Dear Binancians,

In my New Year message last year, I emphasized building foundations for the growth of the global crypto ecosystem for generations to come. In 2020, we worked hard to bring new products, improvements and developments to key ecosystem initiatives. I feel like we are still working on the basement level of a new building, and haven’t even started to build the floors above ground yet. There is still much more work to be done.

The Crypto World After COVID-19

The COVID-19 pandemic has changed the way we live, impacting the well-being of countless individuals and damaging the global economy.

In 2020, worldwide markets faced unprecedented volatility and instability in already-vulnerable economies and countries. With global economic uncertainties, inflation, and traditional assets suffering due to the macroeconomic shock caused by the pandemic, people around the world have increasingly looked to bitcoin and crypto as an alternative asset – in an unprecedented manner. This has driven the crypto market to new heights and poised bitcoin/crypto to enter the mainstream.

This past year, interest in crypto continued to rise amongst traditional investors, and corporate onboarding numbers continued to increase. In 2020, the number of institutional clients we onboarded was 68% higher than in 2019, while new institutional client applications increased 35% quarter-over-quarter, signalling growing institutional interest in crypto. The pandemic also led to drastic macroeconomic changes, such as Quantitative Easing (QE) in almost all countries, which also drives people to crypto. As the new QE money flows into the global market, I think much of it will be converted into one form of cryptocurrency or another. This has corresponded with 2020’s booming crypto futures market that provide the necessary hedging and liquidity opportunities.

The longer-term economic impacts of COVID are unknown. However, as we’re still in the midst of major economic disruptions and historic volatility, I believe bitcoin/crypto will continue to rise and be at the pinnacle of positive change.

Compliance

Our industry is very new and innovative, so inherently, there are more regulations and guidelines needed and under development; similar to how Google and Microsoft persevered during the .com boom. Also, cryptocurrencies cater to a global audience, and because this is such a cutting-edge sector, guidelines in most jurisdictions are still evolving. We believe that ultimately, everyone wants regulation that promotes innovation and an open market. I am optimistic about the positive progress of regulatory frameworks and guidelines around the world, and I believe we will continue to see more clarity on cryptocurrency regulations in the next 12 months.

Compliance is a journey, not a destination – especially in new tech sectors. Responsible players are always working to meet new and changing standards and improve existing practices. We take our compliance standards very seriously, and will continue to heavily invest in this complex and ever-changing environment.

Our goal is to continue adhering to local rules and regulations, which allow us to protect and provide the best services to our users, as well as bring greater adoption. In addition to the many regtech solutions we invest in and compliance partners we work with, we will continue working closely with regulators, complying in the places where we operate as a global decentralized organization, and helping to positively influence regulations that will benefit our industry. We hope to work with more local governments and policymakers in the new year and encourage them to reach out to us to work together.

Decentralized Finance (DeFi) and Binance Smart Chain

This year, we saw the rise of decentralized finance (DeFi) as a compelling use of blockchain technology to spread the freedom of money. Through DeFi, people are given new ways to participate in crypto-fueled financial products and benefit from their gains. The emergence of DeFi also drove more traffic to blockchain networks, and this brings a new set of challenges to developers, like higher network fees and congestion.

To help solve this problem for the crypto community, we worked with the Binance Chain community to launch Binance Smart Chain (BSC) as our contribution to driving more innovation to decentralized solutions such as DeFi and other blockchain-related solutions. BSC offers a high-performance and low-fee blockchain network that’s compatible with the Ethereum Virtual Machine. Now, developers can worry less about costs and focus more on innovating, and we even have rewards for developers.

I think the innovations around liquidity pools and AMM, especially for stablecoin trading, are very interesting. I believe we will see more growth in this area in 2021. DEXs (decentralized exchanges) are also well fitted for listing small and less mature coins, which provides a good validation ground for larger CEXs (centralized exchanges) like Binance.

We have introduced many of these DeFi innovations already on Binance.com, such as interest- and yield-generating products in DeFi Staking and Binance Liquid Swap. We also created the Binance Innovation Zone specifically for listing newer coins, thus providing liquidity for DeFi tokens while protecting less-experienced traders from the risks in trading them.

In 2021, I believe we’ll see more convergence on the product offerings on the CeFi  (centralized finance) front. We have already expanded our portfolio of yield-generating products to include Binance Pool (for miners) and Earn products (for all users), which offer high APY in addition to an easy-to-navigate, one-click interface – reducing technical barriers to entry and costs of on-chain gas fees. Fundamentally, both DeFi and CeFi will help grow the industry. Whatever happens, we are ready to support and adopt any new DeFi innovations and trends.

Adoption: Fiat, Payments, Stablecoins, and Traditional Finance

Another important area for us is the continued growth and mainstream adoption of cryptocurrencies. Growth in crypto payments was one of the most obvious use cases we hoped to see more of in 2020, but it’s still far from mass adoption. Existing fiat payment rails are convenient, low cost and well-established, making them difficult to replace in one swift move.

Since last year, we have been building on existing fiat payment rails in order to allow more users around the world to access crypto. This year, we launched 28 fiat channels, covering different payment methods such as credit card, bank transfer and local popular wallets. Some worked out better than others, but we will keep building out our payment rails in order to provide users with the best purchasing experience. Users are now able to purchase crypto in 46 local currencies with our direct channels and we will continue to add more next year until the whole world is covered.

In addition, we launched Binance Card this year, allowing users to spend their crypto directly from their Binance crypto wallets. This offers a much more convenient method of crypto payment and our Binance Card has been hugely popular amongst our users.

I also believe we’ll see cross-border payments with stablecoins continue to increase next year. Cross-border payments using stablecoins or any cryptocurrency are much cheaper and faster than traditional payment methods, arriving in a matter of seconds, compared to cross-border bank transfers that may take days. Traditional cross-border remittance platforms can charge as much as 7% in fees to remit money overseas, while cryptocurrencies only cost pennies to move – and Binance P2P has some of the lowest fees around. I believe we’ll see greater adoption of stablecoins next year because of these factors.

PayPal entering the market is also great for user education and adoption, as is Square’s continued strong growth in the crypto payments space. Stanley Druckenmiller, Paul Tudor Jones, Franklin Templeton and MassMutual, well-known names in the traditional financial space, all made investments in bitcoin or the cryptocurrency industry this year. Hedge funds, mutual funds, and even a 169-year old insurance company investing in the crypto space, are setting a precedent for this industry, and I believe these are hugely positive moves in the right direction. Maybe next year, we’ll start to see Pension Funds and Sovereign Wealth Funds start to deploy a small part of the tens-of-trillions of dollars that they manage into crypto in order to hedge out some of their fiat risk.

Use Cases: BNB and NFTs

There are so many applications and use cases for BNB, from gaming to cross-border remittances, that I personally can’t count or keep tabs on how many now. There is a large, diverse community in the BNB ecosystem that continues to innovate in finding strong use cases. I don’t know what they will come up with next, but I am sure many of them will be very exciting.

Another crypto asset class I’m looking into this year is NFTs. I think we will see increased sophistication and adoption for NFTs in 2021, from virtual items in games to concert tickets. I believe this is an exciting new area yet to be explored and I’m looking forward to seeing how these develop.

Binance Charity

2020 was full of humanitarian challenges with the Australian bushfires, Beirut explosion, and much more, on top of COVID-19. From the start of the virus, our Binance Charity team and supporters fought against COVID-19 alongside frontline healthcare heroes, providing timely support to communities in need.

Through its “Binance for Wuhan” and “Crypto Against COVID” campaign, Binance Charity raised over $4 million in cryptocurrencies – with three-quarters of the total donated by Binance – which enabled us to distribute more than 2 million pieces of personal protective equipment (PPE) to aid 400+ hospitals in 26+ countries around the world, especially the nations that were affected most by the coronavirus.

In response to the Australia Bushfire Relief, Binance Charity also raised over $2 million aiming at forest rehabilitation and wildlife restoration. Binance Charity also partnered with UNICEF and allocated $10,000 worth of crypto and provided timely support to those in need following the tragic explosion in Beirut this August.

Binance Charity also fundraised $60,000 worth of crypto to Friends of Notre-Dame de Paris to contribute to the restoration of Notre-Dame Cathedral’s Mays, beautiful historical paintings that were damaged in the fire in April 2019.

Always exploring blockchain innovation in charity, the Binance Charity team also led the development of the first blockchain art donation platform, “NFT for Good” – an open platform for global artists to create, sell, auction and donate their NFT blockchain art to NGOs supporting global sustainable development.

During the hard time when the world is facing challenges, Binance Charity will continue its mission of bringing light to the people living in deprived areas in a transparent manner.

Blockchain Research and Development

As we continue to push ahead with crypto, we are also investing significant time and resources to blockchain research. In 2020, we established the Binance China Blockchain Research Institute (BCBRI) with the Linggang Group, with the aim to support blockchain applications in the real world and boost the adoption of blockchain technology. BCBRI has launched blockchain-empowered projects in six cities so far, to further blockchain technology R&D, fintech education including blockchain, AI and big data, and startup incubation. This year alone, we’ve actualized 20+ partnerships and projects with partners such as Amazon Cloud and Stanford University, and will have more developments to share next year.

On Security

Security is a very extensive topic, I think there are a few areas to focus on in 2021:

1. User Education. I believe more user education is needed across the industry to help people avoid “rug pulls” and scammers. We will continue emphasizing the importance of individuals educating themselves in order to make investment decisions cautiously and responsibly. Research before investing is key. In this area, Binance provides educational materials on Binance Academy, Binance Research, and CoinMarketCap to help investors make informed decisions.

2. Security Tools. Better tools are needed for regular people to securely hold their own private keys, with proper encrypted backups. Good cyber hygiene is complex and can be intimidating to cryptocurrency newcomers. We have invested heavily in multiple wallet developments to help on this front. Combining security with ease of use will be vital as more people invest in cryptocurrencies.

3. Security Infrastructure Investments. Centralized exchanges must increase security investments on technologies such as threshold signatures (TSS), to hold users’ funds more securely. Binance has open-sourced our TSS library, and a large number of community developers are contributing to it.

4. Personal Habits. Security threats and technologies used to defend against them evolve over time, but one thing remains constant: the human element. The human element is the weakest link. Attackers constantly prey on psychological flaws such as the desire for quick information and greed. There are increasingly sophisticated ways of abusing trust, including spear-phishing and social engineering. This can circumvent some of the most fundamental defense mechanisms we have relied on in the crypto ecosystem such as 2FA. At Binance, we continue to strive for zero trust in our enterprise security and trading platform security to protect our users.

Binance Angels Community

Another vital component of Binance success this year has been the incredible support and commitment from our Binance Angels Community. Binance Angels consist of dedicated users who believe in blockchain, crypto, and Binance. Binance Angels are community builders at heart, and they share the same values as Binance – to spread the freedom of money all over the world.

They are as passionate as we are about expanding the adoption of crypto and blockchain in their local communities, and they play a key role in helping us accomplish this mission.

Using their own life and professional experiences, our Binance Angels help us add more value to the Binance ecosystem. Our Binance Angels support and educate our users, help us improve our platform and user experience, and highlight our community’s concerns. They are instrumental in helping us build products and features that our communities want.

We take pride in our Binance Angels community, and the support of our Angels has been critical in ensuring Binance’s success. We currently have 239 Binance Angels who help us support users in more than 40 local communities – and growing! If you’d like to be part of the Binance Angels Community, apply through our Binance Angel Application.

Looking Ahead to 2021

In 2021, we will continue to keep our heads down and build products users love. We will continue to develop and improve services that are beneficial to society and protect our users and the industry. I’m very excited about the new developments and products we have planned for 2021.

On the personal side, my New Year’s resolution for the last 10 years has been getting a six-pack, but I’ve never gotten there. My main hope is just that 2021 will be less crazy than 2020, and that people’s lives continue to improve.

Wishing everyone a healthy and happy new year.

– CZ, Binance CEO

https://www.binance.com/en/blog/421499824684901411/Binance-in-2021-Innovating-in-an-Increasingly-Decentralized-World