Research shows that 80% of tokens listed on Binance over the past six months lost value as their price was inflated at the time of trading, negatively affecting retail investors. The exchange plans to support small and medium-sized projects to counter this trend.
Cryptocurrency exchange Binance reached out to small and medium-sized projects to fight the trend of low liquidity and fully diluted valuation (FDV) of tokens. This move aims to support projects with sustainable business models and strong fundamentals, which should foster the development of the blockchain ecosystem and build trust in cryptocurrencies.
Binance’s call to action came shortly after the publication of a study by an on-chain analyst known as Flow, who found that over 80% of tokens listed on Binance in the past six months lost their value after being listed on the platform. Only a few projects, including Dogwifhat (WIF), Memecoin (MEME), Jito (JTO), Jupiter (JUP), and Ordi (ORDI), were exceptions.
Flow noted that most new tokens on Binance are backed by venture capital, launched at high prices, but lack real users or a strong community. The market capitalization of such assets at the start of trading averages around $4.2 billion, with a maximum valuation reaching $11.7 billion.
Flow also emphasized that the current approach to token launches is unsustainable and discredits the crypto industry. He called for changes to prevent further abuse and long-term negative consequences for the industry. In response, Binance’s research team noted that launching with low circulating supply is becoming increasingly common in token projects that allocate a large portion of token supply to future releases. That’s why Binance plans to change its approach to token listings by inviting small and medium-sized projects to apply for listing programs like Launchpools and Megadrops.
Projects from any sector of the crypto market can apply for listing on the exchange. The main criteria that Binance will consider are:
- reserving a significant number of tokens for users: airdrops, community rewards, etc.;
- moderate token float during token generation events (TGE);
- strong product-market fit (PMF);
- self-sustaining business model;
- minimum viable product (MVP);
- organic user base and steady user growth.
Binance reserves the right to determine at its discretion whether a project is eligible for listing on the platform. To apply for participation, projects need to fill out the appropriate form.
Analysts at CoinGecko calculated that an average of about 5,300 new tokens are created daily, and in April 2024, the number of digital assets exceeded 2.52 million.
