Do we still need Binance: From policy crackdowns to user FUD, what is the real issue?

Author: Ice Frog

As the industry leader and the pinnacle of the pyramid, Binance has recently faced an increasing wave of market FUD. Simon, labeled as the CEO of MoonrockCapital on platform X, claimed that Binance requires a fee of 15%-20% of the total token supply as a condition for listing, which has stirred up significant controversy, leading to a rapid rise in market discussions, with both support and opposition voices emerging. Some emotionally charged individuals even consider Binance to be the biggest tumor in the industry, while opponents argue that this is not Binance's responsibility, but rather an issue with the project parties or the industry's own development.

Ultimately, Binance's top female executive publicly responded on social media: if a project has not passed Binance's screening, no matter how much money or listing fees are offered, it cannot be listed on Binance. Token distribution is public, and Binance cannot charge such a high percentage of token distribution.

Regardless of whose statements behind the verbal battle are the truth, or if it is merely a commercial competition, at least from the executive's response, we see her using her own reputation to salvage Binance's reputation. Her proactive and timely responses to such doubts have earned her respect within the community, thanks to her candid and direct attitude in both the past and present.

However, such doubts are not new and will not be the last. This also highlights Binance's development dilemma in recent years, facing external regulatory crackdowns and peer squeezes, as well as internal community skepticism. The real crisis has never been hidden in surface challenges; just as it is not another Binance that will defeat Binance.

1. Is FUD Really Just Rumors: "Victim Mentality" and "Who is the Real Enemy?"

Assuming the executive's response is genuine, FUD is merely the dark side of commercial competition. Unfortunately, the public often lacks independent thinking; otherwise, they would not be called the public. From countless historical instances, one obvious truth is that the collapse of rumors never relies on the public's self-awareness but on irrefutable factual truths. The guidance of KOLs only temporarily disrupts perceptions and does not mean that doubts will dissipate; it may even be the cause of the next more intense FUD.

When attributing all FUD to commercial competition conspiracies, the underlying victim mentality does not help eliminate disputes. Perhaps there are indeed peers fanning the flames, but that may not be the whole story. When a platform has sufficient persuasive evidence, no one would choose to challenge an industry leader with such ungrateful means; this method only proves effective when you have flaws yourself. This is the most basic commercial logic.

In the face of FUD, one should first look for problems within rather than suspect competitors; this is the posture that a great company should have. The real enemy has always been one's own arrogance, not others. If FUD is seen as a commercial tactic, it actually overlooks the real hidden crisis.

2. Where Does the Crisis Come From: The Shift of Pricing Power and Liquidity

1. Liquidity Determines Pricing Power, but the Source of Liquidity is Users
Binance, at least for now, remains the largest liquidity center in the industry. Whoever controls liquidity controls pricing power; this is an unchanging truth in the financial world. However, from a longer-term perspective, short-term pricing power is generally determined by institutions/exchanges, but in the long run, it always returns to users. If pricing power is abused, the speed of this transfer will accelerate further.

A significant sign of pricing power abuse is the indulgence of projects with extremely imbalanced chip structures and poor reputations. Among the projects listed on Binance, there are many with low circulation and high market value, coupled with Binance taking a considerable portion of the chips. This results in investment institutions, project parties, exchanges, and market makers controlling the vast majority of chips, leaving retail investors to passively take over. A recent example is Scroll.

The initial circulation accounted for only 19% of the total circulation, with an additional 5.5% allocated for mining on Binance, and the remaining tokens subject to various unlocking requirements over time. A simple arithmetic question arises: with such a large and continuous selling pressure, who will absorb it? Assuming the project party has a good reputation and self-sustaining capabilities, the selling pressure could receive some feedback, further smoothing the entire price curve. The reality is that after the airdrop and TGE, the data was almost cut in half in a short time. Worse still, this fundamental collapse was nearly 100% predictable before being listed on Binance.

Here come the questions:
1) Everyone knows that this is a situation where the fundamentals are bound to remain poor, the token distribution is extremely unreasonable, and the reputation is very bad, making it easy to form continuous control and selling pressure. Why did Binance choose to list it?
2) From the perspective of interests, which side does Binance's screening mechanism stand on?
Combining these two questions, at least one conclusion can be drawn: from the perspective of interests/user experience, Binance gives the impression that it does not stand with users or at least does not prioritize users' interests.

If it truly stood on the side of user interests, no competitor could tarnish Binance's reputation, because the sustainable wealth effect in the crypto space is the greatest truth.

A more significant contrast reflects the role of users as the ultimate pricing power, exemplified by the Grass project, which raised less than 1/10 of Scroll's funding. The former currently has a total market value of over $1 billion, while the latter is over $500 million.
Even in terms of token unlocking selling pressure, Grass's initial circulation was not proportionally large; however, its fair and sustainable airdrop earned the project a good reputation among users, ultimately reflected in sustained buying from users, leading the project to continue increasing incentives for users, thereby further benefiting them.

The same environment, the same project, but different fates. It clearly reveals that no matter how top-notch the technology or glamorous the financing background, even with the backing of top exchanges, if users do not buy in, the collapse of this harvesting chain will only accelerate, and each collapse consumes the foundation on which Binance stands, leading to a simultaneous acceleration of the transfer of pricing power.

2. The Shift of Liquidity: Human Nature Pursues Greed, but the Premise is Fairness and Transparency; On-chain Dex has Unmatched Advantages.
Whether the crypto space is a big casino is debatable, but it absolutely adheres to the basic rules of survival in a casino: it is not afraid of you making money, but rather of you not playing. Contrary to most people's intuition, legitimate casinos in Macau almost always put significant effort into fairness, justice, and transparency to dispel gamblers' concerns. Casinos do not rely on cheating to make money; they rely on statistical advantages to amplify profits.

In terms of fairness, transparency, and justice, decentralization naturally has a stronger advantage than centralization. The growth of Dex is mainly constrained by user experience, but in the face of wealth effects, the impact is minimized. Data confirms this: according to The Block & Defillama, as of October, the ratio of Dex to Cex spot trading volume has risen to a historical high of 13.84%, and this ratio is steadily expanding.

Not to mention that recently, due to the popularity of MEME, platforms like Pump.fun have given rise to several MEME tokens worth over $1 billion, with daily transaction counts exceeding 670 and daily trading volumes averaging over $1 billion.

The data behind this reflects that liquidity is gradually being seized by on-chain Dex or hot topics like MEME. Although the risks on-chain are higher for novice players, few question the issues of decentralized platforms because they provide a relatively fair gaming environment.

The key difference between Cex and Dex is that the foundation of centralized exchanges lies in users handing back the power to select tokens to the platform. Either you treat everyone equally with no or low thresholds, or you set high thresholds but provide sustainable value. The worst-case scenario is setting high thresholds while choosing a garbage project.

There is also a misconception that some centralized exchanges easily fall into an elite agency model. They do not believe they have chosen a garbage project; most personnel responsible for such businesses have impressive resumes and institutional backgrounds. They overly trust that capital can change the world and have unrealistic fantasies about so-called technology, naturally leaning towards believing institutions or thinking they can see the future direction of the industry, calling it: the direction of the industry.

Taking Scroll as an example, aside from seemingly advanced technology and impressive financing, what is its real value? Is it truly irreplaceable? If it is not irreplaceable, what is the logic behind choosing it? The so-called strict screening mechanism, if it does not consider the project's reputation and the founding team's vision, what is the significance of this screening?

Binance's listing signifies a project's success or failure, which is the power entrusted to Binance by users. If this power is not well utilized, then users' doubts are entirely justified.

3. Some Discussions: Binance's Crisis and the Industry's Crisis

Behavioral economist and Nobel laureate Richard Thaler has a famous theory: people weigh the pros and cons in decision-making unevenly, with considerations of "avoiding harm" outweighing "seeking benefits."

From "Anti-VC Coins" to "MEME Fever," this is essentially a vivid manifestation of this theory. Within the visible range, the risks of buying VC coins continue to increase. When factoring in the time cost of being stuck and the limited upward potential of overvalued assets, the profit space becomes extremely narrow. Thus, VC coins on Binance have become an event where the "harm" outweighs the "benefit" for ordinary users.

You might say that Binance is merely a trading venue, like a casino, an objective and neutral third party, and trading naturally has wins and losses. However, the objective fact cannot replace the objective reality. The true objective reality is that even casinos do not offer games where you lose ten times for every ten bets. In the case of VC coins, retail investors have almost never won, and this consensus is currently indisputable.

Furthermore, from the perspective of project selection, if a truly objective and neutral exchange exists, the rules should be transparent, just like the NYSE or NASDAQ. Currently, in this industry, the listing process of leading exchanges remains a black box, relying on people's guesses and inferences, thus possessing supreme power; some exchanges operate in a semi-transparent state, providing near-zero thresholds (you can pay to list). Both are undesirable because the former specializes power, which can easily breed arrogance and small-circle interests even without corruption; the latter monetizes power, charging exorbitant tolls, which can increase project costs and slow down innovation.

From a broader perspective, the current industry crisis is evident. Without greater liquidity spillover, BTC is becoming increasingly independent of the entire crypto market, gradually being controlled and priced by Wall Street capital. Other altcoins either, like Ethereum, cannot find a way forward or completely turn to MEME. A sense of worthlessness looms over the entire crypto space, especially as most valuable coins have been repeatedly discredited. More users have lost confidence in whether projects are building, especially when the largest exchange chooses to believe these so-called project parties rather than users; this confidence and sense of worthlessness collapse even faster. The rise of MEME itself is a loss of faith in the so-called narrative value of industry development.

As the de facto industry spokesperson, Binance should shoulder more responsibility and user expectations. Shifting the problem to peers is less effective than confronting its own systemic flaws. Users need fairness, and they damn well deserve fairness. In the case of projects like Scroll, Binance took a large proportion of chips with almost no cost, making it hard to argue that this is fair, and it is also difficult to say that this benefits project and industry development.

From the perspective of traffic and status, one might say there is no problem, but do not forget where the traffic comes from, and an old saying: "Water can carry a boat, but it can also capsize it."

Do we still need Binance? Undoubtedly, yes. No one denies the tremendous contributions Binance has made to the industry. We still believe in the professional ethics of industry stalwarts like CZ and He Yi. However, as previously mentioned, this is not an individual issue; it involves the operation of the entire mechanism and the ecological issues of the broader environment. How to solve these problems remains unresolved, and there is still no clear path. What we hope for is that Binance truly stands on the side of users, using its influence and immense energy to reverse the current situation, restoring users' confidence in "valuable coins" and in the entire industry.

From Binance's own perspective, can users do without Binance? Is its irreplaceability declining? This is a question worth pondering for Binance's management, especially in an industry environment where Dex trading volume continues to rise, on-chain MEME remains hot, regulation is tightening, and competition is intensifying.

Remember, historically, no company has gone bankrupt due to too many rumors; most have collapsed due to the confirmation of those rumors, ultimately succumbing to arrogance.