Binance Expands Market-Maker Fee Rebates After Hack to Shore Up Liquidity
Binance, the world’s largest cryptocurrency exchange, has expanded incentives for market makers as it seeks to restore trading liquidity after a major hack.Bloomberg reported on Nov. 2 that Binance, immediately after suffering about $6.3 billion in hack-related losses last week, proposed higher spot and futures trading fee rebates for some small and mid-sized market makers.Market makers are liquidity providers that continuously post buy and sell quotes to help trading run smoothly on an exchange. Binance sorts them into four tiers based on factors including trading-volume contribution, with higher tiers receiving larger fee rebates.The measure will apply for one week. Under the plan, Tier 2 and Tier 3 market makers will receive the same rebate rates as Tier 4, the highest tier. The aim is to encourage participation by relatively smaller firms and deepen order-book liquidity.Binance’s market liquidity has fallen sharply since the hack. According to Talos, a crypto trading infrastructure provider, Bitcoin order-book depth on Binance dropped about 30% in the 24 hours after the breach, to about $32 million from roughly $45 million. The figures are based on buy and sell orders placed within 1% of the current price.Customer outflows have also continued. Binance halted withdrawals after confirming the hack on Oct. 29 and resumed the service on Nov. 1. By Nov. 2, net outflows from the exchange had reached $4.7 billion. Even so, that represented only part of the total customer assets held by Binance.The Federal Bureau of Investigation identified North Korean hackers as being behind the attack. Binance has said it will compensate for losses caused by the hack.A Binance representative said the company’s swift sharing of information after the breach helped ease market anxiety. The exchange also moved immediately to preserve liquidity, one of its core competitive strengths, the representative added.