Exchanges offer traders a one-stop platform to buy, sell and exchange assets. They usually charge a fee for each transaction in exchange for their services. However, as the industry has grown, crypto platforms decided to expand their product offerings. That’s why the concept of exchange tokens appeared.
In this article, we will discuss the exchange coins, the ways of their usage, and the most well-known examples of these assets. Let’s dive in!
Why do cryptocurrency exchanges release exchange coins?
To encourage crypto adoption, exchanges have become easier to buy, sell and exchange these assets. Commonly, crypto platforms release exchange coins as a part of their fundraising strategy. Yet the value of these coins extends much more profoundly, keeping the exchange running and incentivizing active users.
The ways of exchange coins usage
The exact details of the exchange coin will depend on the issuer. However, they are more likely to serve a utility function in their particular ecosystem and be used to pay, trade, and deposit.
Alternatively, many coins give users a say in various decisions in the ecosystem.
The goal is that exchanges become more decentralized over time. Thus, token holders will take on a more significant role in governance, determining the answer to budgeting and development questions. In addition to governance, exchanges can provide other member-only benefits to their token holders.
On many exchanges, their utility token will be linked to several other popular tokens, allowing users to trade assets like any other cryptocurrency. Utility as an underlying market goes hand in hand with use cases associated with increased liquidity.
Liquidity is critical for exchanges to ensure that buyers and sellers can complete a transaction as intended without a significant price change. Exchange coins help solve this problem by providing incentives for traders, which stimulates additional activity in this market.
Although, some platforms use their exchange coins for funding contests and giveaways.
The most well-known exchange coins
According to CoinMarketCap, around 90 exchange coins are owned by some of the biggest names in the industry. Thus, selecting what coin to invest in comes down to the question of the exchange and its benefits. Let’s discuss some of the most popular exchange coins!
The first one on our list is the FTT coin. FTT is a utility token of a cryptocurrency derivatives platform, FTX. It was created to bring FTX users various benefits.
The next one is WBT. WBT is a native token of the WhiteBIT cryptocurrency exchange that gives its owners numerous benefits. The main of them are discounts on trading fees, increased referral rates, daily zero-fee withdrawals of ERC20/ETH tokens, and AML checks.
One more well-known exchange token is HT. HT is a native token of Huobi. It rewards users with reduced trading fees and carries its value in tradable pairs against popular currencies.
The ways to get cryptocurrency exchange tokens
Exchange coins are available through IEO, bought on the native exchange of the token, and given away on more successful occasions.
Most cryptocurrency exchange coins are available through an initial exchange offering (IEO), a type of initial coin offering (ICO), or a crowdfunding method.
The benefits of the exchange coins investment
Many token holders are motivated only by the benefits of governance. However, in some cases, several monetary incentives further encourage this level of investment.
Sometimes traders get access to reduced fees, from 1% to 50% or more. The fee reduction is beneficial when the volume is a factor, and many trades are regular.
Some exchange tokens offer such bonuses as personalized investment advice, interest payments, and improved customer service for the owners.