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Beginner’s Guide to Exchange Tokens

Many cryptocurrency exchanges have launched their own cryptocurrencies. These are called exchange tokens. Binance Coin is the most famous one, and it’s also one of the biggest cryptocurrencies in the market. By owning such tokens, you can get discounts on trading fees, earn interest on your funds, and even get dividends. In this article, we’ll explain the history and use cases of the most popular exchange tokens.

Binance & Binance Coin

Binance is the biggest and the most famous cryptocurrency trading platform. Opened in 2017, Binance is a carefully built platform serving tens of millions of users globally. It has one of the widest coin selections in the market combined with low trading fees.

Binance is also developed continuously. Over the past few years, Binance has launched a debit card, futures, stock tokens, cryptocurrency staking, and many more useful features. You can find more information from our Binance Review & Beginner’s Guide.

binance front

Binance Coin (BNB) was launched via Binance ICO in the summer of 2017. BNB was originally an ERC20 token on Ethereum. In 2019, Binance launched its own blockchain (Binance Chain). This is when BNB tokens were transferred from Ethereum to the Binance Chain.

Launched in 2020, Binance Smart Chain is a direct competitor to Ethereum in the platform category. BSC makes it possible to build complex smart contract applications, such as DeFi protocols.

Binance Coin has had a strong use case from the beginning. If you have BNB tokens in your Binance account, you’ll get a 25% discount on trading fees.

The launches of Binance Chain and Binance Smart Chain made BNB even more useful. It is the native tokens of both Binance blockchains. This means all transactions on BC and BSC are paid with Binance Coin.

As Binance develops further and dominates the market, there will be a base demand for the BNB token. In 2021, we’ve also seen a rapid rise of the Binance Smart Chain. The more Dapps are being built, the more use cases BNB has.

Last but not least, Binance is using the company profits to burn (destroy) its BNB holdings each quarter. This is done until half of the original token supply (200 million) is burned.

FTX & FTT

FTX is another popular trading platform, especially among professionals. The exchange was established in 2019 by Sam Bankman-Fried. FTX really hit the mainstream during the bull market of 2021. It has arguably been the hottest exchange in the market for some time.

FTX is primarily a derivatives exchange, but spot trading is also availatble. The highest volumes are in futures trading, where experienced investors can use up to 20x leverage. Trading fees are very low, even matching Binance.

ftx front page 2021

Check out this FTX beginner’s guide for more detailed information about the exchange.

FTX has its own FTT token, which has proven to be an excellent investment in 2021. The token is a valuable hold for active users of the exchange.┬áThe more tokens you have, the more discount you’ll get on trading fees. You can get a discount of up to 60 percent, and the first discount is already offered for an FTT position of just $100.

There are other advantages too. You can use the FTT token as collateral for leverage or stake your tokens to generate revenue. It’s also positive that FTX uses a third of the company profits to buy back FTT tokens and destroy them. This continues until half of the token supply has been destroyed.

If the FTX exchange continues to conquer the crypto market, its native token should follow up.

Crypto.com & CRO

Crypto.com is one of the best-known crypto trading apps. It has grown fast in popularity, especially due to its Visa debit cards. Originally known as Monaco, Crypto.com started in 2016. The company has more than ten million customers worldwide.

One cannot compare Crypto.com directly to Binance and FTX. The focus has always been on mobile app & debit cards. The app is very popular among small investors. It’s used for crypto trading and earning yield through staking.

cryptocom-front

There is also Crypto.com exchange, which has nothing to do with the popular app. It gives you a similar trading experience to Binance and FTX. However, it cannot compete with the most popular exchanges when it comes to trading fees and coin selection.

You can find more info about the project from our detailed guide.

How about the CRO token, then? It’s worth owning if you like the Crypto.com exchange. By locking at least 10,000 CRO tokens for six months, you’ll earn 16% APY. At the same time, you will get access to The Syndicate service. This gives you a chance to buy popular cryptocurrencies at a discount.

The CRO token is also used with Crypto.com debit cards. The base-level card is free, but better cards are available by staking CRO tokens. You’ll get higher ATM withdrawal limits and other benefits, such as a free Netflix subscription.

Crypto.com has also launched its own blockchain. This is called the Crypto.org chain. CRO is the native token of Crypto.org, which gives it even more utility.

KuCoin & KCS

KuCoin was founded in 2017, during the previous crypto bull market. It operates from Hong Kong. This exchange is very popular among both beginners and professionals, thanks to its easy-to-use platform and huge crypto selection. KuCoin even lists the exchange tokens of its competitors (FTX & BNB).

KuCoin has always been in the shadow of Binance. Lately, FTX has stolen most of the limelight. This is why many active traders haven’t even heard of KuCoin. Yet, this exchange is one of the biggest in the market. It has over six million users globally.

kucoin-front

The KuCoin Token was originally launched as KuCoin Shares via the KuCoin ICO (2017). The ticker remains the same, KCS. It is an ERC20 token running on Ethereum.

KuCoin has a unique rewarding system for its token owners. They get a share of the trading fees KuCoin earns. This means the KCS token pays a dividend like a stock. The more KuCoin exchange earns, the more dividends are paid to KCS holders.

Any active KuCoin exchange user should hold a bag of KCS because you’ll get a discount on your own trading fees. Customer service for KCS token holders is also faster. There are other benefits and bonuses available too.

In 2021, Kucoin also launched its own blockchain, KCC. According to Kucoin, it aims to tackle the high transaction fee issues of public blockchains. The KCC blockchain is compatible with Ethereum smart contracts. KuCoin Token is the native token of the blockchain and is used to pay transaction fees.

The launch of KCC gives the KuCoin token a fresh new use case.

Uniswap & UNI

We have so far presented centralized exchanges also known as CEX. Uniswap is fundamentally different from all of the above. It is a DEX, which means a decentralized exchange. Uniswap is a DeFi application built on Ethereum. It runs on smart contracts and has no central authority.

Uniswap requires no user registration, no KYC, or any other procedures like that. All you need is a Web3 compatible wallet, such as MetaMask. Users communicate directly with smart contracts through their wallets. Transaction fees are paid with Ether, so you must have an ETH balance in your wallet in order to make trades.

uniswap exchange v3

Uniswap has its own UNI token. This was launch in 2020 as an airdrop. Anyone, who had previously used Uniswap exchange, got 400 UNI tokens for free. These are now worth more than 10,000 dollars!

It’s important to understand that UNI is a governance token. This means that the owners of UNI will decide how the application is developed. There is a centralized development team building Uniswap, but UNI token holders can vote on important changes.

Governance tokens are difficult for investors. In theory, the value of the UNI token should go up if the exchange gets more popular. Some might think that the protocol’s TVL (Total Value Locked) gives its token value. This is not the case in practice, though. The market seems to value DeFi apps in different ways. It’s difficult to say why certain governance tokens have the market cap they do.

Pancakeswap & CAKE

Pancakeswap is a direct competitor to Uniswap. It is, in fact, a clone of Uniswap running on Binance Smart Chain. BSC has grown its popularity significantly during the crypto boom of 2021, as it is able to offer significantly lower transaction fees compared to the Ethereum network.

PancakeSwap is a DeFi app running independently on smart contracts. Just like with Uniswap, there is no KYC or user registration. All you need is a Web3 wallet. The popular MetaMask app can be used for both Uniswap and Pancakeswap.

pancakeswap

The native token of Pancakeswap is CAKE. It is a governance token, just like UNI and other popular DeFi tokens. It means that CAKE holders have a say in the development of the platform, but it’s not needed for trading. All fees are paid with the previously mentioned BNB, which is the native token of the Binance Smart Chain.

PancakeSwap is best-known for hundreds of meme coins. They are launched on the Binance Smart Chain because low transaction fees make them accessible for small investors. Uniswap is still the first choice for pro investors.

Photo by Jeremy Zero on Unsplash

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