Binance is set to welcome its new update on trading fee discounts on September 9. Last week, the exchange announced its decision to scrap the referral commission rates and come up with a different approach for the commission fee. Here is what you need to know about the latest development on this key feature.
No more referral commission rates
Binance is knocking down its referral commission rates, which include a trading fee discount for inviting new users to Binance. In short, you earn a percentage of their trading fees as referral commission. This is applicable only for users who hold 500 or more BNB tokens. BNB is the native coin of Binance.
If you hold 500 BNB or more, you could get the maximum referral commission rate, for instance, a 40% trading fee discount on spot trades.
Performance-based commission structure
The latest update is all about a performance-based commission structure.
- By cracking down on the referral commission rates, Binance is removing the requirement for holding a BNB balance.
- The new system is based on performance — the referral system will reward you based on your referral performance and other metrics.
- So, no more discounts/rewards based on how much BNB you hold.
Starting from tomorrow, your referral activity and performance matter.
Metrics used to measure performance
- Trading volume generated by referrals
- Number of new traders you refer
- Quarterly evaluation of your performance
Reasons why Binance is making this significant update
Reduce regulatory risk
Linking referral commission discounts directly to BNB holding could make the token more like a financial instrument. Removing BNB from the circle reduces legal risk, especially under the US and European regulators. The current update also makes Binance a business growth tool.
Incentives do not go only to whales
The old model gives a high discount for users holding more than 500 BNB. However, the new model evaluates the user performance (referral activities) and offers discounts.
Revenue optimization
Binance has been one of the biggest providers of big trading fee discounts. Although this feature attracts more users, the revenue that Binance receives is less. By phasing out the steep discounts, the platform can keep/save more of the fee revenue.
A shift from a BNB holding-based discount system to a performance-based referral system signals a major turning point for th platform in saving more revenue. Removing the need to hold 500+ BNB may be a pain point for big whales; however, considering regulatory risks and the revenue it earns, this move is a big change for Binance.
