Is Binance DEX really decentralized? Some critics are saying it's not

20 Feb, 2019 | Updated: 20 Feb, 2019
by Jelmer van der Dussen
Exchange
Is Binance DEX really decentralized? Some critics are saying it's not

Binance has today launched the Binance decentralized exchange (DEX) and Binance Chain on the public testnet. While this is seen as a major step for the cryptocurrency space, some are saying the new Chain and DEX from Binance aren't that decentralized at all.

Read more: Binance DEX AND Chain are now on public testnet - this is how you start

One critique is that the Binance Chain testnet will run on 11 nodes, at first selected from close partners of Binance. In theory, anyone can run a node, but because of the huge traffic and volume that is expected with one block created per second, node operators need to be highly equipped to run a node for the network.

As Unhashed describes, Binance's influence 'will decrease over time' with the possible addition of more validators, but at first, only the best of the best can run a node, and those parties are pre-approved by the Binance company.

Others are saying that the fact Binance charges listing fees and has a vetted listing process, doesn't make the decentralized exchange a true DEX. 

In an analysis by Saturn Network, Binance Chain is described as 'not the decentralized revolution it was hyped to be. Rather, it will be an evolution of an established centralized business'. The Binance DEX would not be replacing the centralized exchange, 'but the user account model'. Read the full analysis here

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'Socially less decentralized'
Binance CEO Changpeng Zhao addressed these issues earlier this week in an interview with trader Luke Martin. CZ stated that while the Binance Chain is 'technically fully decentralized', 'socially it feels a little bit less decentralized'.

CZ explains: "I think technically, Binance DEX or Binance Chain is fully decentralized. Users host their own private key, the network never has any of it. The network is run by a number of nodes that we not control, so the nodes run independently."

"We can't control the network once we launch it. What I meant by less decentralized, is that socially, we have a lot of influence. People know it's called a Binance Chain, we are one of the key contributors to the development of the technology. So, on the social aspect it's less decentralized than Bitcoin, where nobody knows who Satoshi is. But technically it's fully decentralized."

"And we also use some of our centralized marketing abilities to push it, so initially from a social aspect it feels a little bit less decentralized, but technically it's a fully decentralized platform. So we'll see how that goes."

'User friendly DEX'
In terms of usage, so far there seems to be only positive responses to the new Binance DEX. The happy few traders that got to test the DEX before it went to the public testnet are extremely excited about the work of Binance. With the recent fails of most decentralized exchanges to attract people with enough volume and an easy UX, Binance seems to have created a product that has the potential to reach the masses. 

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CZ had an interview or something where he was talking about decentralization and everything. He said that complete decentralization is wrong.
20 Feb, 2019 - 17:04
surely it should be learn before, but any other exchanges like coinbase can not even dream about it
22 Feb, 2019 - 11:01

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