For an exchange, its product form is essentially a trading tool. At the peak of the domestic Internet era, someone once said: "A good product should be used and then gone."

However, when a platform has gone through the initial growth period of high expansion, especially when the industry is currently in the stage of transitioning from high growth to stock, good products should not be used and then gone.

So what strategic value does the Binance Square product have for Binance?

🗝️Article title

1. Discuss the rationality of Binance Square

2. Why is this a product moat that is difficult to replicate?

3. How to provide more in-depth B-side services based on this product

4. Conclusion: The moat is gradually widening as far as the eye can see

Main Text👇🏻

A few days ago, I saw a Chinese KOL complain that the BN Plaza function itself was cumbersome and far less satisfactory than the pure tool logic of competitors. However, in the competition for the existing market, I think this is a strategically disadvantageous position.

Judging from the product planning of the APP itself, Binance should be the only CEX that currently focuses on this area.

At the beginning of the year, a guy on Twitter also questioned the rationality of this product. I opened his profile and looked at a row of high-sounding titles, and a question emerged in my mind: Why did he ask such a question?

This makes me a little confused: Hasn’t everyone used the products of Internet brokerages? Is this a proven model?

I used to wonder why other platforms didn’t put this product at the core, but#Binancedid. Now I understand one of the answers to this question: the platforms are at different stages of development.

At this stage, other CEXs may focus on increasing volume, but Binance itself has become relatively mature and has become the destination of the industry's largest liquidity. Thinking about how to maximize commercial value and exploring how to better retain users should be the top priority.

But from this point of view, it seems that it is very reasonable for other platforms to expand this business in parallel during their rising development stage. Therefore, in response to the above question, I even don’t understand why other platforms have not given this area to Catch it, cost reason?

1. Discuss the rationality of Binance Square product🔻

1.1 Why is it not feasible to use and go?

When we sort out why a platform needs to build a content community, starting from the most basic logic, CEX itself provides trading scenario services, and trading itself is a closed-loop process that requires a certain decision-making chain, that is, the process from obtaining information to completing trading decisions.

Therefore, from this perspective, trading platforms have unique advantages in serving as content communities. The platforms themselves can provide a very suitable soil for the contentization and socialization of trading platforms.

By establishing a sufficiently rich information system, we can complete the closed-loop chain of "information acquisition → investment decision → completion of transaction", and further improve the conversion rate and retention rate of each customer.

According to my observation, the approach currently taken by most platforms in the industry is basically "off-site traffic diversion", using various brand building methods to attract incremental users into the platform ecosystem.

But with this approach, users come with needs; otherwise, there is no retention at all, and they just come and leave.

In addition, if you open the platform's APP, you will find that major CEXs provide more than just the trading module. Take the #Binance APP as an example: it includes modules such as financial management, activity tasks, copy trading, options, and wallets. If these modules are based on the "use it and go" product mindset, they will be an isolated island.

Not to mention whether the user himself knows that you have this function and whether he has this demand, but in this isolated situation, it may not be possible to reach the user through simple main site information push.

However, by completing the flow within the site through an information community and allowing users to actively access this information themselves, it will be easier to break the dilemma of business modularization islands and form a better business closed loop.

1.2 Content is the source of traffic

At present, I have no idea what the DAU changing trend of the platform was before and after the establishment of the Plaza, but just from the perspective of content production and social relations, in the traditional Internet brokerage industry, brokerages with content platforms and content communities are ahead of their peers in MAU and DAU data.

I think this phenomenon is still applicable to the Web3 industry, because both industries are essentially strong financial attributes and have the most fundamental demand for information intake.

Based on the demand for content, the market's attention will be concentrated on some content platforms, thus achieving new growth and active stock results.

The social relationship between KOLs and users brought about by the content is more likely to prompt a customer to complete the step of depositing funds from being a spectator on a platform. This is a positive impact on the platform driven by social relationships.

It solves users' needs other than tool needs.

1.3 Expand the service matrix

As mentioned above, a CEX software will not have only a single trading function. A trading tool with only a single trading function is basically equivalent to a DEX (this is also the core difference between CEX and DEX that I thought of when writing this article).

These functional service matrices can generate additional revenue for the trading platform. Here are two examples:

1.3.1 Financial services: For the platform, what it earns is the difference in yield. Any difference in yield will bring about qualitative changes driven by the volume;

1.3.2 Order-leading service: This is an individual asset management service that has emerged on various platforms since Q1 this year. Under reasonable circumstances, the order-leading service is a three-party achievement for high-level traders. The platform promotes trading volume, order-leaders gain more positive profits, and copycat users gain income.

Putting these two businesses into a content community can change the way customers obtain product information. The conversion rates brought by passively pushed and actively obtained information are completely different.

This content-based platform DAU growth is sufficient to support a platform in doing many things around crypto assets and improving supply-side capabilities by continuously launching featured products and services.

For example, many people may be confused recently about the significance of BN’s support for the TON ecosystem and the acquisition of “low-value customers”.

In the above three links, I think I can find some answers~

2. Product moat that is difficult to replicate 🔻

2.1 Social relationships that are difficult to replicate

As a relatively old Internet product, we can see community modules in almost all popular vertical financial applications or general social applications on the market.

User-generated content (UGC) can convey and distribute information more efficiently and at a lower cost than content operation and push by a single entity.

In 2021, I was also in charge of a related business segment in a brokerage firm. I saw an interview with Lianchuang from Futu Securities and vaguely remember a sentence: The community ecosystem built through UGC has become Futu's unique moat and barrier.

I think this is also one of the reasons why Binance Square came into being.

In fact, it is very simple to make a product shell of an exchange now, and the cost can be very low. However, for a trading platform, the most difficult thing to build in the current industry is nothing more than: users' trust in the security of the platform;

This is a corporate barrier built by a series of work such as product construction and crisis public relations. It is not something that can be achieved simply based on on-chain margin, because most people may not trust on-chain margin.

In addition to this, from the perspective of replicability, is there anything else that cannot be achieved in the short term by throwing money at it, or by gathering people? The community ecosystem based on UGC is something that cannot be achieved in the short term through unilateral efforts.

What's more, this community is regarded as the private traffic of the platform. For a platform, expanding the increment and how to convert the existing traffic are two parallel main business lines. The UGC-based community built into the APP is such a link that can undertake the conversion of the existing traffic.

2.2 Social Relationship Drives Retention🌱

Community is the most important element in the industry. Currently, the Plaza is completely independently produced by platform users. The social attributes are added to the logic of the tool to form a [built-in community]. In addition to information acquisition, it also gives ordinary users more emotional value.

I have posted a message, opinion or article on the platform, and I will most likely come back to check the feedback (social relationships drive the high frequency of APP opening). Positive feedback will bring me dopamine, and negative feedback will arouse the "critical" fighting spirit of the online team.

Under this cycle, users' content assets will become increasingly rich, and relationship chains between users will gradually form, making the platform's DAU growth more stable.

From this perspective, Binance has locked the social relationships on various social platforms in the industry into its own internal private domain, which is then managed by KOLs themselves, and collaboratively maintained by users on the platform through content and other means.

2.3 Long-term retention and iteration of investor quality🗝️

I personally believe that secondary market transactions are like “water does not compete for the lead, but for its continuous flow”. As a trading venue, I think the platform knows this better than anyone else.

At the beginning of the year, I met a community founder who was very successful in trading. He said that for the top trading platforms, the life cycle of contract users is about 7 months, while for non-top platforms, it may be only 3 months.

I think this is the importance of investor education, but as an official platform, investment education itself is very anti-human, and very few people are willing to take the initiative to learn these things.

But as a creator in the Square, I can clearly see that in the past two years, some of the community friends I have come into contact with have continued to grow through the information in the Square.

This is because driven by social relationships, users can retain on the platform for a long time and obtain positive feedback on knowledge. Moreover, as far as I know, many users actively start to get in touch with these things without paying.

Of course, I am not saying that a platform provides very sound investment education materials, but the social relationships on this platform, the bloggers he follows, gave him such a concept: water does not compete for the lead, but for the continuous flow🔺

2.4 Product iteration based on user behavior

In addition, with this content community approach, the platform can also listen to the users' voices more intuitively on the site. From my personal perspective, we have followed up and iterated on feedback on some of our products in the past. This is a more direct way of reaching out.

Another thing I am not sure about is whether BN will, in addition to responding to individual feedback, analyze user behavior based on data on the square and make corresponding algorithm and product adjustments. From a product perspective, this should be a high probability thing, and such results will also drive product iterations.

3. More in-depth B-side services🔻

3.1 Marketing Logic

The exchange itself actually has quite a lot of To B business lines. The basic services for a coin listing event alone may include access to financial management modules, contract modules, multi-chain withdrawal support, off-site marketing, etc.

The Plaza business provides a good soil for in-site marketing throughout the development cycle of these projects. Ordinary in-site marketing may be announcements, push notifications, home page pushes, etc., but these are all information that users passively access. From a psychological point of view, it is difficult for us to pay close attention to every piece of news that passively comes to our faces.

But the information module of the square, like the short video platform, belongs to the information domain that users actively obtain. Even a joke that is widely complained about will leave a memorable point.

3.2 Specific Examples

Take the latest essay case for example: $DODO

This is a project that has gone through industry cycles, and the market has mixed reviews on it. The essay contest at the square certainly wants to provide positive guidance, but as a UGC section, it is also unable to avoid negative comments.

These two different voices will bring about market discussions and also capture the attention of the general public. Such a phenomenon is a relatively successful marketing campaign.

And because the data on Binance Square cannot be brushed, for a project party, market marketing is the most suitable choice, and the user base is also extremely vertical.

Moreover, this investment can run through the entire development cycle of the project. Not only the projects that have been launched on BN, but also the projects that have not been launched can hold related activities. For more information, please contact the person in charge of the square 𝕏@yingbinance

3.3 A fairer [Write to Earn]

In addition, this is also an incentive for the creators themselves, or the users within the platform, because I also discovered a phenomenon: the number of views of the essay contest rewards has no absolute relationship with the number of your fans. It is true that some big Vs with good traffic may have certain advantages, but this advantage is not obvious.

In other words, anyone who participates in the Square essay contest has the opportunity to receive rewards based on the quality of their essay, which is a relatively fair [Write to Earn].

Compared to the chaos on Twitter, in this respect, the incentive mechanism of the Square is more suitable for an amateur creator (such as me).

This fairness will lead to more intense competition, which will also bring a more cost-effective market effect to the project itself.

4. The moat is gradually widening as far as the eye can see

At present, what I understand is that the functions provided by the Square product in the future will not be limited to text communication between users, but will include more diverse social links.

What I can see now is that the square may be promoting the development of the category of video creators. Because of this reason, I learned that there are so many people shooting short videos in Web3.

In addition, the live broadcast module itself is expected to undergo major iterations and be integrated into the functional areas of the square.

In the end, what is presented is a gradually open social module (including private messages, group chats, etc.). Let us think about the past, when information review in a certain place was not so strict, the activity of the community reflected the activity of the industry.

But now, as a user in a certain place, it is difficult to see this scene appear on any social platform, not only because of the current liquidity issues, but also because users have different preferences for using social products.

And this may be changed in the future by a CEX that was originally just a tool, which will bring about a corporate moat that is more difficult to copy and surpass, and this is just because of such a seemingly simple logical product plan~

The end.