Digital gold rush

Exchange tokens: The new digital gold rush?

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Since the beginning of the cryptocurrency market back in 2012, trading in Bitcoin and other related cryptocurrencies gained a lot in popularity. This growing interest in trading also created a lot of new cryptocurrency exchanges being introduced to the market. Till today the amount of cryptocurrency exchanges has been rising at a rapid pace. When you are new and want to start trading, all these cryptocurrency exchanges out there could be a little overwhelming. Different exchanges offer different experiences. Whether it be through high volume, trading fees, coin listings or native tokens being offered. I think for a starter in this digital trading world the best exchanges to go are the one which offers high volumes and the basic functionalities to trade.

In this article, I’m not going to discuss which exchanges are the best to go to, but I will cover the exchanges tokens which are also described as native tokens. Native tokens are coins which only reside on the platform where you are trading on and offer advantages other exchanges don’t have. One common advantage could be a discount on trading fees but there are many more opportunities. Since February this year native tokens have started a fierce bull run even traded against BTC. Currently, there is a cool-off period going on in these coins with healthy price corrections. In my opinion, native tokens are a new opportunity and have a big chance of being profitable when investing in alt-coins further in 2019. So which ones are worth buying in this new digital gold rush? In this article I’ll explain three options:

BNB coin

BNB coin is the native token of the Binance trading platform. Most traders will call it Binance coin. Technically it isn’t a coin but a token which came to birth as an ERC-20 token on the Ethereum Blockchain platform. Binance used an ICO or crowd token sale to get funding for the development of the online trading platform.

Binance exchange ranking
Binance exchange currently ranked 4th

The BNB token is one of the few exchange tokens which comes with certain advantages. One advantage and the most important one is a nice discount of 25% on trade commissions. When you are a professional day trader with a lot of orders being processed on the platform the trading discount could lead to great savings. Another important advantage the token gives you is the ability to join startups or projects which are launched on the Binance platform. Investors can use this BNB token to finance or join a token sale. A concrete example is the launch of the BTT token, which is also called BitTorrent token. This token could only be bought by investors with the BNB token during the initial token sale.

BNB coin
Binance coin ranking at Coinmarketcap

Another interesting fact of this BNB token is the deflationary property it has. Binance uses part of its profits to buy up BNB
exchange tokens and thereafter burn them or reduce the total tokens in circulation. The goal of this deflationary policy is to increase the value of the BNB token and to create scarcity. This policy is limited and Binance will continue this until there are only 100 million tokens in circulation. This deflationary policy in combination with the growth of the Binance trading platform worked very well. In 2017 the BNB token could be purchased during an ICO for $0.1553 per token. As of writing the BNB coin can be purchased at a price of $18 which is a stunning rise of 11900%!

In my opinion, investing in BNB token could still be profitable because the burning rate hasn’t ended yet. Furthermore, the BNB token gives you the possibility to invest in other projects which will be launched on the Binance platform.

BNB coin
Nice bulltrend for this BNB coin on a daily basis




BGOGO token

Bgogo.com is a cryptocurrency exchange which is registered in the Cayman Islands. According to their whitepaper, they aspire to be the “cryptocurrency exchange of the community, by the community, for the community”. This exchange uses supernodes listing authority and is thereby designed to trade in the most high quality and promising digital assets. These so-called supernodes are limited to a max of 21 nodes. These 21 supernodes have no fixed owner and can change during a period of 90 days. At the end of the 90 days(quarter) re-election takes place about ownership. The re-election is based on the top-20 of highest accounts in BGG token holding position.

BGOGO
BGOGO landing page

Supernodes have a very important role in the ecosystem of the Bgogo cryptocurrency exchange. One important role the supernode has is listing of new coins on the exchange. This is called “One vote, One listing” authority. Another role they have is to do the KYC(Know your customer) of every new user which wants to register on the exchange(this is optional). Initially, each supernode has a holding of 500 amount of ETH.

So what is this BGG token all about? BGG is the platform token which participates in the BGG trading system. It’s an ERC-20(Ethereum platform) token and fixed number of 10 billion BGG will ever be created.

BGG ranking
Ranking of BGG on Coinmarketcap

What is very interesting in its trading platform is its rewards system. In total 50% of BGG token supply is reserved for rewards over a trading period of 4 years. The reward system is on a daily basis and is limited. To be able to get the rewards users on the platform to have several options:

  • High frequency trading
  • Holding positions of BGG
  • Holding periods of BGG tokens

In this table the possibilities for earning rewards

Probability rank BGG HP 2x rewards chance
Tier 1 0-299999 45%
Tier 2 300000-2999999 50.5%
Tier 3 3000000+ 52%

Every user has a daily cap of $50000 in trade volume to avoid malicious manufactured trading. Once the daily cap is reached, traders will not be able to receive extra BGG tokens until the following trading day starts. Also after every 24 hours, Bgogo starts a buyback program and uses the revenues of the trading commissions to repurchase BGG tokens. These tokens will be sent to a public address and will be burnt.

In my opinion, this reward system used by the exchange is quite unique and makes BGG token of all the exchange tokens an interesting token to invest. Also holding coins on the exchange will be rewarded which is also a pro. At the time of writing the price of one BGG coin is $0.002925 which is less compared to the initial ICO price of $0.00317.

BGG token
Since the start of March a stunning bullrun for this BGG token




KuCoin

KuCoin is a relatively new player in this young market of cryptocurrency exchanges where users can trade digital currencies. Although China has a difficult policy towards cryptocurrency exchanges their headquarters are based in Hong Kong. This difficult climate towards cryptocurrency exchanges doesn’t affect the business model of KuCoin much because they’re aiming at foreign markets. Back in 2013, the founders started with setting up the foundation by making a technical implementation of the trading platform. Later on, in 2017, the founders finished this work and made the platform available for the public. As of writing the platform ranks at position 70 on the list of exchanges which is based on trading volume for the past 24 hours.

Ranking of KuCoin exchange
Ranking of KuCoin exchange on Coinmarketcap

On their website, KuCoin claims to be “the exchange for the people”. Their strategy is to attract new people with very low trading fees and is claiming that cryptocurrency exchanges shouldn’t benefit too much. Instead, they want to share the profits among users of the platform. To do this they made shares available on their platform which is called KuCoin shares. All trading fees collected on the platform should go to the holders of these shares. These shares are digital tokens and users can benefit from the growth of the platform.

Exchange tokens and KuCoin

Since the beginning of the platform back in 2017, the number of users has grown rapidly. One of the main reasons for this growth was the KuCoin referral system. This system allows users to invite friends to come and trade on the platform. For each trade the new users made the referrals are rewarded with a portion of the trading fees. At the end of January back in 2018, when the total crypto market was overhyped, KuCoin suddenly stopped this referral action because they couldn’t handle the rapid growth of users. The performance of the exchange deteriorated because they could not handle very high trading volumes.

What are Kucoin Shares

KuCoin shares are also digital exchange tokens which are called native tokens. These tokens are only available for trading on their own trading platform. A total of 200 million shares are in circulation, of which 70 million to the founders, 30 million into investors and the remaining 100 million are available for the public. For founders and investors, the shares are ‘locked’ for a certain period until this is expired. Investors have to wait until 2019 and founders have to wait to 2 September 2021. The main reason for this is to reduce the chance of large dumps in KuCoin shares on the platform.

Kucoin shares
Kucoin shares ranking on Coinmarketcap

The KuCoin holders will receive a payment on a daily basis. These payments are trading revenues and the more shares you hold, the more you get paid. Currently, KuCoin pays out 50% of all fees to the people who own shares. Secondly, 40% of the fees go to people who have invited others to the platform (referral) and the remaining 10% remains with KuCoin itself. It is therefore clear that there is a lot of distribution among users.

KuCoin shares graph
KuCoin Shares is soaring since the start of March




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