Binance's Token Listing Flaws: Changpeng Zhao's Call for Reform and the Rise of New Crypto Launch Trends
Changpeng Zhao, the co - founder and former CEO of Binance, has openly declared that Binance's token listing process has flaws and has urged for improvements in how centralized exchanges (CEXs) handle new listings.
Cryptocurrencies that manage to secure a listing on major CEXs such as Binance, Coinbase, or Kraken are highly sought - after by investors. CEXs offer substantial new liquidity, which can significantly enhance a coin's price performance post - listing.
However, Zhao pointed out that the current process has major issues, primarily due to the extremely short time between the announcement and the actual listing. In a post on X on February 9, he wrote, "As an observer, I think the Binance listing process is a bit broken. They announce, then list 4 hours later. The notice period is necessary, but in those 4 hours, the token prices go high on DEXes, and then people sell on CEX."
Decentralized exchanges (DEXs) are often utilized by more experienced traders to identify emerging cryptocurrencies before a CEX listing announcement. This announcement typically serves as a short - term buy signal for DEX traders, who then sell the token once it gets listed on a CEX, leading to significant selling pressure.
Zhao's comments came right after Binance listed the Test (TST) token. Despite being initially created as part of the BNB Chain's tutorial, the TST token was picked up by investors as a meme token. According to CoinMarketCap data, the TST token briefly reached a peak market cap of $489 million on February 9, only to plummet by over 50% to its current $192 million. The TST token's name was briefly shown for about one second in a BNB Chain tutorial video for its Four.Meme platform, purely for test purposes. Even though Zhao clarified that the video was "not an endorsement" of the token, China - based influencer communities began promoting it, causing its market cap to skyrocket.
CEXs should list “automatically,” just like DEXs
After the astonishing surge of the TST coin, Zhao concurred that CEX listing procedures require improvement. He suggested that implementing automatic token listing procedures, similar to those of DEXs, could be part of the solution, stating, "I think CEX should list (almost) everything automatically, just like DEX. But I am not running a CEX anymore." Zhao emphasized that his remarks were made as an "outsider" who is "not involved in the listing process" on Binance or other CEXs.
The era of fair launch tokens may replace CEX token listing practices
The decentralized launch of the Hyperliquid (HYPE) token might introduce a "new era" for on - chain fair - launch cryptocurrencies. This comes after the project carried out the most valuable airdrop in crypto history, valued at over $7.5 billion. Vitali Dervoed, the co - founder and CEO of Composability Labs, told Cointelegraph, "The HYPE token launch marks the beginning of the new era between centralized exchange listings and on - chain […] Because HYPE was launched by the protocol on its order book on its own layer 1." Dervoed further added that the token "didn't deploy on any centralized venue" but was launched and fairly priced by the crypto community.
In recent years, concerns regarding CEX listing practices have been on the rise. A Cointelegraph report revealed that as of May 2024, more than 80% of tokens listed on Binance had lost value in the first six months after their debut.