For an exchange, its fundamental product form is that of a trading tool. During the peak of the domestic Internet era, it was once said that "a good product should be used and then forgotten." However, when a platform has progressed beyond the initial high-growth expansion stage, especially when the industry is transitioning from rapid expansion to a more stable, stock-based phase, good products should not simply be used and then discarded. So, what strategic significance does the Binance Square product hold for Binance?

### 1. Analyzing the Rationality of Binance Square

#### 1.1 Why the "Use and Forget" Model Isn't Viable
When considering why a platform needs to establish a content community, starting from the most basic principles, a Centralized Exchange (CEX) offers trading scenario services. Trading itself is a closed-loop process that demands a specific decision-making chain, namely the progression from gathering information to finalizing a trading decision.
Consequently, from this perspective, trading platforms possess distinct advantages in serving as content communities. These platforms can provide a fertile ground for the transformation of trading platforms into content and social hubs.
By constructing a comprehensive information system, the loop of "information acquisition → investment decision → transaction completion" can be closed, thereby enhancing both the conversion rate and user retention.

Based on my observations, the majority of platforms in the industry currently adopt an "off-site traffic diversion" approach, employing various brand-building strategies to draw in new users to their platform ecosystems.
Nevertheless, with this method, users only come with specific needs; otherwise, they won't stay, merely passing through.
Moreover, upon opening a platform's application, it becomes evident that major CEXs offer more than just a trading module. For instance, the Binance application includes modules such as financial management, activity tasks, copy trading, options, and wallets. If these modules were designed with the "use and forget" mindset, they would exist in isolation.
Not only would it be uncertain whether the user is aware of these functions or has a need for them, but in such an isolated state, it would be challenging to reach the user through simple main site information dissemination.
However, by facilitating the flow of information within the site via an information community and enabling users to actively seek out this information, it becomes easier to break free from the modularization island dilemma and form a more efficient business closed loop.

#### 1.2 Content as a Traffic Generator
Presently, I'm not certain about the Daily Active User (DAU) trend of the platform before and after the establishment of the Square. However, from the perspective of content generation and social relations, in the traditional Internet brokerage industry, those brokerages with content platforms and communities tend to outperform their peers in terms of Monthly Active User (MAU) and DAU figures.
I believe this phenomenon also holds true in the Web3 industry, as both industries possess strong financial characteristics and a fundamental need for information intake.
Based on the demand for content, the market's attention will be drawn to certain content platforms, leading to new growth and increased user activity.
The social connections between Key Opinion Leaders (KOLs) and users, facilitated by the content, are more likely to encourage a customer to transition from being a passive observer to an active depositor on the platform. This represents a positive impact on the platform, driven by social relationships.
It addresses user needs beyond the basic tool requirements.

#### 1.3 Expanding the Service Portfolio
As previously mentioned, a CEX application typically encompasses more than just a trading function. A trading tool with only a single trading function is, in essence, similar to a Decentralized Exchange (DEX), which is a key distinction I realized while writing this article.
These additional service functions can generate supplementary revenue for the trading platform. Here are two examples:
1.3.1 Financial Services: For the platform, it earns from the yield differential. Any variation in yield can lead to significant changes, especially when volume is involved.
1.3.2 Order-Leading Service: This is an individual asset management service that has emerged on various platforms since the first quarter of this year. Under appropriate circumstances, the order-leading service benefits all three parties: the platform boosts trading volume, the order-leaders achieve greater positive profits, and the copycat users generate income.
Integrating these two business models into a content community can alter the way customers access product information. The conversion rates between passively received and actively sought information are substantially different.
The growth in DAU, driven by this content-based platform, is sufficient to support a platform in exploring various opportunities related to crypto assets and enhancing its supply-side capabilities by continuously introducing innovative products and services.

For example, many may be puzzled recently about the significance of Binance's support for the TON ecosystem and its acquisition of "low-value customers." In the above three aspects, I believe some answers can be found.

### 2. The Irreplicable Product Moat

#### 2.1 Inimitable Social Connections
As a relatively established Internet product, community modules are prevalent in nearly all popular vertical financial applications or general social applications in the market.
User-Generated Content (UGC) can disseminate information more effectively and at a lower cost compared to content managed and promoted by a single entity.
In 2021, I was responsible for a related business segment in a brokerage firm. I recall an interview with Lianchuang from Futu Securities, and one sentence stood out: The community ecosystem constructed through UGC has become Futu's unique competitive edge and safeguard.
I believe this is also one of the driving forces behind the emergence of Binance Square.
In fact, it's relatively easy and inexpensive to create the shell of an exchange product nowadays. However, for a trading platform, the most challenging aspects to develop in the current industry are twofold: users' trust in the platform's security;
This is a barrier erected by the company through a series of efforts, including product development and crisis public relations. It cannot be achieved simply by relying on on-chain margin, as most people may not have faith in it.
Apart from this, in terms of replicability, is there anything else that cannot be accomplished in the short term, regardless of the amount of capital invested or the number of people involved? The community ecosystem based on UGC is precisely such a feat that cannot be achieved through one-sided efforts in the short run.
Moreover, this community is regarded as the platform's private domain traffic. For a platform, expanding the user base and converting existing traffic are two parallel and crucial business directions. The UGC-based community integrated into the application serves as a link for converting existing traffic.

#### 2.2 Social Bonds Fostering Retention
Community is a vital element in the industry. Currently, the Square is entirely generated by the platform's users. By incorporating social attributes into the tool's functionality, a built-in community is formed. Besides information access, it also imparts emotional value to ordinary users.
Once I post a message, opinion, or article on the platform, I'm likely to return to check for responses (social connections drive the frequency of application usage). Positive feedback induces a sense of pleasure, while negative feedback triggers a competitive spirit within the online community.
Under this cycle, users' content assets will accumulate, and relationships between users will gradually solidify, leading to a more stable growth in the platform's DAU.
From this standpoint, Binance has harnessed the social connections scattered across various industry platforms and consolidated them within its private domain, managed by KOLs and maintained collaboratively by users through content and other means.

#### 2.3 Long-Term Retention and Advancement of Investor Quality
Personally, I view secondary market transactions as being like "water that doesn't strive for the lead but for continuous flow." As a trading venue, I believe the platform comprehends this concept better than anyone.
Early this year, I encountered a successful community founder in trading. He mentioned that for top-tier trading platforms, the lifespan of contract users is approximately 7 months, whereas for non-top platforms, it might be as short as 3 months.
I believe this highlights the importance of investor education. However, as an official platform, providing investment education is often counterintuitive, as few are willing to take the initiative to learn.
But as a creator within the Square, I've witnessed some of the community members I've interacted with grow and develop through the information available in the Square over the past two years.
This is because, driven by social connections, users can remain engaged on the platform for an extended period and receive positive reinforcement regarding knowledge. Moreover, as far as I know, many users actively engage with these resources without any financial incentive.
Naturally, I'm not suggesting that the platform offers comprehensive and flawless investment education materials. Instead, it's the social environment and the influencers users follow that instill in them the concept of "water that doesn't strive for the lead but for continuous flow."

#### 2.4 Product Evolution Based on User Behavior
Furthermore, by implementing this content community approach, the platform can more directly listen to user feedback on-site. From my personal experience, we have implemented product improvements in response to user feedback in the past. This represents a more direct form of communication.
One aspect I'm uncertain about is whether Binance, in addition to addressing individual feedback, analyzes user behavior data on the Square and makes corresponding algorithmic and product adjustments. From a product development perspective, this is likely and would also drive product innovation.

### 3. Delivering More In-Depth Business-to-Business Services

#### 3.1 Marketing Strategy
The exchange itself has numerous Business-to-Business (B2B) service lines. For a single coin listing event, the basic services might include integration with financial management modules, contract modules, support for multi-chain withdrawals, off-site marketing, and more.
The Square business offers a conducive environment for on-site marketing throughout the development cycle of these projects. Traditional on-site marketing methods, such as announcements, push notifications, and home page highlights, are forms of passive information that users may overlook. Psychologically, it's difficult for us to pay close attention to every piece of passive information.
However, the information module within the Square, similar to a short video platform, belongs to the category of information that users actively seek. Even a widely criticized joke can leave a memorable impression.

#### 3.2 Practical Examples
Take the most recent essay competition as an example: $DODO. This is a project that has weathered industry cycles, and market opinions about it are divided. The essay contest on the Square aimed to provide positive guidance, but as a User-Generated Content section, it was inevitable to encounter negative remarks.
These diverse viewpoints will spark market discussions and capture public attention. Such an event represents a relatively successful marketing campaign.
Since the data on Binance Square cannot be manipulated, for a project, marketing here is a sensible choice, and the user base is highly targeted.
Moreover, this form of investment can span the entire project development cycle. Not only can launched projects on Binance benefit, but also those yet to be launched can conduct related activities. For more details, contact the Square's manager 𝕏@yingbinance.

#### 3.3 A More Equitable "Write to Earn" Model
Additionally, this serves as an incentive for creators and users within the platform. I've noticed a phenomenon: the number of views an essay receives in the contest is not strictly correlated with the number of followers a user has. While popular influencers may have a slight advantage, it's not decisive.
In other words, anyone participating in the Square's essay contest has a fair chance of being rewarded based on the quality of their writing, making it a more equitable "Write to Earn" opportunity.
Compared to the chaotic situation on Twitter, in this regard, the Square's incentive mechanism is more appealing to amateur creators like myself.
This fairness will intensify competition, ultimately bringing more cost-effective marketing outcomes for the project.

### 4. The Expanding and Unreplicable Moat
Currently, my understanding is that the future functions of the Square product will extend beyond simple text-based user interactions to encompass a broader range of social connections.
I've noticed that the Square may be promoting the growth of the video creator community. Because of this, I've become aware of the significant number of people creating short videos in the Web3 space.
Furthermore, the live broadcast module is expected to undergo substantial enhancements and be integrated into the Square's functionality.
Ultimately, what will emerge is a progressively more open social module (including private messaging, group chats, etc.). Reflecting on the past, when information dissemination was less restricted, the vibrancy of the community mirrored the activity of the industry.
However, as a user in the current landscape, it's rare to witness such a scene on any social platform. This is due not only to current liquidity challenges but also to varying user preferences for social products.
In the future, a Centralized Exchange, which was initially just a trading tool, has the potential to transform this situation, creating a corporate moat that is increasingly difficult to replicate or surpass. All of this stems from what appears to be a straightforward yet strategically profound product plan.

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