Changpeng Zhao Criticized The Idea Of ​​liquidity Segregation In The Crypto Market

Some countries want to create a separate order book (liquidity) to effectively protect consumers. The CEO made this conclusion of Binance, Changpeng Zhao, based on the results of interaction with regulators. 

“This is a bad idea for a number of reasons ,” he stressed.

Zhao is convinced that ordinary users will suffer if it is implemented. They will lose tight spreads, low slippage and the best execution prices possible in a highly liquid environment.

The latter is an important form of protecting their rights, as it makes market manipulation more difficult and reduces volatility and the likelihood of liquidations, he added.

The CEO of Binance proposed to conduct a thought experiment and divide liquidity into 180 countries. According to him, in this scenario, it will be much easier for large traders to “rock the market,” increasing the scope of price fluctuations.

Arbitrage traders’ attempts will not be as effective as a single order book. Ordinary users will pay for their earnings, Zhao stressed.

Recall that the CEO of Binance promised to focus on the creation and development of products in the next five years and cooperate with regulators.

In 2021, Zhao published an open letter outlining the platform’s compliance and customer protection plans.

In September 2021, the head of the company announced the rejection of the “decentralized” business model.