One of the largest cryptocurrency exchanges in the world, Binance, introduced a lottery system for its token sale through Launchpad, the exchange’s token launch platform. The update was announced via an official post on 24 March.
The update will see the exchange abandoning its “first come-first-served” system which left many users tokenless owing to their surging demand. A notable example of this system was Binance’s sale of BitTorrent tokens [BTT] in January, 50 billion of which was sold out in 15 minutes.
Binance will introduce a “lottery” as an upgrade on its previous system. Under this new method, prior to the scheduled date of the lottery, the tickets that can be claimed will depend on how many Binance Coins [BNB] users hold within a 20-day period. The lottery will then be drawn via a “transparent, randomized system with a random selection of lottery tickets based on tail digits.”
The Lottery Ticket allocation based on the BNB held is given below,
Users will be allowed to decide how many lottery tickets they wish to enter, with the maximum amount being based on their BNB holdings. The exchange will then select multi-digit numbers that will be matched against the tail digits of the tickets issued to determine the winners.
“This process will continue until the maximum number of winners (previously set) are matched. The respective BNB will be deducted from each winning user’s balance, as soon as they are deemed a winner.”
Binance also listed out the set of risks and concerns it foresaw with this system. The exchange’s native token will see a degree of price fluctuation due to this model. However, Binance predicted that these will be minimal changes. After the announcement was made, the price of BNB surged by over 15 percent against the US Dollar.
During the 20-day period when users will accumulate BNB, the exchange attested that the price will fluctuate,
“If BNB price drops, it is entirely possible the drop in BNB price will outweigh any gains made by the new token. That is first assuming you win in the lottery draw. Further, the new token being sold is not guaranteed to increase in price. It may drop in price.”
Binance ended on an advisory note, requesting users to not hold BNB for the sole purpose of the Launchpad events. The next set of projects emanating from the Launchpad will be intimated to the community in the next two weeks, the exchange concluded.
Additionally, reports suggest that the exchange is looking to make cryptocurrency trading riskier. Binance is looking to introduce margin trading within their services, thereby allowing users to trade on borrowed funds.
Further, Binance will look to shift their base of operations if regulators voice their disapproval for the margin trading feature.
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Graduate of Finance and Economics, interested in the intersection of the world of decentralized currency and global governance.