Following the events of last week (FTX incident), there is an urgent need for crypto exchanges such as Binance to embrace particular guidelines in order to maintain confidence with their users. It is not acceptable to allow a few bad actors to tarnish the name of this sector while it is still in its infancy. It is the responsibility of crypto exchange platforms like Binance to defend their valued customers. User funds must never be misused, and all precautions must be in place to keep them safe. Transparency in exchange activities is essential. Planning to launch a Binance-like crypto exchange of your own? Here are six guidelines for keeping cryptocurrency exchanges and crypto exchange scripts secure and safe for customers.
1. Use User Funds with Caution
Crypto exchanges should never trade or invest with user funds. They must also convey proactive risk alerts to customers so that they comprehend the volatility of cryptocurrency. This builds trust among the users and in turn, attracts them to your crypto exchange platform such as Binance.
2. Native Tokens should never be used as Collateral
Native tokens are exchange tokens developed by the exchange's operator. These native tokens are essential to the operation of blockchains and maintain the robust foundations for blockchains. A healthy native token is a successful blockchain's lifeblood. Users must be able to rely on the native token on which their chosen blockchain is built with confidence. Also, there must also be broad utility.
BNB chain, for example, is a community-driven, decentralized, and censorship-resistant blockchain powered by BNB. BNB's auto-burn system is steadily reducing its entire supply to 100,000,000 BNB. This is done to improve predictability and visibility by altering the quantity of BNB to be burnt based on the price of BNB and the number of blocks created on the BSC. The utility is created by developing highly interactive DApps such as games and social apps. Ensure that your Binance-like crypto exchange platform delivers the same.
3. Start Sharing live Asset Proof
Did you know that Binance has begun providing information on critical hot and cold wallet addresses as part of Binance's continuous commitment to openness and encouraging confidence in the ecosystem? Yes, you read that right! This is a beginning step as they try to develop a Merkle tree proof of funds to share with the community in the coming weeks. The objective is to enable platform users to make educated decisions that are in line with their financial objectives. A crypto exchange platform developed using the Binance crypto exchange script must do the same. Other industry participants have already provided similar openness, which is laudable, and it’s time for the whole sector to do the same so that we can demonstrate that a few rotten apples do not represent the entire business.
4. Maintain Ample Reserves
Binance established the SAFU fund to address severe situations. The Secure Asset Fund for Users (SAFU) is a fund established in 2018 to protect Binance users in severe circumstances. They have managed to manage SAFU's growth throughout the years, keeping the balance at a level sufficient to protect our users. The fund now has around $1 billion in it. Others in the industry should commit to doing the same and that includes you. Just launching a crypto exchange similar to Binance is not enough. A reserve will help out you and your users in times of trouble.
5. Avoid using too much Leverage
Taking on debt to fuel expansion is a bad idea even if you have umpteen resources. This is why Binance's financing structure is debt-free. The cryptocurrency is just too volatile. Binance has urged its industry partners to be economically prudent as well. It is often said, ‘A debt-free business is a successful business’. Ensure you follow the same with your Binance-like exchange platform and remain debt-free.
6. Enhance and Implement Security Protocols
Because industry and project protocols are rapidly expanding, there is a need for the industry to build a stronger alliance to agree on criteria for the quality of security precautions for exchanges and projects. To facilitate investigations and the recovery of stolen funds, a strong relationship with law enforcement is necessary. We require a stronger incubation strategy to provide new players with adequate security safeguards. KYC and AML procedures should be strictly enforced at all exchanges. The same applies to your Binance clone script.
