Mining Pool: Your friend Binance has joined the group chat

Author | Qin Xiaofeng

Editor | Mandy

Produced by | Odaily Planet Daily

Introduction

After much anticipation, Binance Pool is now online.

At the end of last year, Binance founder Zhao Changpeng (CZ) said in an exclusive interview with Odaily Planet Daily that Binance would continue to expand its business in 2020, and the layout of mining pools was one of the directions. At that time, many people thought that Binance was just talking on paper and it was too early to really enter the market. But on April 1 this year, Zhao Changpeng issued a statement confirming that the Binance mining pool would be launched soon.

On April 24, Zhao Changpeng posted another post with pictures, saying that Binance Pool was in internal testing and mined the first Bitcoin block. Three days later, Binance Pool was officially launched. This also means that the three major exchanges have all entered the mining pool field.

However, the outside world knows very little about the newly launched Binance mining pool.

For example, for PoW mining pools, what preferential policies will Binance introduce to attract miners? For PoS mining pools, what currencies does Binance support and what are the benefits? With the established mining pools now firmly established, how does Binance Pool, as an exchange mining pool, differentiate itself from the competition? For its own business, what role does Binance Pool play? Will it issue mining pool tokens in the future?

Based on various questions, Odaily Planet Daily interviewed the Binance Mining Pool team, and they also gave detailed answers.

1. Binance Mining Pool: PoW+PoS Dual-Making Model

First of all, Binance simultaneously launched PoW and PoS mining pool services.

Let’s talk about PoS first. In fact, it is natural for Binance to do PoS mining pool business, which can directly take over the previous Binance exchange staking business. Therefore, as soon as the Binance mining pool was launched, it covered the mainstream PoS tokens in the market.

“Binance has been doing PoS business for a long time and currently supports 23 PoS currencies.” Binance said, “We will also further leverage the exchange’s natural advantages in the PoS mining pool to provide C-end customers with high-quality and convenient ways to participate in the community and earn profits, allowing users to participate more directly.”

(Note from Odaily Planet Daily: Huobi Mining Pool supports 23 POS tokens, and OKEx Mining Pool supports 9 POS tokens.)

PoW mining is a business that Binance Pool will focus on to fill the gap in the mining ecosystem. Currently, BTC mining has been launched, and Binance also stated that more PoW currencies will be launched in the future.

Speaking of preferential policies, in order to expand its user base, Binance Pool has implemented a limited period of zero fees.

"Our BTC mining pool adopts the FPPS profit distribution model, and the public fee is 2.5% to benefit miners, which is already the lowest in the industry. We will have a 0 fee before May 31, and miners can also fill out a registration form before May 31 to apply for a longer period of 0 fee benefits." Binance said.

Odaily Planet Daily’s investigation found that the current public fee rate of the top PoW mining pools (for general retail miners) is at least 4%.

From the perspective of ordinary retail miners, the 2.5% fee rate of Binance Pool does have a certain appeal.

Odaily Planet Daily also asked about the mining pool token issue, and Binance Pool said it would not issue its own mining pool coins.

On the one hand, Zhao Changpeng, He Yi and other Binance executives have repeatedly said and promised that "BNB will be the only token in the Binance ecosystem", and Binance Pool will naturally not go against their words; on the other hand, Binance Pool tends to give benefits to miners, reducing its own profit margins. In order to protect investors, Binance Pool has eliminated the new coin issuance plan from the source.

"In the PoW business, the mining pool is responsible for concentrating the miners' computing power to generate blocks, distributing the profits, bearing the fluctuations in luck values, and charging handling fees; in the PoS business, the mining pool is responsible for proxy voting and then distributes the profits to everyone. Under such a business model, the profits of the mining pool should not be high. Binance Pool will continue to optimize its business, increase miners' profits, and increase industry competition. This is the greatest responsibility to miners." Binance said.

Although the linkage policy between BNB and Binance Pool has not been announced yet, similar to Huobi Pool, perhaps in the future those holding BNB can enjoy Binance Pool POS token airdrops.

(Note from Odaily Planet Daily: Huobi Mining Pool stipulates that holders of mining pool coins can enjoy multiple POS coin airdrops including EOS.)

Finally, the underlying technology and team of the mining pool. The Binance mining pool was built by Binance itself.

Previously, there were media reports that Binance Pool would adopt third-party technical solutions and hire former Bitmain employees to provide Bitcoin mining pool services. In response, Binance said that the technical architecture of the mining pool was independently completed by the Binance Pool technical team.

"We have fully utilized the technological advantages accumulated by Binance. We have high-level technical personnel in the industry. At the same time, we have also hired developers with rich experience in mining pool development. Some of them have been engaged in mining pool development for more than five years. Therefore, the whole development process was relatively smooth. We are still confident in our technical strength." Binance explained.

In fact, Binance’s actual investment in the mining pool business was very short, with preparation time of less than three months.

"Binance has been paying close attention to mining trends. It was not until February of this year when all conditions were ripe that we began preparing to launch our own mining pool business - Binance Mining Pool." Binance told Odaily Planet Daily.

2. Significance of the layout: make up for shortcomings and empower BNB

The launch of Binance Pool means that the three major exchanges have all entered the mining industry.

The emergence of exchange mining pools has broken the mining industry pattern where the old PoW mining pools monopolized computing power. For miners, being able to experience a one-stop service of mining + trading is undoubtedly convenient.

For Binance, launching a mining pool business is also a necessary step to build a comprehensive ecosystem.

On the one hand, the launch of Binance Mining Pool fills the gap in the mining field in the Binance ecosystem.

Although Binance has launched futures and options businesses, they are still mainly focused on the trading level, and only expand the categories vertically. Now Binance has expanded its business horizontally and entered the mining pool field, breaking through the barriers between the encryption industries and forming a complete industrial chain: mining-trading-coin storage and financial management. This will also bring incremental users to Binance.

In addition, Binance also intends to further expand in the mining industry in the future and integrate the upstream and downstream of the mining industry. "We will provide in-depth financial services to miners around mining machines, mining farms, OTC and other businesses, and break through the current situation of multiple businesses and multiple platforms."

Based on PoW computing power mining, Binance Pool will also develop user-oriented mining products, such as cloud computing power.

"We plan to launch mining products that are more suitable for C-end users at the right time. In response to the current situation of high mining thresholds and many pitfalls, we will make product innovations so that ordinary users can easily enter the mining industry." Binance said.

On the other hand, the launch of Binance Mining Pool will also bring certain economic benefits to Binance.

Judging from the size of the PoW market, even if Bitcoin is halved in May 2020, the value of BTC mined in the next year will still exceed 3 billion US dollars; judging from the market development of PoS, Ethereum, the second largest blockchain by market value, will also turn to PoS in the second half of this year.

From the perspective of revenue expectations, despite the concessions made, the potential growth space of Binance Pool cannot be underestimated.

All of the above will benefit the development of Binance Mining Pool and expand the value of the entire Binance ecosystem. The ultimate goal is to empower the Binance ecosystem token BNB.

"The revenue generated by all Binance's businesses will be incorporated into Binance's overall ecological planning and used to destroy BNB," said He Yi.

III. Future development: meticulous service for miners and comprehensive layout of mining industry

"Can Binance Pool really succeed?" Some people still have doubts about the future development of Binance Pool.

Odaily Planet Daily believes that the answer is yes. As an exchange mining pool, it is natural for Binance Pool to first make a big splash in the POS field, but it will indeed have to go through many tests in the PoW field.

Binance Pool is backed by Binance Exchange. Users only need to transfer funds with one click in the exchange to complete the staking, and the migration cost of PoS token mining is relatively low. In addition, the Binance brand endorses it. Compared with other Staking business node service providers, users have a higher degree of trust in Binance Pool.

Therefore, it is not difficult for Binance Pool to start up the PoS business. This is also proven by the practice of Huobi Pool and OKEx Pool, which have successively ranked first in EOS super nodes and ranked among the top in other PoS token node rankings.

Surrounded by powerful competitors, how can Binance Pool compete with Huobi Pool and OKEx Pool for the leading position in the PoS market?

Binance said that in the PoS field, Binance Pool will adhere to the principle of "increasing miners' income" to allow PoS miners to obtain higher income and be more transparent. "The EOS lock-up product we recently launched has an annualized return of 8% in 30 days, which is twice that of OKEx and Huobi."

But it is impossible to gain a foothold in the PoW market simply by making concessions. Many miners told Odaily Planet Daily that interest rates are not a prerequisite for impressing the mining community. "Although Binance Pool offers a 2.5% fee, large miners can also enjoy lower fees in other mining pools.

In addition to fees, other services that the mining pool can provide are also important factors for miners to consider. After all, mining is only one link in the mining industry, and the needs of the miner group are also diverse.

Financial services are the most important of the full process and refined services. For example, mining coins must be traded, and coin-to-coin trading has requirements for depth and handling fees, and OTC trading has higher requirements for the security of funds; for example, when miners think that the price of coins is at risk of falling, they may need to hedge; for example, some miners are coin hoarders who only mine but do not sell, and at this time safe and stable financial management will be their rigid needs... Providing services for the above needs, exchange mining pools may have more advantages than old PoW mining pools.

“For PoW miners, we will rely on Binance’s deep understanding of finance to provide miners with high-yield investment opportunities on the asset side, and provide customers with convenient financing channels on the liability side. We also have professional derivative products to help miners hedge risks and increase returns.”

Binance added that after fully exploring the needs of miners, customized financial tools for miners will be launched one after another. In addition, customized services can be provided according to the special needs of different miners. "By integrating Binance Financial's products, we can provide customers with more customized products. Customers can get tailor-made customized services on Binance, no longer cold hedging and complex options products, but provide customers with products that are closer to business."

It is precisely because of the soft services that Binance Mining Pool can provide and the Binance brand that a large number of miners have actively applied to join the mining pool during the internal testing period. "As soon as the news that we are going to build a mining pool was released, miner friends and mining machine manufacturers contacted us, hoping to establish cooperation."

However, referring to the development of Huobi Mining Pool and OKEx Mining Pool, Binance Mining Pool still has a long way to go in the PoW field.

As of press time, among BTC mining pools, Huobi Mining Pool and OKEx Mining Pool ranked seventh and eighth respectively, with a computing power three times that of the first-ranked Poolin Mining Pool.

Summarize

In any case, going from zero to one is an incremental step for Binance to fill in the gaps in its business. As for how to go from one to ten, Binance has its own set of rules.

From futures to options, Binance has demonstrated through its actions its strong capabilities and high efficiency in expanding new businesses.

Now that the mining pool business has been launched, although there are still many battles to fight, Binance has long been accustomed to it. I believe that the pace of occupying the market and conquering the mining pool is not far away.