Exchange Coins - To Hodl or Not To Hodl?
I believe that exchange tokens should have a place in many portfolios because they have massive utility and other beneficial tokenomics.
But not all exchange coins are created equal and for learning purposes I want to dive into these coins a little deeper to better understand some of their fundamentals.
Binance Token (BNB)
Centralized - The largest exchange on planet earth by daily volume ($6,642,385,016), by a mile! BNB's main utility comes from being able to use it to pay for exchange fee's, and doing so gets you the lowest rates around. Who doesn't love paying less fee's!
On top of this there's the BNB vault which is a yield aggregator providing opportunity to stake and earn from Savings, Launchpool, and Defi staking. It's also worth mentioning that BNB staking is also very popular amongst BSC exchanges providing liquidity for a great number of trading pairs. At 154M token the supply is relatively mall, and Binance has committed to burning 100 million BNB to the token officially has deflationary tokenomics.
BNB Price: $256.08
Market Cap: $39,532,095,982
Circulation: 154,533,651
Max Supply: 170,533,651
UniSwap (UNI)
Decentralized - The King of Ethereum exchanges by daily volume ($1,139,134,829). Technically an automated liquidity protocol. There's simply a staggering number of pairs available to trade, currently just over 2100.
The UNI token is a governance token. That's it's primary utility, allowing holders to influence and vote on Uniswap development decisions. It's also possible to fund grants, partnerships, and participate in liquidity mining pools. I will assume at this point that it's primary monetary value is derived through liquidity pools, as this type of mining is growing rapidly in popularity. Liquidity pools remove supply from exchanges and lock up the tokens, if even only temporary it means less supply circulating on exchanges. In short good utility and staking mechanisms means a valuable token. The max supply of a billion appears to be on the larger side, a concern?
UNI Price: $25.89
Market Cap: $7,722,292,898
Circulation: 299,586,964
Max Supply: 1,000,000,000
Okex (OKB)
Centralized - The exchange that comes with some drama from time to time. Past events include a trader who reportedly bought bitcoin futures worth $416 million who was ultimately forced to liquidate, at the expense of the exchange and it's users who had unrealized profits clawed back, what the fuck. More recent drama includes withdrawals being suspended after its founder was allegedly arrested.
The HT token has utility by providing it's users with a monthly VIP status plan that gives a fee discount, and allows them to vote on exchange decisions as a governance token. lower fee's in my opinion is great utility, and the max supply doesn't seem to be outrageous. When I suggest people look at exchange coins, I don't mention OKB.
OKB Price: $18.52
Market Cap: $4,948,166,761
Circulation: 271,451,284
Max Supply: 300,000,000
Huobi Token (HT)
Centralized - A Singapore based centralized cryptocurrency exchange created in 2013 by a former Oracle engineer. I personally like Huobi because they don't have KYC and they have a ton of alts. Use at your own risk but this is my go to Alt coin exchange. Daily volume in the area of $8,549,569,343.
The Huobi Token is a decentralized digital asset based on Ethereum. Again like other exchange tokens it provides it's users with lowered exchange fee's. It was initially distributed to exchange VIP users following china's banning of Bitcoin which led to lowered trading activity.
A relatively small circulation but the max supply leaves me wondering.
HT Price: $18.87
Market Cap: $3,564,225,915
Circulation: 186,866,518
Max Supply: 500,000,000
SushiSwap (SUSHI)
Decentralized - A decentralized exchange built on the Ethereum network. 180 pars to swap, and a daily volume of $388,789,636. Is this the future? fairly simple UI, decentralized, and has swaps, farming, and lending all in one platform. SUSHI has utility as the core function of the exchange requires users to lock up the token into liquidity pools through the use of smart contracts.
As long as these smart contracts are audited I think you're good to go. Daily volume of $1,120,306,425, low circulation and max supply and this token is built to be locked into smart contracts, a thing of beauty.
SUSHI Price: $16.47
Market Cap: $2,099,984,193
Circulation: 127,244,443
Max Supply: 250,000,000
Pancake Swap (CAKE)
Decentraized - An automated market maker (AMM) on the Binance Smart Chain. Decentralized but not entirely decentralized as it relies upon the BSC, and the possibility and likelihood that many of its nodes are owned and operated by Binance.
That said PancakeSwap has in my opinion one of the best UI's. It's simple, fun, clean design is really encouraging in a space that is still early and often overly complex for new users creating barriers for entry. PancakeSwap has recently started challenging UniSwap with daily volume around $770,801,599.
PancakeSwap token (CAKE) much like UNI and SUSHI is built to be locked up within smart contracts to create liquidity, and is used to reward liquidity providers on it's platform. We're talking LP's Yield Farming, and lending but with one key difference vs Ethereum based exchanges, significantly lowered fee's. This is a large enough competitive advantage to allow PancakeSwap to gain massive amounts of market share.
It's very possible that in 1 to 2 years time from now when ETH 2.0 has rolled the playing field will be somewhat leveled and these companies will then rely on their core product offering to deliver value and attract new users. But this sure as hell hands them a great market entry strategy. CAKE has no max supply as tokens are burned regularly making it a deflationary token.
CAKE Price: $13.28
Market Cap: $1,663,617,334
Circulation: 122,776,659
Max Supply: ?
When Coinbase or Kraken coin?
Or doe sit even matter, is the future all about Decentralized exchanges that provide swaps, farms, LP's and loans?
I think while Binance has build the foundation of what will be a massive empire that may last deep into this century the emergence of true DeFi is really a cat that can't be put back in the bag.
I think BNB will be a valuable token to hold long term, but beyond that as as exchanges go the future appears to be about DEXes that provide their users with multiple product offerings while delivering excellent utility to their native tokens.
Ciao for now,
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I agree with your take on BNB. Seems they kind of have a very solid segment of the market cornered. As for the other ones, I'm just not sure where they're going to get more value for the owners of the their tokens. Yes, the defi market continues to expand. But just like Sushi copied Uniswap, I don't see what's to prevent more defi exchanges from coming online with updated and arguably "better" technology and stealing market share. Like I said, I'm not saying they've topped out. But it seems to me "investors" might be better served rolling from one to the next and riding the early wave in each. Let the big money decide which ones are going to survive....just my take.
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That's a decent take on the DeFi scene right there! There's a lot of UniSwap clones kicking around. I think we could look at all the clones just on BSC and like you pointed out ask ourselves where are they going, how will they innovate. I think there's enough money kicking around that there's more than enough for a few to survive the long haul. Fun times!
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Interesting points you stated with project example. Though market territory this day is indecision it's a moment to wait and watch for sometimes for bitcoin stability, but seriously, BNB has created a system or market that many crypto lovers can fetch on.
Binance has definitely created a monster of an ecosystem!
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