TLDR:
- More than 80% of tokens listed on Binance have declined in value over the past six months.
- Top-tier venture capital firms are using Binance’s dominance for exit liquidity, leaving retail investors with limited gains.
Full Article:
A recent study revealed that over 80% of the tokens listed on Binance have declined in value over the past six months. Many of these tokens were backed by top-tier venture capital firms like Paradigm, Binance Labs, Coinbase and others. Binance’s dominance and liquidity are being used by insiders to exit investments, leaving retail investors with limited gains.
The study by crypto researcher Flow found that out of 31 selected tokens on Binance, only 5 have seen price increases since their launch. These tokens, primarily meme coins or projects without major venture capital backing, have surged individually by over 50% in the past six months.
Tokens backed by top VCs have performed poorly, with some seeing significant declines in value. Binance Labs’ NFP token, Pantera Capital-backed OMNI, and AEVO, supported by VCs including Coinbase, Paradigm, and Dragonfly, have plummeted by about 63%, 52%, and 68%, respectively.
Flow explained that many projects launch at high fully diluted values (FDVs) on Binance, sometimes exceeding billions of dollars, without real users or a strong community behind them. The popularity of Binance’s token listings among industry players has made it attractive for insiders to exit their investments, leaving retail investors with limited gains.
The article concludes with the suggestion that tokens launching on Binance may not be investment vehicles anymore, but instead represent exit liquidity for insiders. Binance’s dominance and high liquidity have made it an easy platform for insiders to capitalize on retail investors’ lack of access to quality early investment opportunities.
Overall, the article highlights the challenges faced by retail investors in the crypto space when dealing with tokens listed on major exchanges like Binance. It emphasizes the importance of due diligence and caution when investing in projects listed on these platforms.
