will be added in the first week of each month; and the removal of observation tags and seed tags will be reviewed "quarterly".

That is to say, Binance will review the performance of listed assets more frequently. Once they are "observed" in a certain month, they must perform well within the quarter if they want to remove the label, otherwise the probability of delisting will increase greatly.

"Adding observation labels" is Binance's continuous and regular review of more mature crypto asset projects. Once a project is added with an "observation label", it means that these tokens may have higher volatility and risks; when they do not meet Binance's listing standards, they may be delisted.

27 tokens have been added to the Binance market with "observation tags"

A risk warning banner will be displayed on Binance for tokens that enter the "observation zone". Users will also be subject to actual audits of their understanding of the risks of tokens with "observation tags" - if they want to trade tokens with "observation tags", users need to complete a test every 90 days and only obtain trading permissions after accepting the terms of use.

So far, 27 tokens have been labeled with "observation tags", including new tokens such as GPS that have just entered due to violations, as well as market "familiar faces" such as ZEC, FTT, BAL, and ARK.

So, what are the criteria for adding "observation tags" or removing tags for projects?

Binance has also listed the review reference factors in previous announcements of adding tags, including the team's commitment to the project, the level and quality of the project during advancement, trading volume and liquidity, freedom from attacks and maintaining network stability and security, network/smart contract stability, community maintenance, enthusiasm for responding to Binance's regular reviews, unethical/fraudulent behavior, and contribution to the construction of the entire blockchain ecosystem.

In addition, the GPS market maker incident will also allow Binance to conduct a "post-listing review" from a dimension that the market values ​​more, that is, whether the liquidity performance is normal.

In the announcement of the investigation results against GPS, Binance knocked on all market makers authorized by the project parties on the site, requiring them to abide by the platform rules, otherwise, Binance will take action. These principles and rules include:

• Ensuring that both buy and sell orders are supported by pending orders

• Ensuring sufficient order size within the specified depth level

• Providing healthy and stable market depth in the trading market

• text="">Ensure that pending orders are retained for a certain period of time to avoid high-frequency order cancellations disrupting the market

On March 13, Binance directed its strict review of the "sword" to the early project discovery platform Alpha in its Web3 wallet, stating that it will regularly review the "observation selection pool" and that any token that does not meet the platform's "quantitative indicators" and "qualitative standards" will be deleted from Alpha. On the day of the official announcement, 21 tokens were deleted.

Binance Alpha's "Two Determinations" framework includes:

• Quantitative indicators: trading volume stability, liquidity depth, on-chain transaction frequency, token holder distribution and other related indicators.

• Qualitative standards: project team credibility, regulatory compliance, ecosystem synergy, community visibility and other related factors.

Since its launch, the Alpha product has been interpreted by the outside world as an important pool for Binance to select new assets from the on-chain ecosystem. Although it is not guaranteed to be listed on the Binance main site, its coin observation area has brought together many popular tokens in the market. Some projects that have conducted exclusive TGE (Genesis Release) on the Binance Web3 wallet have directly passed the Alpha selection pool, and some have obtained "tickets" to enter the Binance main site.

Now, under the new "two determinations" review standard, a large number of tokens have been removed, which also means that if you want to be selected by Binance from Alpha, you must first pass the "two determinations" and then go through the user "vote". Even if you pass and go online, you must continue to accept the platform's review and be vigilant about being labeled as "observation".

This time, the strict review of Binance, which was opened by the new coin storm, is also a "wake-up call" sounded by the world's largest trading platform to the project circle.

Whether it is the "increase points, promote interaction, and get airdrops" marketing that has become popular on the chain in the past, or the thinking of "first go to a small platform to show your face, and then go to a large platform to reap the benefits", in the process of Binance's increasingly strict coin review, transaction monitoring, and voted coin delisting, to a certain extent, it will break the project party's fantasy of "going online on Binance to achieve the goal", and inject some crisis awareness into them.

At a time when the entire crypto asset market is in a downturn, Binance's approach can be described as "scraping the bone to cure the poison", releasing the courage to "protect the people in the door even if it sacrifices the potential volume-carrying capacity of hot assets". This is also a reform that a business entity that occupies a leading position in the industry must make in the context of the crypto asset market's trend towards compliance.