What Is An Exchange Token In Crypto? Simple Beginner’s Guide
An exchange token is a cryptocurrency issued by a crypto exchange that serves as its native currency and utility token for its underlying ecosystem. These tokens typically provide investors with additional benefits, such as staking, access to exclusive opportunities, and airdrops. Holders also acquire tokens to reduce trading fees. A successful exchange token often accompanies a successful exchange.
Has DeFi Quietly Replaced Exchange Tokens?
Do you want to earn passive income with crypto? Dividends have been an attractive investment opportunity for TradFi investors. However, crypto also has dividend-paying assets in the form of exchange tokens. However, DeFi seems to have stolen the show, leaving one to wonder whether this remains a viable opportunity. This becomes a very significant question, especially since investors require both gains and stability.
Investors seek a certain level of safety when putting up collateral to earn yield. They do not simply select the highest return but also weigh up risk against projected return. Exchange tokens are perhaps safer than DeFi, which is exposed to high leverage, hacks, and exploits. However, compared to DeFi, the returns are generally lower.
Before DeFi, exchange tokens were relatively popular because their returns were quite good compared to other, more traditional investments. This is especially true if the exchange token in question increases in value. However, the opposite is also a possibility, and one that potential investors should consider. The crypto market is incredibly volatile, especially in DeFi.
Are Exchange Token Gains Gone For Good?
I remember that in the early days of BitMax, now known as AscendEX, the yield was at times over 40% APR. This is fairly high, given that an exchange token should increase in value due to demand. However, yields are always highest at the onset of a project. One has to consider whether a particular exchange token can continue to provide the yield it began with. The yield is currently 10% APR.
Why Crypto Exchange Tokens Still Matter More Than You Think
Because exchange tokens offer utilities and benefits, there is usually strong 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 affecting this aspect of crypto. Increased regulatory pressure has also led many exchanges to require KYC (Know Your Customer) protocols, which are generally frowned upon by users.
This has led many crypto traders and investors to migrate to a more DeFi-oriented setup. However, the influx of new users from increased adoption is likely to offset this revenue loss. Just days ago, Binance reported $100 billion in trading volume for a single day! That said, if submitting KYC is not an issue, exchange tokens most likely still offer a reasonably good investment opportunity.
The Secret Behind Exchange Token Value Few Talk About
Looking at Binance again, BNB’s all-time low is $0.039, while its 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 all the more 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. Sometimes it’s important to diversify out of an investment based on the yield you receive. It’s a good way to de-risk and diversify your portfolio more effectively.
DYOR Is Imperative
I believe there is still value in holding exchange tokens, but, as with any investment opportunity, you will have to weed your way through it 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. It’s a win/win dynamic.
Exchange Tokens Worth Exploring
- BNB – Binance token
- ASD – AscendEX token
- KuCoin – KCS token
- Gate.io – GT token
- MEXC – MX token
Exchange tokens operate differently; some offer fixed yields, while various criteria determine others. However, holding exchange tokens can be beneficial, provided you maximize their potential and use them wisely. They are a great way to earn passive income in the crypto space.
Which Exchange Token Has The Most Utility? Features, Use Cases, & Token Benefits Explained
This is actually quite an easy one to answer straight off the bat. BNB, Binance’s exchange token, is without a doubt the best exchange token to hold due to its multiple use cases and utility. Firstly, BNB can be staked to help secure the network and earn staking rewards. BNB can also be acquired and held to reduce trading fees. This is obviously more beneficial for whale traders.
Furthermore, holding BNB unlocks various benefits regarding Binance Launchpad/Launchpool. Holders earn the privilege of farming new tokens and receiving airdrops. It’s a utility token with strong opportunities and income potential, unlike most exchange tokens, which are often limited in utility and profitability.
Final Thoughts
When you choose to purchase your exchange tokens is also incredibly important. For instance, buying ASD tokens now while the price is at record lows could prove viable in the future. The risk is obviously much lower, and one stands a chance of seeing one’s yields grow exponentially as the token’s price rises with the broader market. If you are looking for passive income in crypto, exchange tokens might be an option. This is not intended as financial advice, but rather food for thought. All the best! See you next time!
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