The Rising Influence of Exchange Coins: A Comprehensive Guide to Their Utility and Investment Potential
Summary:
This article explains the concept of exchange coins, also known as exchange tokens. These are cryptocurrencies issued by crypto exchanges, offering various benefits such as trading fee discounts, staking rewards, and access to exclusive services. The difference between "coin" and "token" is explained, as well as the increasing use of exchange tokens as payment methods. The article also discusses potential financial and strategic benefits of investing in exchange coins, including governance roles, yield generation through staking, and token burn mechanisms. Finally, it highlights the growth and popularity of several exchange coins like BNB, BYT, GateToken, and OKB.
Exchange coins, more commonly known as exchange tokens, are cryptocurrencies that are deployed by cryptocurrency trading platforms to offer various invaluable utilities within the platforms' ecosystem. Such tokens deliver a myriad of advantages to its users, including trading fee discounts, accruing rewards through staking, and exclusive access to platform-specific features or services.
Crypto jargon includes a plethora of terms like utility tokens, native coins, altcoins, stablecoins, and governance tokens. One lesser-known term in this crypto-bubble is the exchange coin or token, issued by a cryptocurrency exchange to deliver supportive functions within its environment.
One widespread use of exchange coins is to provide users with discounts on transaction fees on the exchange platform. BNB, the native coin of Binance, is one such example that facilitates reduced trading charges. Another popular feature is staking, where users can earn additional coins or tokens or participate in voting for new token listings by staking their exchange coins.
Holders of exchange coins often gain access to exclusive features or services on the platform, like premium customer support and participation in initial exchange offerings (IEOs). Some exchange coins also serve as collateral for loans, enable cross-platform transactions, or act as a base trading pair for other cryptocurrencies, although these features aren't as common.
While the terms “token” and “coin” are generally used reciprocally, their use cases are subtly different. For example, BNB is native to the BNB Smart Chain, the blockchain powering the Binance exchange and is used to pay gas fees, classifying it as an “exchange coin.” On the other hand, KuCoin Token (KCS) is an ERC-20 token running on Ethereum, correctly classified as an "exchange token."
As a project matures, its developers may construct their own blockchain, moving their existing exchange token to the native network. An example is the Crypto.com exchange coin Cronos (CRO), which began as an ERC-20 token on Ethereum. In November 2021, it was moved to the Cronos blockchain, where it now functions as a native coin.
Investing in exchange coins and tokens offers both fiscal incentives and strategic benefits. Discounted trading fees, token burn mechanisms, governance roles, and yield generation via staking and other DeFi activities are some attractive features of such investments.
While BNB continues to dominate as the widely-used exchange coin given its use on Binance, other coins like Bybit’s BYT, GateToken, and OKB are progressively becoming popular by offering trading fee discounts, exclusive investment opportunities, and governance roles, setting the stage for their exponential growth.
Exchange coins like BNB and OKB are progressively being adopted as payment methods, providing alternatives to conventional cryptocurrencies. For instance, BNB is accepted as a form of payment at many Shopify stores through integration with crypto payment processors like CoinPayments. Similarly, OKB is accepted by several merchants and services for payment purposes.
Published At
6/28/2024 12:45:00 PM
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