Binance has officially announced Binance Mirror, an addition to its Binance Custody product, which will let institutions access trading and investment products within the Binance Exchange ecosystem without having to post collateral directly on the exchange.
Using Binance Custody, institutional clients get to keep their assets in a solution with more security features, either in hot or cold storage. If they wanted to use this assets on the exchange, they would have to move them from the secured wallet to an exchange wallet.
But with Binance Mirror, when institutions lock a specified amount of their asset balance available in their Binance Custody wallet, this amount gets to be mirrored onto their Binance Exchange account with a 1:1 balance.
“Their assets remain secure in their segregated cold wallet for as long as their Mirror position remains open on the Binance Exchange, which can be settled at any time,” Binance said.
Following the collapse of FTX exchange in late 2022, users have become wary of exchanges, and the Binance exchange itself is thought to have experienced significant withdrawals in December 2022, due to this situation. However, CEO, Changpeng Zhao, brushed aside any jitters saying the withdrawals represent just 2% of net assets held on the exchange.
“Most people are not able to back up their security keys; they will lose the device […] They will not have the proper encryption for their backup; they will write it on a piece of paper, someone else will see it, and they will steal those funds,” he explained to one person.
Launched in December 2021, Binance Custody is described as a separate, dedicated custody platform separate from Binance Exchange, with segregated account and wallet systems that address the security and operational challenges faced by institutions participating in the digital asset economy.
According to Binance, adoption and use cases for the off-exchange settlement solution grew significantly in the last quarter of 2022 with a 67% increase in assets mirrored from Binance Custody to the Binance Exchange.
It is reported that assets in Binance Mirror account for more than 60% of all assets currently secured on Binance Custody.
“Security is a top priority for institutions who also desire the deep liquidity that the Binance Exchange offers. Binance Mirror brings the best of both worlds,” shares Athena Yu, VP of Binance Custody.
“We spent much of last year refining its operations to help our clients unlock the liquidity of their assets held in our cold storage. We’re very excited about where we are today and can’t wait to introduce our upcoming new features that will elevate Binance Mirror’s functionality even further.”
According to Binance, mirrored assets can be used to access several products on the Binance exchange including institutional VIP loans.
“This new use case was successfully executed through Binance Mirror while the client’s collateral, required to apply for the loan, remained segregated in their Binance Custody Qualified Wallet.”
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