Exchange tokens are a relatively new arrival on the crypto scene but have quickly risen to prominence due to their having the one thing that all coins seek: utility.
While most coins are only backed up by whitepaper promises and overlong roadmaps, exchange tokens already have a real-world function, and offer users something in return.
An exchange coin isn’t going to revolutionize the world with technological prowess, it won’t be host to dApps, or used by multinational firms in their IoT systems. But it will cut the cost of regular trading on a given exchange and, for crypto users, that’s more than enough to start with.
So much so, in fact, that there are already four exchange tokens in and around the market cap top-100 rankings, with all of them having launched in the last five to eleven months.
So what exactly do exchange tokens offer?
Reduced fees
This is the backbone of the exchange token and the main reason so many people use them. Whether it’s exchange fees, withdrawal fees, listing fees or just about any other type of fee, exchanges offer discounts if you use their native token.
Binance is the most successful of the exchange coins and is one of the few cryptocurrencies to record a net growth throughout 2018. The BNB token, or Binance Coin, cuts fees in half for the first year of its use. The next four years see the reduction amount halved each year, up until year five when the benefits disappear.
Token burns
Exchanges like Bibox, Binance, and Kucoin will buy back their native tokens and burn them on a regular basis. Binance, for example, buys back a portion of BNB tokens every quarter and burns them. This process will last until there are only 100 million Binance Coins remaining, thus increasing the value of the tokens over time. The circulating supply currently stands at just over 114,000,000.
The Bibox exchange operates in a similar way, buying back their BIX tokens until the total supply hits 200 million.
Shares
Kucoin Shares (KCS) are the native tokens on the Kucoin exchange and holders can expect to gain profit on their KCS tokens just for holding them.
Kucoin takes 90% of its platform trading fees and distributes it to KCS holders. 50% goes to those who hold their KCS on its exchange, while 40% is awarded to users who bring in referrals to the exchange.
CryptoBridge Dex and Cryptopia also have a share system in place, but with smaller allocations.
Profitability
Of all the coins and tokens in the top-100 rankings, few coins have recorded net gains for 2018. Binance Coin has. It went from a price of $8.50 on January 1st, to its current price of $13.94 at the time of writing.
That also holds true for Huobi Token (HT), and Bibox Token (BIX), and as long as these exchanges remain stable, then so too should the upwards trajectory of their native tokens.
