In this article, let us talk about the top 8 benefits of token listings in centralized crypto exchanges.
We all know that we are a fan of Decentralized Finance (DeFi) where it allows people to be able to transact in a decentralized manner — it has its own pros; it also has its own cons.
That is why I do believe that in spite of DeFi, centralized ownership is something that’s relatively important as well. There also are a lot of merits for listing in centralized exchanges and I want to talk about the top 8 benefits of it.
Read: Japan Streamlines Cryptocurrency Listing Process To Expand Offerings On Local Exchanges
1. Increased Liquidity
Exchanges provide a platform for buying and selling tokens increasing liquidity; this makes it easier for investors to enter or exit positions fostering a more dynamic market.
And I think that’s the entire merit of it because it’s using an order book system and there’s a larger amount of money moving in and out of it. It allows users to be able to buy and sell in larger quantities unlike in DeFi where the slippage could get higher especially if there’s not a lot of liquidity involved.
2. Access To A Wider Audience
Listing on popular exchanges grants exposure to a broader range of investors — it enhances the visibility and attracts potential users and stakeholders thereby increasing the token’s market reach.
3. Price Discovery
Exchanges facilitate price discovery allowing the token’s value to be determined by the market to real-time trading and this transparency helps confidence among investors.
4. Credibility And Trust
I do believe that this is something that is important because listing on reputable exchanges can boost a token’s credibility — it signifies that the project has met certain standards and requirements reassuring investors about its legitimacy.
What’s interesting about exchanges is that they have people who filter out projects if they have merit or not; so unlike in DeFi we don’t have that as much there where you have a centralized group of people who act as “gatekeepers” on who can enter this exchange or not.
For a lot of crypto projects, once it gets listed in exchanges it gives them the ability to be able to say that “okay, the token got listed in this exchange” and that gives them a step ahead versus other tokens, coins or projects out there as well.
Even if it’s in exchanges or even if you read this from blogs like this, it’s still your money, it’s still your responsibility; so please do your own due diligence when investing — no one will work harder for your money more than you and don’t just buy anything just because you hear it of from someone or you see it in an exchange. Take the time to learn by looking at the merits of certain projects as well.
Read: Institutional Trust Fuels Optimism As Bitcoin ETF Race Takes Off
5. Community Growth
Exchanges act as hubs for cryptocurrency communities — tokens listed on exchanges gain access to a large and engaged user base fostering community growth and support.
6. Facilitating Partnerships
Exchanges often collaborate with listed projects creating opportunities for partnerships, marketing initiatives and expanding the token’s use cases.
Read: Binance CEO Plans To Exploring New Stablecoin Partnerships
7. Accessibility And Convenience
Listing on exchanges offer a convenient and user-friendly platform for investors to access and manage their token simplifying the trading process.
And I do believe that this is something that’s important especially for newer investors that are trying to weave their way into cryptocurrencies — no storing of private keys yet, you just need an email and a password and it makes it easier also for them to get into the space as well.
8. Increased Value And Exposure
Exchange’s robust trading volumes can drive demand for the token potentially leading to a large amount of people having exposure to it over time.
And I do believe that’s one of the merits of exchanges that it allows people to be able to get to know a certain project that if it’s just in DeFi, it’s only exposed to a lesser amount of people as well.
Final Thoughts
At the end of the day, our responsibilities as investors is to do our own due diligence, to learn and try to be our best.
Exchange platforms are tools for us to be able to execute transactions and a token being listed just allows us to have access to tokens and projects in a simplified way as compared to doing it from a DeFi point of view. I do believe that DeFi works but I also believe that there’s a time and space for centralized projects as well.
Frequently Asked Questions (FAQs)
Liquidity eases the buying and selling of an asset in the markets making it easier and cheaper for platform users to enter and exit positions resulting in a dynamic and robust market.
Tokens listed in CEXs exposes the token to a wider range of traders and investors resulting in increased visibility driving up volume demand.
Tokens listed on CEXs means the project has complied specific standards and requirements before it is cleared for trading. Do note you still need to do your own further research before entering into any crypto project.