Leading cryptocurrency exchange Binance has just launched a Bitcoin-backed token on Binance Chain. Called BTCB, the token is based on the BEP2 token format. Binance will introduce more such crypto-pegged tokens on its native blockchain in the coming days.
Pegged tokens such as BTCB are 100% backed by Bitcoin held in reserve which can be audited easily. A trading pair will be created between the pegged token and the native coin, e.g. BTCB/BTC.
The main benefit of crypto-pegged tokens is the availability of tokens that aren’t native to Binance Chain on the Binance DEX, its recently launched decentralised exchange. This would also help boost trading volume and liquidity.
Binance admits that the approach is more centralised than atomic swaps, but it provides ease-of-use for the traders.
(Image Credit: Binance Blog)