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Are Exchange Utility Tokens the Ultimate Safe Bet?

5 months of randomly selected data from a sampling pool of 18 exchanges is suggesting “yes”.

We’ve all heard of the Binance legend: the platform’s token BNB went from $0.11 in last August to $25.18 in this January, and became the top three exchange 143 days after launching, making it possibly the fastest tech startup to achieve unicorn status. Binance’s success has led to a blossoming of “Platform Tokens”, a specific genre of cryptocurrency which is often used to reward users, enhance platform exposure and increase “stickiness”, or member loyalty. Here we will be looking at the operation models of different platform tokens and their intrinsic value.

Comparison of Platform Tokens

Enlarge & Download at 2018 Platform Tokens Analysis PDF Version

READING THE STATS: The above table provides some core information of 18 exchange/platform tokens. We have taken 8 of them with complete data and compared their respective ICO prices (in USD equivalent) to the average first day price traded for the first five month in 2018, and showed that, prices of the 1 January – 1 May 2018, five months first day prices, on average, are trading at 6.18 times higher than respective ICO prices!

(Note: in our calculations we have excluded the complimentary platform tokens that did not go through ICOs, and excluded the highest sample [Binance, trading at 72.25 times of its ICO price] and lowest [Huobi, trading at 1.45 of its ICO price]).

So the question is: “Are exchange utility tokens a ‘safe heaven’ of all cryptocurrencies”??

Mainstream platform tokens can be broken down into dividend tokens, buy-back tokens and other tokens.

Dividend Tokens

The essence of dividend token is similar to the dividend in stock. A certain percentage of profits from the platform’s administrative or transaction fees are distributed to users in the form of dividends. Examples of dividend tokens: TMC, KCS, DT, BIX, etc. Dividend token is all about profitability, which is closely related to the day-to-day platform operation and trading scale of the exchange. The value of the token is unlikely to increase dramatically, and the dividend model will be adversely affected by governmental regulations.

Buy-back Tokens

The investment logic of the buy-back token is not dissimilar to the “enhanced version” of Bitcoin. Compared to the fixed or constant circulation of Bitcoin, the total amount of a buy-back token will also gradually shrink to the specified value, and like Bitcoin, the token also has some kind of payment function, from settling transaction fee, to purchasing other digital assets or exclusive, “VIP” services on the platform. There is also the tendency of creating a public chain, supporting the industrial application of the platform. The selling point of buy-back tokens is often its innate scarcity. Examples of buy-back tokens: BNB, DEW, HT, BIG, ZB, etc.

Buy-back tokens often have higher intrinsic value than dividend tokens. On the one hand, the platform token can be used as a method of discounted payments; on the other hand, the platform will repurchase platform tokens according to the contract to generate powerful buy orders. Some buy-back tokens also has a destruction, or “burning” mechanism, to guarantee the token numbers in circulation, and maintain the demand in the long run. Therefore, many buy-back tokens are often forecasted to have a bright future. However, since most platforms use their profits for token repurchasing; taxation, financial and legal aspects are factors need to be considered, thus companies with low transparency in their corporate entity setup should be avoided. However

Other Tokens

Besides dividend and buy-back tokens, some platform tokens are mainly used for promotion and loyalty credits. An example is CEX, which has a total supply 150,000,000, with its users holding 30,000,000 and the platform reserving 120,000,000, which doesn’t appear to be a ratio with high investment value.

There is also another type of platform token, which itself is mainly used as products within a closed ecosystem, such as QASH, which is a financial service payment method. This type of platform token has constant issuance, no dividend, no repurchase, and its value is solely determined by its project development.

Summary

On the whole, the better the development of the platform, the higher is the value of the platform token. In addition, due to its inherent destructive nature, repurchase mechanism, platform-specific payment capability and potential of value-exchange with other projects, platform token is a functional and relatively stable type of cryptocurrency. Early investment in a platform token issued by, and backed by a platform with good prospects, is likely to yield considerable long term benefits, along with the sustainable development and growth of the platform.

Disclaimer: The above article is based on subjective perspectives and not an investment advice. Please do your own due diligence before investing in any digital asset.

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The Latest Exchange Token in the Making

XBrick is a global digital asset trading platform, or cryptocurrency exchange, operated under X Blockchain Pty Ltd. headquartered in Sydney, Australia. The XBrick core team members consist of directors and senior executives who have worked at listed companies on the ASX, and renowned Australian family private equity groups. The core team has rich experience in investment banking, finance and senior management from world-class financial institutions.

XBrick is meticulously built by a team of blockchain technology experts, which takes pride in optimizing the experience of global blockchain digital asset transaction. With multi-language support, SSL bank-level encrypted transmission, hot and cold wallet isolation management, multi-layer/ multi-cluster system architecture, high transaction speed of 2 million orders per second, high-performance liquidity-matching engine technology and global AML/ KYC system, XBrick is providing users the most secure, stable and convenient global cryptocurrency trading services.

As the platform token of the XBrick platform, XBC enables token holders to settle transaction fees on the platform at 50% discount. Of the portion of XBC received as a fee by the platform, 20% to 80% will be burned and destroyed directly. XBrick is the first one to initiate this operation model in the industry. This leaves the platform unaffected by taxation and various accounting factors and gives the platform extremely strong token buy-back power, precisely because this does not involve any financial management, the whole process will be as transparent to the market as possible. Under this model, the more deals the platform handles, the stronger the token destruction power is.

The five fundamental functions of XBC:

  1. XBC can be used to settle transaction fees and other expenses on XBrick
  2. XBC is developing its own public blockchain
  3. XBC can be used to purchase privileged services on the platform
  4. XBC is one of the benchmark currencies on the platform
  5. XBC holders enjoy priority access to pre-selected token sale projects in the community

XBrick has entered into a partnership with strategic partner LiquidAlpha, an experienced trading team and developers with more than 10 years of experience in quantitative and high-frequency trading. XBrick and LiquidAlpha have been working together to develop a mature technology that continuously scans and collects transactional liquidity information from all over the world to form a simple, accessible Global Consolidated Order Book (GCOB), and Dynamic Liquidity Providing Engine (DLPE) that provides liquidity under specific market conditions, together these can provide XBrick users the highest liquidity and most favorable market prices.

XBrick is currently advancing awareness through international roadshows in South Korea, Dubai, Canada, Hong Kong, Australia, and other countries. At the same time, XBC will soon enter an early stage of token pre-sale, followed by a public sale. XBrick is expected to become one of the high-potential crypto exchanges with advanced in-house technologies in store, investors could consider early participation in its platform tokens.

XBrick token sale website: https://xbc.xbrick.io
XBrick Exchange website: https://xbrick.io
XBrick Bounty App: https://i.xbrick.io/en
Twitter: https://twitter.com/XBrick_Exchange
XBrick Telegram Groups:
Telegram group (Global): https://t.me/XBrick_GLOBAL
Telegram group (Chinese): https://t.me/XBrick_CN
Telegram group (Korean): https://t.me/XBrick_Korea
Telegram news channel: https://t.me/XBrick_NEWS

Written by: Futurelabs
Translated by: COINS MARKETING

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