Binance Launchpool's "price limit mechanism" test was for RedStone (RED) tokens

On February 25, Binance announced that it would launch a "price limit mechanism" test in the pre-market trading of Launchpool, and this test was for RedStone (RED) tokens.

Binance will test a “price limit mechanism” in the pre-market trading of Launchpool, the first testing token is RedStone (RED), the 64th project of Binance Launchpool, a multi-chain oracle across EVM and non-EVM chains.

According to the pre-market trading rules, Binance stated that in order to promote innovation and enhance the user trading experience, it launched a new feature of the Binance pre-market trading market - the price limit mechanism. This mechanism will limit the maximum trading price in the first 72 hours of the pre-market market, and the token price increase must not exceed a certain percentage of the initial opening price. After 72 hours of the pre-market opening, there will be no price limit and trading will return to normal.

According to the tips, this price limit mechanism is only tested when the RED token is issued, and it is not yet certain whether this function will become a long-term function of the pre-market market in the future.

According to the pre-market trading rules, the maximum position limit for an individual is 5,000 RED. The specific daily limit rules are as follows:

2025-02-28 18:00 - 2025-03-01 17:59 (GMT+8): The maximum order price is 200% of the opening price

18:00, March 1, 2025 - 17:59, March 2, 2025 (GMT+8): The maximum order price is 300% of the opening price

2025-03-02 18:00 - 2025-03-03 17:59 (GMT+8): The maximum order price is 400% of the opening price

After 18:00 on March 3, 2025 (GMT+8): No price limit

In addition, RedStone (RED), total/maximum supply of tokens: 1 billion RED, total Launchpool supply: 40 million RED (4% of the maximum supply of tokens), initial circulation: 280 million RED (28.00% of the total supply of tokens).

The individual hourly reward hard cap is as follows:

BNB mining pool: 66,666 RED

FDUSD Pool: 8,333 RED

USDC mining pool: 8,333 RED.

The daily limit mechanism is designed to deal with the sharp rise and fall of new coins. Is it applicable to cryptocurrencies?

What Binance calls the "limit-up mechanism" can actually be regarded as a circuit breaker mechanism, but Binance has not yet clarified the time to stop trading. This mechanism originally came from the traditional financial market, and refers to the suspension of trading measures taken by the exchange to control risks when the volatility of the stock index reaches the specified circuit breaker point. Taking the New York Stock Exchange as an example, the New York Stock Exchange has implemented three circuit breaker thresholds, measuring the decline of the S&P 500 index from the closing price of the previous trading day - 7% (level 1), 13% (level 2) and 20% (level 3). When the first two thresholds are reached, trading will be suspended for 15 minutes. At the level 3 threshold, trading will be stopped.

Supporters believe that the circuit breaker mechanism helps stabilize market sentiment and prevent investors from overreacting. The daily limit mechanism tested by Binance this time is designed to prevent new coins from experiencing sharp rises and falls when they are listed, thereby reducing extreme volatility and avoiding price surges due to speculation or manipulation. This mechanism is designed to make pre-market transactions more controllable and predictable, and provide the market with enough time to digest information and avoid drastic fluctuations after the opening.

However, users who oppose this mechanism believe that it may violate the decentralized concept advocated by cryptocurrencies. The volatility of the crypto market is high, and the setting of circuit breakers is challenging in itself. Some users are considering whether a circuit breaker mechanism can be added to the algorithm and design of the currency. However, considering the free market fundamentalist attitude of the cryptocurrency industry as a whole, these ideas are probably not very realistic.

In addition, the crypto market is open 24 hours a day and there are multiple trading platforms. If a platform announces the implementation of a circuit breaker mechanism, it may lead to a widening of the price difference between different platforms, thus triggering arbitrage behavior. Crypto user @ChequerCat666 pointed out: "It is useless unless this coin is only listed on Binance, including DEX (decentralized exchange)." However, supportive users believe that it is possible to form