Recently, the crypto community has been actively discussing whether Binance charges a listing fee, causing many investors to doubt the potential of new projects listed on the exchange. This article explores the challenges brought by this controversy and Binance's response strategies.
(Background information: Decrypting the top 3 listing performance of Binance, OKX, Bybit, and other top 5 exchanges in the first 3 quarters, with an average return rate in the red)
(Additional context: Binance accused of charging $100 million "listing fee", He Yi extinguishes the fire: the rules are very transparent, FUD will never disappear)
The entire industry is switching and rotating exchanges. I started using exchanges in 2013, starting with Huobi. From 2013 to 2017, many Chinese users were very fond of Huobi. Every era has one or two exchange founders who are willing to inject passion into their products.
After 94 in 2017, people around me started discussing Binance and BNB, regarding ICO/exchange overseas expansion. In the past two cycles, under the leadership of CZ and He Yi, the Binance team went overseas, conquering cities, and has now become the largest exchange in the universe, with over 300m users.
1. Exchanges cannot actually guarantee profits
Let's look at some data. This year, the average ROI of Binance's Launchpool projects is 2.13 times, with an average valuation of $326 million. The total financing through Launchpool is $929 million, which is very impressive.
Ordinary traders do not usually blame the poor quality of projects audited by Nasdaq/HKEX/SZSE for their losses, because everyone knows that the platform cannot guarantee that users can make money. But since users obtain new project airdrops by holding BNB or FUSD, many users have a very simple mindset - they don't care whether the projects are good or bad, and just choose to sell them at the time of listing and exchange them for BNB. This model works well in a bull market, as the appreciation of new projects and the wealth effect make the project parties, the exchange, and the BNB-holding retail investors all very happy.
2. Where does the doubt come from? User mentality and investment trends
As the largest exchange in the universe, Binance indeed bears a burden it cannot bear, because users will always have higher expectations of it. From the launch of Launchpad in 2018 to the past two cycles, Binance has never stopped exploring and listing new projects. Looking at the long-term cycle, Binance and Launchpad projects have indeed been mutually successful, and many people may have forgotten the ICO projects of OKEx and Huobi in the previous cycle, but many Binance Launchpad projects still remain.
Binance has thus become the Nasdaq with the best liquidity. Most projects can achieve sufficient distribution and digestion of chips through Binance, and can better withstand bull and bear cycles. In the past two cycles, there were many serious research community users who admired Binance's investment research capabilities, and would even choose to buy in at the time of listing (such as Ethena this year). However, as more and more projects have shown a downward trend from the first day of listing, fewer and fewer retail investors are buying in, and there have even been cases where a project only has single-digit new buyers.
3. The Binance model and routine are taking shape
From the perspective of the participants, as the largest exchange, Binance helps its BNB users obtain project airdrops for free, further enhancing the potential value of BNB and increasing the trading activity of exchange users. In the context of aligned interests, BNB holders/users naturally believe that Binance has an obligation to help them find the best investment assets, and the tolerance for errors should be very low.
Here is the English translation:However, due to various review reasons, even professional "To Bit" mode fake data projects and VCs have appeared on the market, and they can package the user growth/data activity/TVL all-in-one. As this situation becomes more and more common, people will doubt the professionalism of Binance.
Recently, there has even been a trend where some projects specifically look at which KOL accounts are followed on Twitter, and then bribe/sponsor these KOLs to publish project-related information in order to attract their attention, because of the information cocoon effect on the Twitter platform. When you see more of this content, more similar content will be pushed to you. I even feel that when He Yi is browsing Twitter, he may be trapped in a certain information cocoon, and many innovative research and products from various industries are thus buried in the information flow.
4. How can Binance break through?
4.1. Information transparency, and take strict punishment measures against problematic projects
The way for Binance to break through has been moving forward, including the current understanding of the unlock information module related to Launchpool projects, which has been well received. However, since the biggest open secret is that He Yi has become the final decision-maker, all relevant stakeholders and resource parties will actively transmit some kind of signal around He Yi, and most of the introductions and acquaintances have become a pre-planned script.
When the TON ecosystem was hot, the best game publishing platform was launched; when AI was hot, the social application with the most fake users was promoted; when meme was hot, the most Web2 Instagram meme platform was promoted. Then, when problems with the founders and teams of these projects were discovered, they could not be immediately taken offline, because this would harm the interests of the exchange users. So they are in a dilemma, but do not take the most severe punishment measures against these projects, which will continue to harm more platform users in the future.
You can review the views of Western projects on the deposit fee required by Binance in the last cycle and this cycle. Around 2021, a European team invested by IOSG directly refused Binance's token listing fee requirement on the spot. Of course, they must be regretting it deeply now.
In March this year, a team we invested in from the US, as a serial entrepreneur, the founder mentioned the amount of tokens that needed to be paid to the Launchpad and the corresponding valuation and proportion that needed to be given to the Binance investment department. He said firmly that no matter what, he would pay this fee, because at that time, it was the best listing time for them, and Binance was the best distribution channel in the market, so it was a win-win deal for both the exchange and the project party.
However, after experiencing two cycles, it took Western founders 3 years to understand the true meaning of the listing fee. What method can make such a deal more transparent? This kind of rule consensus, the conditions and fees for listing, increase transparency, form a window-like guidance, open up communication channels, and constantly revise to avoid some arbitrage opportunities in the primary and secondary markets.
4.2. Separate department interests, and take measures to avoid conflicts of interest
I believe Binance needs to separate the listing and investment departments, because when there are terms of interest, the listing evaluation criteria are easy to deviate. The listing department should not become a tool to help the Binance investment department generate revenue, but should be more objective and fair, and help users better screen the best projects and protect the interests of users.
Of course, what needs to be clarified is the recent claim that for the projects invested by Binance Labs, when they come to the listing department, a "Great Firewall" has been deliberately built, which to some extent indicates Binance's impartial attitude in handling listings. But this should not only be a "Great Firewall" for China, the Western teams facing Binance's investment should also have the same standards and requirements.
4.3. Prudent due diligence, multi-party decision-making, and say no to fraud
From BD-Listing - Listing Committee as a regular internal process of Binance, increase the interaction between Binance's research and Listing teams, increase the weight of research and publish it regularly. Many of Binance's research reports are also very forward-looking and professional. The Binance research team should have more guidance and discussion on the listing direction, and can even regularly announce what kind of direction and projects Binance is interested in at a certain stage, and collect market feedback and issues in advance.
Referring to the investment process of IOSG, we will have sufficient internal discussion and demonstration, with materials from Pipeline-Summary-Memo. Theoretical research and respect for facts are very important. Which users are real and which data is falsified, which revenue models can be sustained. I believe that anyone who has been trained in traditional investment research institutions for three to five years will have a rigorous due diligence process and standards. Therefore, unless there are conflicts of interest, Binance should not tolerate and allow those projects with known problems to be listed on the Binance platform. Internally, it should also give more decision-making power to the theoretical research team, so that the overall evaluation process is more comprehensive and the decision-making mechanism is more diverse and decentralized.
In the upcoming bull market, the competition between exchanges will return to a white-hot level. I believe that many exchanges, in order to attract traffic and hype, will not focus on the fundamentals. In such competition, Binance will also face a dilemma.
Previously, a Tweeter introduced the listing forms of Binance, Coinbase, and Upbit (attached below). I still recommend that more startup teams should consider these 3 exchanges in this cycle, as they are still the best choices in the current market. At the same time, with Trump's election, the next 6-12 months will be the golden window period for project listings, and the competition will be unusually fierce.
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