Binance is one of the largest centralized exchanges in the crypto market. For a project to be listed on this exchange, it must meet many factors such as influence, community, and the team behind it. In addition, the cost factor is also something that a project needs to consider.
The story about Binance listing fees
In one of his blogs, Athur Hayes - Co-Founder of BitMEX, said that listing on Binance requires the project to hold $5M in $BNB and an additional 8% as a listing fee.
He also said: "If the project gives tokens to the CEX instead of to the users, that will harm the future potential of the project." Specifically, such as losing users, losing credibility, and holders being harmed due to lack of decentralization...
He also put forward an argument that a project with a highly applicable product that brings a high number of users willing to pay the cost can achieve success in profitability and sustainable development. In contrast, vaporware projects or low-quality products will need CEX to dump their goods to retailers.
When a project wants to list on Binance or other exchanges, it has to incur a significant additional cost at the present time. With the trend of many TGE projects having high FDV to easily dump to retailers, this group is more likely to suffer damage.
In another direction, VCs are the ones who benefit the most, which can be seen in the statistics table above, where the VC exit price can reach 142.5%.
Even VanEck, a large financial institution, has mentioned that investment funds are aiming for too much short-term profit. Therefore, the most affected subjects are still users and projects.
An important factor that Mr. Hayes also mentioned is that choosing Binance as the first priority listing may not necessarily be a wise choice.
However, if a project is chosen by Binance to be listed as a secondary market because of its good community and technology, that would be a good thing. In reality, projects that provide real value and have the factors to lead the Narrative have been gradually moving in this direction.
The most typical examples are $TON and $TAO.
Read more: Projects that provide real value are the future of the crypto market
Exchange listing fees
Binance charges a listing fee of up to 8% of the total token supply. Most other centralized exchanges (CEXs) charge fees from $250,000 to $500,000, payable in stablecoin.
Binance has a strategy that requires projects to buy BNB and stake it. When/if the project is delisted, the BNB will be returned, and this amount can reach $5 million. Meanwhile, most other CEXs require a deposit of $250,000 to $500,000 in stablecoin or the exchange's own token.
- Marketing costs
Binance, at the highest level, requires projects to give 8% of the total token supply to Binance users through Airdrop on the platform and other campaigns. Other CEXs at a lower level require marketing costs from $250,000 to $1 million in stablecoin or the project's token.
In total, listing on Binance can cost a project 16% of its total token supply and $5 million in $BNB. If Binance is not the primary exchange (i.e., if Binance is not the first exchange to list the token), a project still has to spend nearly $2 million in tokens or stablecoin.
With such high costs, both the project and the VC are forced to shift towards shorter-term profitability to more easily recoup their capital. This is also one of the factors that have made the performance of projects listed on Binance in 2024 somewhat negative for investors.
Scroll - a Layer 2 project that raises a question after the information about Binance listing fees
The Scroll project, with a circulating supply of 19%, allocates 5.5% to the Binance Launchpool. Based on the costs mentioned above, this can be understood as the cost for this Layer 2 project to be listed on the exchange.
Read more: What is Scroll?
This number is quite high, and it's not even certain that it will all go to the users. Meanwhile, Binance currently holds ~71% of the $BNB supply according to Forbes, or Justin Sun has also previously deposited money to farm tokens during each Launchpool period.
Combined with the information that users receive little Airdrop (only 7% in season 1), this seems to be a move to have as few users holding tokens as possible to easily manipulate the price. This is also a plan that ZKsync and StarkNet have previously applied to investors.
One more point is that the Pre-market $SCR on Binance can also create opportunities for Whales to pump the token price when the circulating supply is low, as that is a form of Spot trading. However, users cannot withdraw the token, which further helps the whales to manipulate the token more easily.
The Pre-market price of $SCR is currently around $1, which means a Marketcap of $200M. Given the factors mentioned above, the likelihood of pushing the price during the TGE with a high Marketcap & FDV is quite high.
Conclusion
The Binance listing fee is creating a vicious cycle that is affecting the entire cryptocurrency ecosystem. The enormous financial pressure from the listing fee forces projects to prioritize short-term profits, leading to a decline in product quality and a loss of investor confidence.
At the same time, the excessive concentration of power in large exchanges like Binance reduces the decentralization of the market and increases the risk of price manipulation. To solve this problem, projects need the cooperation of stakeholders to build a transparent, sustainable ecosystem that focuses on the long-term interests of the community.
Additionally, the timing of the listing is also a factor closely linked to the project's price performance. The story of liquidity towards the end of this year and the beginning of next year will likely be the life jacket for these "VC coins", otherwise Memecoins will continue to dominate the market as they do now.
Read more about the articles preparing for the Uptrend:
- Crypto Q4/2024 – Q1/2025: Reasons Why Market Liquidity Will Explode
- Will the Uptrend Come and How Long Will It Last?
- The Upcoming Alt Season - Choosing Memecoins or Technology Coins?
Summary
Allinstation has just provided information to you about the details and impacts behind the costs of being listed on Binance. Please explore and evaluate them to make the most informed investment decisions. Good luck!
