Updated: May 15
Only 165 days after its founding date, in July 2017, Binance had become the #1 cryptocurrency exchange worldwide in terms of the trading volume. How did it happen so fast? From the company culture and organizational structure to the decentralized nature of its operations, the unconventional approach adopted by Binance has paid off.
Here are 7 Growth Hacking Strategies Binance used to establish itself as a key player in the blockchain space:
1. The Role of Binance Coin (BNB):
BNB is the native token of the Binance blockchain, powering its ecosystem. The token has many use cases: from fueling transactions to paying fees, and so on.
The image below provides a comprehensive overview of multiple use cases for BNB.
Especially initially, the savvy use of the BNB token provided Binance with an edge over its competitors. Arguably, Binance was the first exchange with a token that actually had some utility, as it allowed users to pay 20% less trading fees than other tokens.
The pivotal role the BNB token has within the Binance ecosystem is clear, given that all new branches have been built with a central role for BNB, to incentivize real use of the token. Further partnerships and strategic agreements have expanded the realm of uses. It is now possible to use BNB to get passive returns, to hire freelancers, to pay in shops, and even to buy land or gaming items.
Last but not least, Binance plans to burn BNB tokens in each quarter, based on the volume of the exchange, until 50% of the total supply is burned. This ensures the token is always in high demand and reduces inflationary pressures.
2. User Referral Fees
With no doubt, this was the most successful user acquisition strategy at Binance. In 2017 it was impossible to surf cryptocurrency forums and subreddits without finding anyone inviting you to Binance, an unknown exchange back then.
Referrals are in no way a novelty, as they have been employed by many companies, starting from PayPal (giving 10$ to acquire users) to AirBNB (one of the most successful referrals campaigns out there). Referrals set Binance aside from its competitors and transformed users into de-facto brand ambassadors. In fact, users inviting their friends would get 20% of their trading fees back in rewards, leading to a frenzy to invite as many friends as possible. Such a great use of incentives and game theory.
Furthermore, Binance wisely combined its native tokens and referrals to incentivize users even more: users keeping >500 BNB on their account would be able to get up to 40% trading fees from users they invite. Recently, they also introduced the possibility to share some of the 20% referral bonus with invited friends.
3. Decentralized Operations
Since its inception, Binance has operated under the premises of the philosophy of decentralization. The uncommon approach worked both as a differentiating factor and a competitive advantage. The exchange employs people from all over the world, coordinating among several time zones maximizing the potential of smart working even since the beginning. Such a decentralized structure allows Binance to be flexible with respect to operations, management, and responsiveness to challenges. Thanks to its flexibility and decentralized infrastructure.
In fact, Binance was able to relocate twice, from China to Japan and later to Malta, in order to avoid anti-cryptocurrency regulations that would have hurt the company. It is very hard to imagine an established multinational company to move overnight to another continent with basically no impact on its operations.
4. Verticalization and Speed to Market
Ever since the beginning, CZ (Binance CEO) has pointed out his vision for Binance of being more than just a centralized exchange, but rather to lead to a new paradigm of finance, founded on the principles of decentralization. Binance was launched in July 2017. Here are some of the most important developments since then:
Nov 2017: Binance Launchpad
Aug 2018: Binance academy
Oct 2018: Binance Charity
Nov 2018: Binance Research
Feb 2019: Binance Chain
Apr 2019: Binance Decentralized Exchange
A recurrent element in its expansion strategy is the pace with which they test and implement new branches of Binance in almost every sector that can be verticalized. Slowly but surely Binance is evolving into a crypto conglomerate that touches every financial — for now — aspect of life. At Binance, everything is done to provide services to users. As CZ often mentioned during past interviews, Binance responds to the users, as the value of the BNB token is determined by them, by how much they value the utility of Binance.
5. Token Listings
Binance was able to attract plenty of users by leveraging token listings. Initially, they decided to differentiate their offer by exchanging so-called alt-coins — lower capitalization coins that were harder to find around. As such, many users were driven to the exchange in order to buy specific coins that were only offered on Binance. With the same model in mind, Binance went on to list hundreds of coins.
They eventually expanded and focused their efforts on the creation of a platform that would allow companies to raise funds and launch their own ICO, IEO, or STO: the Binance Launchpad. A self-described token launch platform for transformative projects, it allows Binance to tap in the user circle of each project, bringing all of them on the Binance exchange.
The logic of gamification goes hand in hand with user acquisition and retainment. With gamification features, Binance was able to become an attractive exchange, incentivizing users to register and trade — and differentiating itself from other exchanges that adopted a less aggressive approach. Some examples include the frequent trading competitions Binance hosts regarding Binance futures or individual cryptocurrencies. Even in this context, BNB plays a ubiquitous role, as it is often used as a prize for competitions. These are some of the latest activities carried out:
Last but not least, since its inception Binance (and particularly its CEO CZ) has been heavily involved in sewing strategic partnerships both with innovative players and incumbents. Especially when it comes to governments, CZ went to great lengths to build connections with emerging countries, such as Uganda, Bermuda, and Togo.
Low-key lobbying governments eventually led to higher acceptance and high regard for a cryptocurrency company that so openly approached governmental entities. Everything Binance did was in a win-win mentality: they helped governments get educated regarding cryptocurrencies and got their favor in return. Being very careful regarding legislative developments and building partnerships with incumbents indirectly benefits branding and also make sure that Binance sits on tables that matter — even in the role of a government adviser.
On the other hand, important partnerships and acquisitions, such as Trust Wallet, are targeted to complement the already existing suite of services provided by Binance.
List of Partners
Here is a comprehensive list of Binance partners as of 2020, taken from Publish0x:
Decentralized Finance (DeFi)
Band Protocol (Source)
Settle Network (Source)
Vertex Ventures (Source)
Z Corporation (Source)
Binance really took the game to a whole new level. The unconventional way they implemented their business model makes them material for a Harvard Business School case study.
The combination of decentralized organizational structure, user acquisition strategies, referral and retention, uncommon marketing, and game theory and incentives lead to a successful growth hacking mindset that proved to be successful, especially in terms of the pace with which they tackled the market and expanded in basically every possible area. All single parts of their strategy eventually come together and reinforce each other, exemplified by how the role of BNB is strengthened with new use cases.
Furthermore, Binance greatly benefited from its branding — with a loyal customer base and even more with many pros of the financial sector joining the company, very much aligned with its values and mission. Nowadays Binance is a powerhouse, poised to become the Google of cryptocurrency. In just two years, they went from being an unknown Chinese exchange to a global company that directly shapes the future of finance.
GrowaholicLab is a data-driven growth hacking company that helps you carry your business forward across the different stages of a product life cycle by fully utilizing the latest digital marketing techniques and technological advancements.