Top 5 Crypto Exchange Tokens
- More and more crypto exchanges are issuing tokens in an attempt to secure customer loyalty
- Binance Coin was the first crypto exchange token to achieve success and is used as a model by most other crypto exchanges
- The combined market capitalization of crypto exchange tokens is well above $5 billion
Top crypto exchange tokens
Speculation is still the name of the game for the vast majority of crypto assets, and exchanges continue to be a huge part of the cryptocurrency ecosystem. Since the market is highly competitive, exchanges are coming up with increasingly elaborate ways of ensuring customer loyalty. One of the most common ways to achieve this is through exchange-issued tokens, a model initially popularized by Binance.
While all exchange tokens have slightly different features, the general idea is that holders of the token receive special benefits when using the exchange. One of the most common benefits provided by exchange tokens are reduced fees, but holding an exchange’s tokens is often also a requirement for gaining access to IEOs or other “premium” features.
Exchange tokens have been highly successful and have a combined market capitalization of well over $5 billion. In this article, we’ll be taking a look at 5 major crypto exchange tokens.
1. Binance Coin (BNB)
Binance Coin is the exchange token that started the entire trend, and it still remains the biggest exchange token by a very comfortable
The Binance exchange collected funding for its launch through a 2017 initial coin offering (ICO) in which they sold BNB. Those who bought BNB at the ICO price of $0.15 are currently up 171x in USD terms.
A unique aspect of BNB is that it is the native asset of its own blockchain network, Binance Chain. Just like ETH is needed for performing operations on Ethereum, the same holds true for BNB and Binance Chain.
Buy/Sell Binance Coin
Traders on Binance can purchase some BNB and choose to pay their trading fees in the form of BNB – by doing so, they effectively receive a 25% discount on their trading fees.
Holding a certain amount of BNB is also a requirement for having the chance of participating in token sales hosted on the Binance Launchpad. With the current system employed by Binance, users who hold the prerequisite amount of BNB can enter a lottery. Each ticket they win gives them the right to purchase a certain amount of the token that’s being sold on Binance Launchpad.
Since BNB is an immensely popular cryptocurrency, it’s also being accepted by many crypto-friendly merchants, even though payments probably weren’t a use case Binance had in mind when designing the token.
Each quarter, Binance burns a certain amount of BNB in order to reduce the coin’s supply. The goal of these coin burns is to eventually reduce the total supply by half.
Key Binance Coin features:
- Trading fee discounts for Binance users
- Native asset of Binance Chain
- Necessary for accessing Binance Launchpad IEOs
- Quarterly coin burn program
2. Huobi Token (HT)
Huobi is one Binance’s biggest rivals, and they were not shy in taking Binance’s successful Binance Coin idea and applying it to their own exchange. Huobi Token was launched in early 2018 and 60% of the HT supply was distributed to the exchange’s users in exchange for purchasing services on Huobi.
Buy/Sell Huobi Token (HT)
Huobi users who hold HT are entitled to discounted trading fees, and gain access to the Huobi Prime IEO platform. Users can receive bigger discounts if they hold larger amounts of HT. Those who hold HT tokens also have a say in which tokens will be listed on the Huobi exchange.
At the moment, Huobi Token is the second largest exchange token and is enjoying a spot in the cryptocurrency top 20.
Key Huobi Token features:
- Trading fee discounts for Huobi users
- Access to Huobi Prime IEOs
- Voting on assets that will be listed on Huobi
3. FTX Token (FTT)
Unlike Binance and Huobi, FTX is primarily a cryptocurrency derivatives exchange – instead of simply exchanging cryptocurrencies, users speculate on price movements of cryptocurrencies and other assets by trading derivative products such as futures contracts and options.
Buy/Sell FTX Token (FTT)
Depending on how much FTT they hold, users receive rebates on their trading fees. The FTT token can also be used as collateral for entering leveraged positions.
The FTX exchange employs a weekly “Buy & Burn” program, in which they purchase FTT tokens equal to 33% of the fees generated by the exchange.
Key FTX Token features:
- Trading fee discounts for FTX users
- Weekly coin burn program
- Can be used as collateral for leveraged trading on FTX
4. OKB (OKB)
OKEx is one of the biggest players in the cryptocurrency exchange industry and the exchange has also created their own token, OKB. The basic formula of OKB’s design is similar to the other exchange tokens described above.
OKB holders get reduced trading fees when trading on OKEx, and they also have the ability of participating in token sales hosted on the OK Jumpstart IEO platform. OKB holders can also vote in various polls created by their exchange and have some influence on the exchange’s activities.
Buy/Sell OKB (OKB)
OKEx performs quarterly token burns, burning an amount of OKB equal to 30% of fees generated from the exchange’s spot markets each quarter.
Key OKB features:
- Trading fee discounts for OKEx users
- Access to OK Jumpstart IEOs
- Quarterly coin burn program
5. KuCoin Shares (KCS)
While it’s not quite as big as Binance, Huobi, or OKEx, KuCoin is still a cryptocurrency exchange with a loyal userbase. The exchange’s KCS token is built on the Ethereum platform and has been a mainstay in the cryptocurrency top 100.
Buy/Sell KuCoin Shares (KCS)
KCS holders pay lower trading fees and have the chance of participating in airdrops and KuCoin Spotlight IEOs. An interesting feature of KCS is that KuCoin periodically buys KCS from the market and then redistributes the tokens to those who already hold KCS – this feature is called “KuCoin Bonus”.
Key KuCoin Shares features:
- Trading fee discounts for KuCoin users
- Access to KuCoin Spotlight IEOs
- KuCoin Bonus
As we can see, most cryptocurrency exchanges have based their exchange token models after Binance Coin, the first exchange token to become a top asset in the cryptocurrency market. If you’re an active trader on any of these exchanges, buying a small amount of the exchange’s token is often a good idea as it could save you money on trading fees.
However, there are certain specific risks with exchange tokens that you should keep in mind. For users who want to use exchange tokens as a proxy for investing in the success of the specific exchange (similarly to buying a stock), the situation is a bit more complicated.
Unlike with stocks, holding an exchange token doesn’t give you any ownership in the underlying business. In addition, the exchange can simply change the benefits token holders receive at its own discretion.
You should also keep in mind that exchange tokens, unlike cryptocurrencies like Bitcoin and Ethereum, are inextricably linked to specific business entities. If the exchange is forced to close down its operations, the exchange’s token will likely have very little or no value at all.