summary: Binance DEX (launched in 2019) is a DEX built on Binance Chain that allows exchanging digital assets issued and listed on it. 
content: Binance DEX (launched in 2019) is a decentralized exchange (DEX) built on BNB Chain that allows exchanging digital assets issued and listed on it. The matching happens within the blockchain nodes and all of the transactions are recorded on-chain, therefore forming a complete, auditable ledger of activity. Overview Binance DEX is a decentralized exchange and an extension of the largest cryptocurrency exchange by daily volume, Binance. Binance DEX is built on BNB Chain. The testnet was launched on February 24, 2019, and this is what founder Changpeng Zhao said at the time of launch: "Binance DEX is a decentralized exchange with a decentralized network of nodes, where you hold your own private keys and manage your own wallet,” said Changpeng Zhao (CZ), CEO of Binance. “With Binance DEX, we provide a different balance of security, freedom and ease-of-use, where you take more responsibility and are in more control of your assets." After two months of testnet, a period involving nearly 8.5 million transactions across a simulated trading competition, coding competition, bug bounty program, and new updates and enhancements, the first version of mainnet was released on April 23, 2019. The mainnet was released along with the launching of BNB Chain and so Binance Coin (BNB) migrated from ERC20 standards to BEP-2 to become the native asset on BNB Chain, and also Binance DEX, where it is used as a base token to assist network transactions. The users were allowed to create wallets using Binance's official Trust Wallet and also third-party wallets like Enjin Crypto Wallet, Magnum Wallet, Coinomi Wallet, Atomic Wallet, ZelCore Wallet, Infinito Wallet, Math Wallet, Ellipal Wallet, Guarda Wallet, Exodus Wallet, and also hardware wallets, Ledger and CoolWallet. The users also gained access to the Binance Chain Explorer, web wallet, public data nodes, and APIs, but actual trading began later. CZ believed that this would start a new era for financial systems and he also asked the community to come forward and give input for the same. This is what he stated: “We believe decentralized exchanges bring new hope and new possibilities, offering a trustless and transparent financial system,” said CZ (Changpeng Zhao), CEO of Binance. “With no central custody of funds, Binance DEX offers far more control over your own assets. We hope this brings a new level of freedom to our community. We will work closely with projects and teams to grow the entire ecosystem.” On September 1, 2020, BNB Chain, a parallel chain to Binance main chain was launched. It enabled the creation of smart contracts and the staking mechanism for BNB. It helps the whole Binance ecosystem to grow because of cheaper transaction fees with a high-performance network (with a block every 3 sec), increasing cross-chain interoperability by using DeFi mechanisms, bootstrapping and investing in many DeFi projects, and collaborating with many blockchain and crypto projects. So currently, Binance DEX is powered by a dual-chain system and because of BSC, it will get more and more volume using cross-chain interoperable mechanisms and decentralized applications (DApps). The Dual Chain Model Binance DEX is first developed on a Binance Chain (BC) that allowed anyone to create, issue, and trade assets on the Binance Smart Chain and Binance DEX. Binance Smart Chain (BSC) enabled the writing of smart contracts which help to develop a decentralized application (DApp) and bring liquidity to Binance DEX using interoperable mechanisms from other blockchains like Ethereum, Bitcoin and others. The BC and BSC are compatible and can communicate with each other. | Parameter | Binance Chain | Binance Smart Chain | | --------- | ------------- | ------------------- | | Type | Main Chain | Parallel Chain | | Consensus Mechanism | Dpos (Delegated-Proof-Of-Stake) | Proof of Staked Authority (PoSA) | | Number of block validators | 11 | up to 21 | | Mean Block Time | < 1 second | < 5 seconds | | Programmability | Non-Compatible to EVM | Supports Ethereum Virtual Machine smart contracts | | Token creation | Can only issue token (BEP-2) on Binance Chain | Can create a tokenized form for foreign assets (BEP-20 = Cross-chain BEP-2) on Binance Chain | | Cross-chain | BEP3 introduces 'Hash Timer Locked Contract' functions and further mechanisms to handle inter-blockchain tokens peg. | BSC comes with efficient native dual chain communication; Optimized for scaling high-performance dApps that require a fast and smooth user experience. | Features Functionality Binance DEX has a very similar user interface to Binance centralized exchange and it utilizes a web-based trading platform. It has also integrated TradingView charts which offer a full range of technical indicators for traders. The core function of the platform that it allows users to create their own wallets and hold their own private keys along with support to alternative third-party software and hardware wallets including popular wallets like Atomic Wallet, Ledger, and others. Technology The exchange is built on the Binance Chain therefore it has advantages like one-second block time with near-instant transaction finality. As a result, it can support similar trading volumes as cryptocurrency exchanges like Binance, although it uses a different order matching engine. It uses a periodic auction technique to match all available orders, and as the match happens simultaneously for all orders with the same price in every auction, it put an end to the role of market makers and takers. Security Similar to other decentralized exchanges, Binance DEX doesn’t take custody of user funds, and the users and traders maintain control of their wallets, private keys, and their funds. Binance Chain runs on Byzantine fault tolerance (BFT) and Proof-of-stake (PoS) based consensus mechanism that involves a series of qualified block validators and makes use of a number of anti-front running mechanisms to maintain the treading integrity of the exchange. Binance DEX vs Binance Binance is a centralized exchange and it is hosted on servers while Binance DEX is a decentralized exchange built on Binance Chain. Apart from this primary difference, there are many additional key differences. | Type | Binance | Binance DEX | | ---- | ------- | ----------- | | Nature | Hosted on centralized servers | Decentralized exchange built on a Binance public blockchain | | Fund Control | The exchange wallet controls the funds of the user. | The user can create wallet or use any preferable third party wallet to control and use funds. The is user is responsible for the funds. | | Type of Orders | The user can trade using both market order or limit order. | Only limit order is accepted as order are processed every block. | | KYC | Requires KYC for large withdrawals (over 2 BTC per day). | Doesn't require KYC. | | Order Matching | Order matches up bids and offers to complete trades. It is continuous like on most of the centralized exchanges. | Order matching is done using periodic auction matching for all the existing open orders received in the past and the latest blocks. | | Market Makers and Takers | They play a big role. The market makers create an order that provides liquidity, which is useful for market takers to buy or sell instantly. | There is no role for maker makers and takers as orders are processed at once. | Order Matching Matching Logic As blocks are produced at the regular interval, order matching takes place using periodic auction matching for all open orders received in the past up to the latest block. It uses a discrete matching engine. The orders are collected every block and all open orders up to the latest block are matched at the end of that block. Principles of the Matching Engine 1. Matching is attempted 1 time each block. 2. Matching occurs when the highest bid price is higher than the lowest ask price. 3. Only 1 price is selected in each block, determined as the fill price among all the fillable orders. 4. Order matching is prioritized first by price aggressiveness, then second by time (block height) that they are accepted. Order Matching Process Every matching attempt occurs after a block is recorded on the chain (mined and verified). The matching attempt follows the below steps determining block fill price from the following factors: Determining block fill price\from the following factors Maximum executable volume Minimum surplus Market pressure Reference price Allocating order fills using rules Orders with the highest bid price will match with the orders with the lowest ask price. If all bids or asks at the block fill price cannot be fully-filled by the respective asks or bids, orders from the earliest blocks are selected and filled first. If all bids or asks at the block fill price cannot be fully filled by the respective asks or bids, and arrive in the same block, allocated execution will be in proportion to their quantity (floored if the number has a partial lot). If the allocation cannot be divided equally, a deterministic algorithm will guarantee a fair selection using a random order ID. Trading !ggpng.pngBinance DEX Trading Interface To log in and trade on Binance DEX, a user needs a BNB Chain-compatible wallet. The wallet can be created on the website itself or any compatible third-party wallet like Trust Wallet, SafePal, CoolWallet S, Math Wallet, Meet.one, Equal, Atomic Wallet that can be used via the WalletConnect interface. The users can also use hardware wallets like Ledger. Since it is a non-custodial decentralized exchange, the user is in c