Binance starts initiative against inflated token valuations
Exchange seeks projects with strong fundamentals
Initiative aims to protect retail investors
Binance, the world’s leading cryptocurrency exchange, has unveiled a new initiative aimed at fostering a more balanced and equitable crypto market environment. The exchange seeks to address a growing concern: token launches with excessively high Fully Diluted Valuations (FDVs) and limited initial circulating supplies.
This strategy involves some projects releasing a small number of tokens at launch, creating an illusion of scarcity to inflate the price. These projects often hold a much larger reserve that could be released later, potentially exerting downward pressure on prices for retail investors.
In response, Binance seeks to empower promising small and medium-sized projects with sound fundamentals. The exchange outlined its proactive approach in a recent report titled “Low Float & High FDV: How Did We Get Here?”
Binance is now inviting applications from high-quality teams and projects across various sectors with moderate valuations to participate in its listing programs. These programs encompass direct spot listing, Launchpools, and Mega Drops.
Specifically, Binance is seeking projects that:
Allocate a significant portion of tokens to community users.
Maintain a reasonable token float at Token Generation Events (TGEs).
Limit allocations to non-community users.
Demonstrate a strong product-market fit (PMF).
Possess a self-sustaining business model.
Have a minimum viable product (MVP) in place.
Ideally, showcase innovation in technology or design.
Additionally, Binance prioritizes projects with:
An organic user base.
Sustainable user growth.
A commitment to responsible regulatory and compliance practices.
Potential benefits of this initiative include more justifiable valuations and token allocations, a better alignment with retail investors and the broader community, and increased exposure for promising projects through Binance’s extensive platform.
Binance’s new listing initiative marks a significant step towards fostering a more mature and transparent cryptocurrency market. By prioritizing projects with strong fundamentals and user focus, the exchange aims to curb the prevalence of inflated valuations and safeguard retail investors.
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