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I was considering using dyed veneer in my binding, but I've read somewhere that it fades and is not so attractive over time. Anybody have experience with this?

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A higher purpose for wood.
Rich Smith
Issaquah, WA

Anything that is stained or dyed will fade from uv exposure. Most finishes have either a uv inhibotor or just naturally inhibit uv to some degree or another. the simple answer to your question is yes. The harder question is; how fast? The answer to that is dependent ono dye used, finish used and exposure to uv light.

On my first guitar I used a commercial rosette that has some dyed veneer. Today, it is not nearly as colourful as when I bought it. That fading actually happened quite quickly. Some dyes may be better than others, but for when colour matters, I'd rather do it another way

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Expectation is the source of all misery; comparison the thief of joy.
http://redrivercanoe.ca/

Color with pigment when you can, it'll last for centuries. Just like water color and oil paint.