Events of Blockchain March/April
Blockchain development is mainly based on open-source code and an open-source community. Most projects and companies are therefore fairly open about the direction of their businesses and long-term vision. Indeed, we have written proof from a number of these projects on their exact milestones—whitepapers. It serves as no surprise that projects take cues from each other—they piggyback off the successes of others. We saw this happen prominently among crypto exchange tokens over the past few months.
Binance has been making headlines over the last few months as it began working and enhancing the use cases for its Binance Coin (BNB). In addition, the company launched its long-awaited Decentralized Exchange (DEX) product which was outlined in their 2017 whitepaper. BNB is one of the few tokens in existence that offers actual utility for its token:
- Tokens can be used to pay for trading fees on the Binance platform and offers users a discount on those trading fees.
- Serves as trading pair for every asset on the exchange, making it an asset many traders own and hold, like Bitcoin and Ethereum.
- Token has equity like features—a portion of the tokens are repurchased and burned on a quarterly basis in proportion to the exchange’s trading revenues.
The company also saw increase in the number of merchants that accept Binance as a form of payment (travel operators, games, virtual goods stores). Binance decided to relaunched their Binance Launchpad product, which provides a platform to token projects to raise funds in an Initial Exchange Offering (IEO), the next evolution of the ICO. Purchases of these new issuances have to be made using BNB tokens. Unlike previous ICO offerings where investors could pay primarily in BTC and ETH and projects were in charge of distributing their offering themselves, Binance took on these burdens, providing projects with distribution and offering their customers a chance to participate using their exchange token.
KuCoin exchange based in Hong-Kong, which opened operations in late 2017, issued its exchange token in September 2017, two months after Binance conducted their ICO. KuCoin Shares (KCS) offer trading discounts to users with a quarterly buy-back and burn mechanism similar to Binance’s model. Additionally, the exchange implemented “KuCoin Bonus”—a daily airdrop to users who hold KCS based on the exchange’s daily trading fees. Looking to stay apace with its competition, KuCoin announced it would launch an IEO platform on March 20. This resulted in a 54% move higher in KCS tokens, muted compared to BNB’s returns.
Although many might believe that these exchanges are riding the behind Binance’s success, it is remarkable how these exchanges were able to pivot business models and stay agile with their product offerings. The digital assets market moves a mile a second and tokens and products that can’t keep up will be left in the dust. These exchanges stepped up in Q1 while the overall market was depressed to piggyback off another’s