According to a Business Insider investigation, cryptocurrency exchanges charge between $50 000 and $1 million to list initial coin offerings. Michael Jackson, a partner at venture capital Mangrove Partners, said that the exchanges are where the liquidity is, and it is where the money is. Therefore, the exchanges are where the power is at the moment. Although these crypto exchanges are dominating, there might be changes with tougher regulations and more standardized business models.
A $1 million charge of list a token on an exchange is higher than the cost of listing on most stock exchanges. These stock exchanges are the mainstream equivalent of crypto exchange. The high cost is a reflection of the current power imbalance between crypto exchanges and crypto projects.
Crypto exchanges wield enormous power in the crypto space. Access to larger ones can mean the difference between success and failure for most crypto projects. Many people want their coins listed since the exchanges are where the liquidity is at the moment. Aside from the exchange fees, there are also several other expenses built into the ICO listing process.
Is the High-Cost Worth It?
Before we answer this question, let us explore certain benefits of listing coins on crypto exchanges. Listing coins on a crypto exchange can often be what makes or breaks the levels of adoption and market impact of the coin. Having a listing on an exchange might mean the difference between one ten thousand and ten million customers. Therefore, it is important for cryptocurrency projects to get listed and exchanged. A crypto project may have many potentials but may fail to reach that potential if it’s not listed on an exchange.
For example, the listing of Bitcoin Cash on GDAX and Coinbase dobles the cryptocurrency in worth within a space of 24 hours. Access to liquidity is essential for the success of any cryptocurrency. If you cannot trade the crypto, what is the essence of having it in the first place? Therefore, it is obvious that listing crypto projects on exchanges help the market impact of such cryptos.
With the amount of positive impact that exchanges have on crypto projects’ market value, listing cryptos’ exorbitant price is worth it. Value creation drives price in the market space. Crypto exchanges offer great value to crypto projects; hence it is within reason to have a price for their services.
The price range varies accordingly throughout exchanges. You cannot equate the 24-hour trading volume of Binance, which is one of the biggest exchanges in the world, to that of Bitstamp. The bigger the liquidity pool, the higher the potential market value of your crypto project.
What Next After Exchange Listing?
Here is a question whose answer determines the security of your project. Exchange listing is not enough to guarantee project success. securing your investors’ funds contributes to your success. Therefore, integrating a secure wallet will help build trust; as you know, trust is branding. Your choices of crypto wallets vary from cold to hot wallets. Concurrently, if security is your priority; cold wallet is your best bet. Such cold wallets are BC Vault, Ledger, etc.
Although cryptocurrency exchanges have a huge impact on crypto projects, most projects don’t deserve such fees. Hence, sometimes crumbles the project because of the high cost of listing.