The crypto world provides different opportunities to promote your project; however, listing proves to be one of major key points to look for from the investor’s point of view.
However, the reality of market play is far from that shiny statements that large exchanges give its services for free.
Speaking of a token, the market participants lose an opportunity to acquire the project’s cryptocurrency after the ICO has officially ended. Here exchanges come to rescue. Due to different data, listing a token on an exchange can increase its value by up to 20%. That’s precisely the reason why the listing is one of the most critical tasks for a company after carrying out an ICO. Another reason to list the token on the exchange – requests of the project’s community (some of the people want to get rid of tokens, purchased on ICO, some of them are too late and want to buy some right now to become the user of the project).
Marketing and media make all the difference in our world. That’s why the listing on exchange with a decent reputation can sometimes make a real difference. For ICO-projects that store a significant part of their tokens, the growth of value can mean the possibility of the further functioning of the project at large.
Despite numerous statements, many people still not aware that the token listing on the cryptocurrency exchange is not quite a free procedure and, most likely, quite burdensome.
The Reality Check – Getting Listed For “Free”
Whenever asking about the actual cost, platforms tend to state about their eternal love and support for startups and absence of any expenses from the client in this case. Is that actually true?
According to the latest study conducted by Business Insider research, which interviewed several representatives of this industry, the “unofficial” price of including a token to the trading platform list can be sometimes shocking. Sources refused to name specific names, and the exchanges themselves, which were contacted by the publication, including GDAX, Bitfinex, and Kraken, either did not give an answer or reported that they did not take money from cryptocurrency startups. Nothing new.
For businesses, ICO is still the fastest and cheapest way to get funding, compared to venture capital or IPO. For investors, tokens provide access to a quick and easy exchange of project shares, previously unavailable. However, to ensure liquidity, companies must place the issued tokens on at least one crypto-exchange.
Earlier, the exchange Binance reported that it rejects 97% of applications for the listing of tokens because they do not comply with its internal rules. But every single day many post-ICO projects still craving to get listed on any exchange. And they are very happy when they finally see, that there is no “listing fee”.
However, despite the fact that listing is free, crypto exchanges states that for the promotion of the tokens they need specified amount of money. This sum starts at $ 50,000 and go up to $ 1 million… depending on the size of the exchange. Many other survey respondents confirmed these figures. Quite a bounty for such promotion effort, isn’t it?
It is noteworthy to mention here, that the $1 million price tag exceeds the cost of launching a security token on most crypto exchanges.
One of the success factors of cryptocurrency projects after the ICO stage is their ability to attract new investors, which is difficult to achieve without entering an extensive exchange.
Many large projects are trying to reach out to multiple exchanges, which in the end increase their listing costs.
Not all the crypto exchanges are the same. Funny enough, in this market situation there are also crypto exchanges that do not take money for listing coins. Some exchanges offer projects to be placed on the basis of a project competition or ask users to vote for the addition of a coin. In the end of November 2018, however, Ripple’s price jumped 5% due to rumors of placement on Coinbase, showing the listing’s impact on the perception of the project and the token.
On the one hand, given that the projects collected almost $29 billion through the ICO by this point. Moreover, the rapid growth of funds occurred mainly due to such large projects as EOS ($ 4.2 billion, 06.2017 – 06.2018), Telegram ($ 1.7 billion, 02.2018 – 03.2018) and Tatatu ($ 575 million, 06.2018). If we exclude these three projects from the overall picture, the situation will turn out to be quite stable, even despite the deep recession in the market:
Anyway, on the other hand, crypto exchanges themselves also earn a lot. According to Bloomberg, the top 10 crypto exchanges earn $ 3 million a day on commissions.
Exchanges tend to show-off with unreal liquidity
Liquidity is a critical factor in predicting the resilience of the exchange to shocks and the favorability of the rates that the exchange can offer. More volume means more liquidity and more relative price stability, which tends to even out the exchange rates. Conversely, less amount means less liquidity, less price stability, and more volatile exchange rates.
Simply enough, if you conduct your trades on an exchange with higher volume, you’re less exposed to these fluctuations.
“I know a lot of shady projects providing liquidity to the exchanges”, – says Kamilya Arslanova, CEO Arbidex crypto arbitrage platform. “Of course, they are in grey zone. What do they do – they are making many fake orders on the exchange to increase the volume of operations and transactions. Exchanges usually pay a lot to such projects.
There are other services like ours. We increase the liquidity of the exchanges, bringing to those our traders. All exchanges integrated with Arbidex by API. However, the exchanges do not pay us, in opposite, they lower the commission for our users. It is a two way road: we rise up their volumes, they attract new clients”.
As many traders gained certain experience interacting with numerous exchanges, the understanding and views on the works changed. Undoubtedly, even the largest exchanges tend to draw their real volumes pretty much.
Many pairs with a trading volume of almost $7 million will receive “slippage” more than 10% when selling for $70k. Where is the hint? If the sale of a coin with a trading volume of $7 million in the amount of $70,000 causes the price to “slip” by more than 10%, then you can already start thinking about the possibility that these $7 million volumes are not quite real? Moreover, the currency pairs under study were apparently not among the low-liquid shit coins. Only this data would be enough to say that many exchanges fake their volumes.
The counter arguments may be the following as the market is not regulated, there is nothing illegal, etc. Precisely because the market is not regulated, the entire responsibility for results and security lies with the users. Therefore, distributing such information and boycotting exchanges that do so is the least we can do. We can say that ” this practice does not harm anyone.” Trading volumes falsification may not be a crime but is far more than just a marketing step. These indicators affect the decisions of traders, influence the market and lead to specific events at some points. As the traders ‘ decisions in the end based on faked volumes can lead to the purchase of deliberately overvalued assets.
Independent appraisers around the world often say that more than $3 billion of daily trading volume, declared on the crypto – market-fake. Moreover, this practice, though not supported, but almost entirely ignored by popular resources like CoinMarketCap and all their users. Despite short-term rises, cryptocurrency assets are globally at the mercy of bears in 2018. There is no doubt that a market recovery will not occur until we have established a healthy environment for trading and asset development. The ecosystem must be completely transparent and honest. We cannot afford to allow such manipulations, because if fake volumes provide growth instead of real value, we may fall more painful than ever.
Worth the listing paying for it?
No doubt, the most joyful event for investors right next to getting the successful ICO hard cap is the listing of their new shiny coins or tokens on the reputable (or not very) exchange. The cryptocurrency exchanges often represent fragmented pools of liquidity, and each wants to expand the portfolio of traded assets through new acquisitions. However, the sudden inclusion of the asset in the listing at the stock exchange actually causes a sharp rise in its price.
No secret that developers and marketers pay (that means: give bribes) to crypto exchanges for inclusion in the listing of their projects. Many of the projects include a fee for the listing in their budget spending plan.
Anyway, how can one be sure that paying big money to a particular crypto-exchange for the listing is a thing to die for?
It is necessary to choose a popular crypto exchange that has no problems with liquidity. After all, issuers themselves are usually the largest holders of their own coins, and they are also interested in growth after being added to the listing. It is often the case that listing on a major crypto-exchange like Binance becomes an excellent opportunity for an insider team to reset their coins and successfully exit the project. Therefore, developers and popularizers of altcoins are vitally interested in paying for the listing (usually we are talking about payments in bitcoin in the amount of hundreds of thousands of dollars). Moreover, exchanges, especially for second-tier players, are interested in creating an image that does not have problems with liquidity to be able to charge a commission.
Simply put, most exchanges with cryptocurrency pairs have nothing to do with real solid stock exchanges like NASDAQ. Smart and experienced investors do understand whom they deal with, but most rookies tend to trust them too much, which results in long-term holding of coins in their wallets. Also, crypto exchanges, in turn, advertise themselves and do not hesitate to overestimate their trading volumes using fictitious transactions.
Alternative ways to list your tokens?
Imagine your team didn’t get your hands of those millions during the ICO and are far from being able to pay that much for questionable marketing purposes. Is there a way of achieving your goals and not get your pockets robbed by the overrated favorite exchanges?
There is still a way as some exchange encourage their users to provide voting – which token will be listing for free. However, that’s not a common practice for that – as Bitfinex is known for that.
For example, one of the top exchanges – OKEx, due to it’s new listing regime, has three different approaches.You can put token on voting (the listing review committee will first examine and review the projects through a systematic and rigorous process), use “Collaboration” option (a direct listing of projects which are invested by OK Blockchain Capital and 5 OKEx Prime Investors), either use the “Community Building” option – to encourage the liveliness of the community, OKEx will partner with project teams which are able to bring more active users, and will provide a priority listing review for them. The projects must meet the specific requirements though.
On other hands, Bitfinex has token listed on Ethfinex affiliated exchange. One can also engage into the voting there, however, to be able to vote their EVT tokens need to be purchased.
CEO of Arbidex, Kamilya Arslanova, stated, that it’s extremely hard to get listed on exchange sometimes, so the Arbidex approach is not to get list the tokens, but manage the cooperation with exchanges, convincing them this is a mutually beneficial cooperation. Many projects on the market try to do the same, but sometimes it ends up with no listings at all.
Taking the stated above into consideration, we’re about to see more option in the future in opposition to the classic “free” listing – as more and more users are unwilling to pay shady money amounts which are enough to launch an ICO at all.
Guest Post Author: Maria Lobanova