BNB Loses Stability: CZ’s Plan to Rebuild Binance Chain

• Binance has come under public scrutiny for its BNB operations and artificially maintaining the collateral threshold to bolster the coin.
• A potential liquidation scare related to a prior Binance Chain exploit involving Venus Protocol surfaced, which threatens more severe repercussions than FTX collapse.
• Large liquidations could send BNB prices quickly tumbling as the token is sold in the open market, creating far-reaching consequences for the entire crypto sphere.

Binance Exchange In Hot Water

Binance exchange has recently come under public scrutiny due to its questionable BNB operations and the artificially maintaining of collateral threshold to boost the price of this token above a widely-discussed liquidation margin near $212.

Venus Protocol Exploit

This controversy began with an exploit of Venus Protocol involving a potential liquidation scare. An “exploiter” illegally minted 2 million BNB through a BNB Bridge, then deposited 900,000 of them onto Venus in order to borrow $150 million worth of stablecoins. However, given that BNB prices are currently unstable, this massive loan could lead to serious repercussions if it were to be liquidated.

The Liquidation Danger

In detail, when an exchange forcefully closes a trader’s leveraged position due to either partial or total loss of their initial margin, it is known as a ‘liquidation’. This can occur if a trader fails to meet margin requirements or does not have enough funds available to keep their trade open. As such large scale liquidations can significantly cause drops in BNB prices by selling off tokens in the open market – with potentially spiraling effects on other positions – thus leading to further FUD and withdrawals/liquidations from other users.

BNB Chain Overview

It should also be noted that Binance Smart Chain is currently one of the top three DeFi ecosystems globally with over $2 billion locked in TVL (Total Value Locked) and $263 million collected daily in fees. Additionally, there is also about $5 billion worth of stablecoins stored within this chain’s ecosystem. On top of this, there’s also no denying that Binance Exchange remains one of the largest crypto exchanges worldwide at present with over $5 billion traded within 24 hours alone .

CZ’s Plan To Rebuild Credibility

With all these facts taken into consideration it becomes obvious why many investors are concerned about how CEO Changpeng Zhao plans on rebuilding his credibility after having lost it due these developments surrounding Venus Protocol and its subsequent liquidity threats against both BNB itself and all those reliant upon its infrastructure: namely both investors and users alike.