Gleb Kostarev: Exchanges To Copy Binance Experience And Launch Their Own Launchpads
Gleb Kostarev, a representative of the Binance Cryptocurrency Exchange in Russia and the CIS, reveals in his interview with LetKnow.News how to launch an ICO on the Binance Launchpad, what criteria the company uses in selecting the countries for launching their fiat-to-crypto platforms and about the main reasons for the creation of Binance’s DEX.
LK: Tell us your story; when did you become interested in cryptocurrency?
GK: I first discovered cryptocurrencies in 2013. At that time I worked as a journalist at RBC and wrote articles about the international economy, as well as about cryptocurrencies. It was the time of the Bitcoin micro hype, and the media began to actively write about the Crypto Market. But unfortunately, after Bitcoin’s price skyrocketed to $1,000, the market soon experienced a collapse like in 2017.
After the media, I worked at Ernst & Young, and then I got into Sasha Ivanov’s Waves startup. There [Waves] I was involved in global PR, and with my background at Waves, it wasn’t very difficult to get into Binance.
LK: How does Binance store its funds? This question is particularly relevant amid a backdrop of the QuadrigaCX incident.
GK: We [Binance] hold funds both in hot and cold wallets on a centralized exchange. We do not keep anyone’s funds stored on the DEX. We launched the DEX to enable users to store their private keys there. Thus, only the users of the platform have access to their own private keys.
Each of the trading floors facilitates a balance between the security and usability of the platform. The principle reason of the DEX complexity is that a user is solely responsible for storing their private keys. In the event they [private keys] are lost, the support team, unfortunately, can’t help you, and thus, you won’t be able to access your funds. Therefore, a decentralized exchange requires special care and increased responsibility for money.
This makes the centralized exchange the best solution for most users, since so many people can forget their password for some reason, and our support team can quickly resolve these problems for the customers.
With regard to security, it should be noted that we have a Secure Asset Fund for Users (SAFU) financed by storing 10% of trading fees. This Fund is in place to be used in case of force majeure or cyber attack to compensate [clients] for financial loss. But the money from this fund has not had to be used yet.
At our exchange, we also use innovative technologies, such as artificial intelligence to analyze transactions. This allows us to determine if there is any suspicious activity associated with these transactions. Therefore, greater priority has been placed on security. It may even be too great. That’s why, users often complain that they constantly need to submit additional documents for verification, or that their funds are frozen. But we believe that it is better to double check than to allow hackers to withdraw money from users’ accounts. Therefore, all additional verifications are made for the clients’ benefit.
LK: Why did Binance decide to launch the DEX?
GK: Users have been pushing to keep the private keys themselves for a long time, and we just provided them with this opportunity. Besides the DEX and a centralized trading platform, Binance is also developing a rather large ecosystem, which is comprised of a charitable initiative, an educational portal and an academy. Therefore, I think we can now say that the Binance structure is much broader than just an exchange.
LK: How do you deal with liquidity and cyber security issues?
GK: As for liquidity, it will not be connected with the main platform, but we welcome users who decide to act as the DEX market makers. In particular, we have also one of the largest communities in the world - which also ensures a certain level of liquidity.
But the exchange is currently operating on testnet because we haven’t launched our own blockchain platform yet. And soon we will launch a full-fledged DEX. As for the transaction speed, our task was to ensure the transaction capacity and the ability to withstand the same loads as on the centralized exchange.
LK: How do you respond to suspicious transactions?
GK: As for suspicious transactions, we keep an eye out for everything and can freeze money promptly. If we notice value exchange, or some kind of suspicious activity, our internal team investigates this case. In general, transactions are monitored automatically, and in addition, we have a support team, which, in case of freezing funds, conducts further investigation and directly communicates with users, trying to help them.
LK: Earlier, BitTorrent’s ICO crowd-sale was organized on the Binance Launchpad. It was completed in a few minutes and most investors did not have time to take part in the token sale due to technical problems. How is it that the failure occurred at the most critical moment?
GK: It should be understood that before BitTorrent, the last ICO was held in 2017. Since then, this platform hasn’t functioned, and BitTorrent was the first ICO held on the updated platform. Of course, we had to check the demand and no one expected such an excitement around it. Therefore, we were faced with those technical difficulties, but we sorted out the technical issues, and recently we hosted a second ICO for Fetch. There were no significant technical problems with it, and the funds were raised in just a few seconds.
LK: It is generally believed throughout the crypto community that amid the fall of ICOs, Binance has monopolized the area of holding crowdsales. What conditions must be met by a project to launch an ICO on the Binance Launchpad? And how much does it cost?
GK: First of all, Binance cannot monopolize this market. Any project can independently run its own token sale and raise money. As for the increased attention to Launchpad, it could have resulted from the fact that the industry of raising money through an ICO is rather immature. As we all know, there was a lot of scams and this affected investor sentiments. Moreover, now we have a crypto winter and investors have less cryptocurrency than before, and of course they are interested in investing in fair and reliable projects.
In view of this, Binance Launchpad has turned up just at the right moment. We study all the projects to be run on our platform, since recognition by Binance is important for investors and affects their investment decisions. I think that soon we can watch how other platforms copy the Binance experience and launch their own Launchpads. I think this is the next stage in the development of the industry. In general though, I see nothing wrong in the ICO field. Crowd-sale, as a mechanism, never died or disappeared. However, with the advancement of the industry, everything is changing.
As for the cost of launching an ICO on Launchpad, we actually have an individual approach to each project, and any project can submit a request on our site if they are interested in running an ICO on our platform.
It should be understood that there is a lot of competition among the projects. Even in the case of listing, we approve only a small percentage of the total number of applications. And only one ICO can be run on Launchpad per month. This means, we can have 12 projects a year. That is, only 12 projects out of the total number of applications can be approved per year. There is a chance, but you need to understand that it is small. To increase your chances, you need to have a stable team of developers with extensive experience and background, it is also desirable to have some kind of MVP, some kind of working solution. And you need to understand that [Binance] has much more stringent selection criteria than what is required for listing the token on the exchange.
LK: Earlier, Binance announced the launch of several fiat-to-crypto exchanges. How is it going with this project and when should we expect the launch of these platforms in the CIS?
GK: Binance has already launched several fiat-to-crypto exchanges and their number will grow. This year we have planned to launch at least five fiat-to-crypto exchanges. We have already launched the platform in Jersey in the UK. There, users can buy basic cryptocurrencies for English pounds and euros. The platform is also already operating in Uganda, and exchanges are also planned for launching in Singapore and in another 4-5 jurisdictions.
The key purpose of the launche of the fiat-to-crypto exchanges is related to the regulation practices. Binance launches its fiat-to-crypto exchanges in the countries that already have the laws in place for regulating the circulation of cryptocurrencies. Therefore, the choice of jurisdiction is directly associated with this. As for the CIS, we would be happy to launch our platforms here, but as far as we can see, the cryptocurrency regulation is not yet developing as fast as we would like.
LK: It is quite surprising that Uganda is among the listed countries. Why did Binance launch the fiat-to-crypto exchange there?
GK: The peculiarity of regulation in developing countries is that they are more flexible in these processes than more developed countries. EU states and Russia address these issues with greater deliberation, and as a result, it takes more time. We believe that such unexpected jurisdictions have great potential, because the process of crypto law adoption is much faster there.
LK: What trends for crypto exchanges and the industry as a whole can we look for in 2019?
GK: In 2019, stablebcoins will develop more actively—their number continues to grow. Binance is increasingly listing them, so Tether will have a lot of competitors this year. That’s good because users will have a choice. After all, we all heard concerns expressed by some industry leaders and users regarding Tether.
In addition, we can see a growing interest from institutional and corporate clients. Despite the crypto winter, they are increasingly interested in cryptocurrencies and investing in them. We believe that more and more institutional organizations will come to the market. For example, JP Morgan has recently announced the launch of its cryptocurrency. Therefore, large financial institutions, no matter how much they criticize cryptocurrency, gradually join this industry. There was also news recently, that WhatsApp plans to launch its stablecoin, which can also be big news for the industry and give it an additional lift for its development. In addition, interest in decentralized exchanges will grow, especially among users who care about the safety of their funds.
DISCLAIMER: The original interview and quotes were created in the Russian language and have been translated to English with as much accuracy as possible. LetKnow News is not responsible for variation in language anomolies which may alter the original meaning of specific terms or phrases.