Has DeFi Stolen The Show?
This becomes a very significant question, especially since investors require both gains and stability. Investors seek a certain amount of safety when putting up collateral in order to earn yield. They do not simply select the highest return but also weigh up risk against projected return.
Prior to DeFi, exchange tokens were relatively popular due to the returns being quite good in comparison to other more traditional styled investments.
I remember in the early days of BitMax, now known as AscendEX, the yield was at times in excess of 40% APR. This is fairly high when you consider that an exchange token should increase in value due to demand.
Exchange Token Demand
Due to the fact that exchange tokens have certain utilities and benefits, there is usually a fair amount of demand for them. This is obviously conditional on the exchange actually being well utilized and having healthy trading volume. However, DeFi and DEXs are not the only developments that have affected this aspect of Crypto. Increased regulatory pressure has also caused many exchanges to insist on KYC (know your client) protocols, which are generally frowned upon by users.
This has seen a lot of Crypto traders and investors migrate to a more DeFi orientated setup. However, the influx of new users due to increased adoption is most likely more than compensating for this loss of revenue. Just days ago, Binance reported $100 billion in trading volume for a single day! That being said, if having to submit KYC is not an issue, then exchange tokens most likely still offer a reasonably good investment opportunity.
If The Exchange Has A Future Then So Does The Token
Looking to Binance again, the all-time low for BNB is $0.039, while the all-time high is $686! This is a return of 17589X! A $100 investment at the low would have been worth $1.75 million at the recent high. It is important to note that Binance launched in 2017, making this return absolutely phenomenal. However, once again this was in the formative years of exchanges and their introduction into the world of finance. This is why I still hold onto my ASD tokens, as I accumulated the majority of my holdings at approximately $0.03 and bought more at that price with the dividends I received.
Recently the token surged past $3 and retraced sharply. ASD is currently trading at $0.53 at the time of writing. I believe it is definitely worth holding this particular token long-term, as I can either purchase more with the daily dividends or get my hands on some other alts on AscendEX.
DYOR Is Imperative
I believe that there is still value in holding exchange tokens but as with any investment opportunity, you will have to weed your way through by doing some research. Looking at the recent data from Binance, it is clear that centralized exchanges are far from dead. This is further confirmed by the fact that these users have all had to submit basic KYC documentation.
If you can find an exchange with a solid future, gains through token ownership and dividends should be inevitable.
Exchange Tokens I Am Holding
BNB – Binance token
ASD – AscendEX token
GIO – Graviex token