Binance, the world’s leading cryptocurrency exchange, is announcing a pivotal change in its listing strategy. This move comes in response to growing concerns over recent token listings and aims to prioritize low-cap tokens, fostering sustainability and enhancing market conditions.
Recent data indicates that nearly 80% of tokens listed on Binance over the past six months have experienced significant price declines. This trend has been linked to tokens launching with high Fully Diluted Valuations (FDVs) but low initial circulating supplies. Such tokens often face selling pressure when large token unlocks occur, leading to dilution and price drops.
Launching tokens at high FDV and low circulating supply can result in dilution from future unlocks, creating selling pressure, Binance stated. This issue is exacerbated by venture capital funding and bullish market conditions, leading to unsustainable price surges followed by declines post-Token Generation Event (TGE).
To address these challenges, Binance is shifting its focus to engage more with small to medium projects. The exchange is actively seeking quality teams that allocate a significant portion of tokens to their community and maintain a smaller token float at launch. “We are taking the lead to engage small to medium projects,” Binance announced, inviting such teams to apply for its programs, including listing, Launchpool, and Megadrop. These projects should prioritize community allocation over team and venture capital allocations to ensure fair token distribution.
A Binance Research report highlights that $155 billion worth of tokens are set to unlock between 2024 and 2030. Without increased buy-side demand, these unlocks could significantly impact token prices. Tokens launched in 2024 showed the lowest Market Cap (MC) to FDV ratios in recent years, at just 12.3%, indicating potential future price declines if demand does not match supply.
Private market capital has driven crypto valuations significantly, with over $91 billion invested since 2017. Despite this, many new tokens have FDVs comparable to established projects but lack equivalent market presence, indicating a misalignment between valuations and actual demand, which can lead to overvaluation and corrections.
Binance Research emphasizes the importance of careful tokenomics design, considering unlock schedules and thorough due diligence to avoid the pitfalls of high-FDV tokens. Sustainable growth can be achieved through strategies such as token burning, milestone-based vesting, and increasing initial circulating supply to reduce future selling pressures.
