Yesterday, and when the rest of the markets were in the red, the signature token on the Binance exchange, Binance Coin (BNB), experienced an explosive gain in value over a short period of time.
The coin was more or less trading at a comfortable level of $12.50 until the exchange announced that it would be doubling the referral bonus on the exchange for anyone with more than 500 BNB in their account. This then led BNB to skyrocket to a level of $16.22: an increment of 30%. The token has since settled at current levels of $15 which is still high and a 20% increment from the $12.50 levels earlier mentioned.
The announcement by the exchange was made as follows:
Binance will double referral commission rewards to 40% for all accounts that hold 500 BNB or more, starting from 2018/05/19 0:00 AM (UTC). Each user’s commission rate will then be adjusted at 0:00 AM (UTC) each day based on their BNB holdings. The commission rate for all other users will remain at 20%.
Note: The daily snapshot of BNB holdings will not include any BNB locked in-order or pending for withdrawal/deposit.
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This means that any trader with more than 500 BNB in their Binance account, will receive a 40% referral bonus that is double the initial rate of 20%. This then explains why BNB shot up in value as more users wanted to increase their holdings of the token so as to maximize on the referral bonus for anyone who signs up through them.
This is primarily advantageous for the exchange in that it indirectly recruits users, via this incentive, to be their new user-enrollment agents into the online exchange. The referral programs works in a way that whenever a new user whom you referred to the site trades, you get a commission off the trading fees charged by Binance. This means you now get a 40% every time anyone you have refereed to the site decides to trade: Binance gets the other 60%.