Exchange tokens have become a frequent occurrence within the cryptocurrency industry, with major exchanges releasing their own tokens.
Do you want to get more out of your cryptocurrency trading? Look at exchange tokens. These tokens provide a variety of benefits, ranging from reduced trading fees to access to exclusive features. Continue reading to learn about exchange tokens and why holding them can be a wise move for any serious crypto trader.
In today’s article, we will exchange tokens and their use cases so let’s get started!
What are Exchange Tokens?
Exchange tokens are cryptocurrencies produced by centralized exchanges like Binance that can be used to pay exchange fees, obtain discounts, and participate in token launches (IEOs). Some exchange tokens are Binance Coin (BNB), Huobi Token (HT), OKB, KuCoin Shares (KCS), and FTX Token (FTT), these are only a few instances of exchange tokens; many other exchanges have also released their own tokens.
Users can gain discounts on trading fees, access to special services and promotions, and, in certain cases, a portion of the exchange’s revenue by holding exchange tokens. Furthermore, exchange tokens can serve as a kind of governance by allowing token holders to vote on crucial exchange choices such as selecting new assets to list.
It is essential to remember that exchange tokens are centralized, therefore their value and stability are determined by the exchange’s performance. Furthermore, the benefits associated with exchange tokens may change over time and are subject to the exchange’s discretion. As a result, before investing in exchange tokens, it is critical to conduct an extensive study and examine the dangers.
Features of Exchange Tokens
Here are some of the most typical characteristics of trade tokens:
- Discounts on Trading Fees
- Special Features Access
- Revenue Sharing
- Voting Rights
- Liquidity
- Centralization
It’s crucial to note that these features may differ from exchange to exchange, so do your own research and evaluate the risks before investing in exchange tokens.
How Exchange Tokens Work?
The following is how exchange tokens work:
- Issuance: The exchange creates a set number of tokens, which are then sold to the public via an Initial Exchange Offering (IEO) or another method. Tokens are frequently issued on blockchains like Ethereum and can be saved in a cryptocurrency wallet.
- Trading: Exchange tokens can be traded on the exchange as well as on other cryptocurrency exchanges and their price is determined by supply and demand as well as the performance of the underlying exchange.
- Benefits: Users that hold a particular quantity of the exchange token can enjoy discounts on trading fees, access to special services and promotions, and, in certain cases, a piece of the exchange’s revenue.
- Exchange Tokens Usage: Exchange tokens can be used to pay exchange fees, gain discounts, and participate in token launches (IEOs).
Benefits of Holding Exchange Tokens
The following are some of the advantages of holding exchange tokens:
- Trading Fees Have Been Reduced
- Special Features Access
- Revenue Splitting
- The Right to Vote
- Liquidity
- Diversification
How to Determine Exchange Token Price?
It’s vital to know that the price of exchange tokens is highly volatile and can fluctuate quickly. Furthermore, before investing in exchange tokens, it is usually a good idea to conduct an extensive study and examine the risks. In general, the price of exchange tokens can be influenced by both micro and macroeconomic factors, making it impossible to predict the price at any given time. To make informed investment decisions, the best strategy is to regularly monitor the market and study the variables influencing the price of exchange tokens.
Like other cryptocurrencies, the price of an exchange token is determined by supply and demand, and the following factors can have an impact on the price of exchange tokens:
- Exchange Efficiency
- Token Applicability
- Market Attitudes
- Competition
- Regulation
How to Increase the Value of Exchange Tokens?
Some exchange tokens use token buyback and burning methods to maintain or grow the value of the token.
Token Buyback: Token buyback refers to the process by which exchange purchases and retires tokens from the market, hence lowering the overall number of tokens in circulation. This can serve to enhance the token’s scarcity, which can push up its price.
Token Burning: Token burning is the process of permanently destroying a specific number of tokens, hence reducing total supply and boosting scarcity, this may potentially have a beneficial impact on the token’s price.
Note: By reducing the overall supply and demand with the help of token buyback and burning mechanisms, may help to increase the price of the specific tokens. However, it is important to remember that token buyback and burning do not ensure an increase in the token’s price. Before investing in exchange tokens, it is recommended to conduct comprehensive research and become familiar with the token’s buyback and burning procedure, it is also important to be aware of the potential hazards of investing in digital currency, such as market instability and regulatory risks.
Use Cases of Exchange Tokens
Exchange tokens have a variety of potential applications, including
- Trading Fee Discounts
- Access to Special Features
- Governance
- Provision for Liquidity
- Revenue Splitting
How to Get Cryptocurrency Exchange Tokens
To obtain cryptocurrency exchange tokens, there are various options, including
- Purchasing on the Exchange
- Other Cryptocurrency Trading
- Earnings via trading
- Airdrops, and giveaways
Top Exchange Tokens
CoinGecko is a cryptocurrency data and research platform that delivers comprehensive and up-to-date cryptocurrency market information. It monitors the market capitalization, trade volume, and price changes of thousands of cryptocurrencies and digital assets.
According to CoinGecko here is a list of some of the most valuable exchange tokens, as measured by market capitalization: Binance Coin (BNB), Huobi Token (HT), OKB (OKB), KuCoin Shares (KCS), BitMax Token (BTMX), Gate.io Token (GT), FTX Token (FTT), Band Protocol (BAND), DODO (DODO), and IOST are all examples of cryptocurrencies (IOST).
Top 20+ Exchange Coins and Tokens by Market Cap
By Coincodex.com, the market cap of exchange tokens is currently $ 76.85B, after a decrease of -4.46% in the last 24 hours, the market cap of the exchange tokens sector is $76.85B and representing 7.16% of the total cryptocurrency market cap as well as the exchange token sector saw $3.57B in trading volume over the last year.
Many cryptocurrencies have created their own blockchain-based tokens which help investors provide remarkable benefits in return for holding tokens. Here is the top 20 exchange tokens recorded on the Coincodex.
Note: This given detail was collected on Feb 9, 2023, so it may not be correct for the coming days because the crypto market is volatile and the change in prices is normal. Visit the market cap websites to keep yourself updated: Infinite Market Cap, Coingecko, CoinMarketCap, and Nomics.
What are the Risks with Exchange Tokens?
Investing in exchange tokens, like investing in any other cryptocurrency, entails risks. Here are some potential hazards to be aware of:
- Market Instability
- Risks to Liquidity
- Regulatory Concerns
- Security Threats
- Reliance on the exchange
Conclusion
To sum up, tokens related to cryptocurrency exchanges are a distinct asset type that can offer advantages to those who hold them, but also contain distinctive threats. It is essential to do a thorough investigation and comprehend the token and the exchange it is linked to before investing.
