Exchange Tokens by Market Cap and Volume

We use the term “exchange tokens” to refer to various crypto tokens that are created by cryptocurrency exchanges. The concept of exchange tokens was first introduced by Binance in 2017. Often, exchange tokens don’t have their own blockchain but are instead issued on another platform, for example Ethereum.

Typically, exchange tokens will provide several benefits to users who hold them on the exchange in question. For example, users that hold BNB on Binance enjoy discounted trading fees and can also access perks such as initial exchange offerings (IEOs). Tokens issued by other exchanges, for example OKEx and Huobi, offer similar benefits to users of the respective exchange.

While decentralization is an important value in the cryptocurrency community, exchange tokens are not decentralized in a few important ways. While they can be transacted with freely on their respective blockchains, exchange tokens are closely tied to a single business entity (the exchange that’s issuing the token). If the exchange fails, it’s very likely that its token will lose value as well.

Some users view buying exchange tokens as a proxy for investing in a cryptocurrency exchange business. While this idea does have some merit, it’s important to note that exchange tokens usually don’t confer any legal rights to their owners – they should not be viewed as a substitute for owning shares in a business.