Coinspeaker Binance Highlights Four Crucial Industry Observations from Token2049 Event in Its New Report
Leading cryptocurrency exchange by daily traded volume and globally registered users Binance Holdings Ltd has published its latest market report based on its observation from recent crypto events. According to the Binance report, market participants have raised four main key concerns that must either be addressed or looked into to ensure safer investments ahead.
Moreover, the ongoing crypto regulations in different jurisdictions have raised concerns over investor protection, which is challenging due to the underlying complex infrastructure. Furthermore, more investors have reserved their funds for alternative markets until certain conditions are reached in the crypto space.
High Valuation in Some New Crypto Projects
According to the Binance report, most investors are largely concerned with the high valuation of some new crypto projects that have launched with low circulating supply. Essentially, the report highlighted that some new crypto projects at their Token Generation Event (TGE) have a high market cap, almost similar to established projects, but a very low circulating supply.
As a result, the projects tend to drop in value as early investors dump to the small secondary market in the subsequent token unlocks.
Centralization Risks
Despite the crypto industry’s popularity due to its decentralized networks, a recent study suggests that some crypto projects have a high concentration among the top holders.
For instance, some meme coin projects have early adopters, who are mostly developers and insiders, holding the majority of the tokens.
Interestingly, Binance noted that some crypto projects have inflated their token holders through dubious practices. Furthermore, on-chain data shows that transactions of the top account holders of some crypto projects are highly interconnected, thus indicating ownership of a single entity.
The high centralization of some crypto projects poses a threat mostly to governance, resulting in low community engagement.
Projects Transparency on Funds Expenditure
While most crypto projects, which have achieved higher decentralization aspects, use DAO to manage funds, Binance noted that investors are concerned over low transparency in expenditures. Binance noted that most investors are inclined towards projects with more financial disclosures.
For instance, Polkadot DOT $4.05 24h volatility: 2.5% Market cap: $5.75 B Vol. 24h: $214.67 M has been under significant market scrutiny after its recent financial disclosure revealed high spending on non-performing marketing efforts.
The Ethereum Foundation has also been involved in several ETH sell-offs worth nearly $10 million year-to-date. However, the firm has revealed that the funds are meant for salaries and grant financing.
“Greater transparency in treasury fund usage fosters responsible financial management and encourages active participation from governance token holders. We should strive to make detailed fund disclosure the norm,” Binance noted.
Rebrands
Over the years, different crypto projects have rebranded to appeal to new investors. The rebranding can include the name of the company or their native token. For example, Polygon network recently rebranded its native token from MATIC MATIC $0.37 24h volatility: 1.6% Market cap: $1.00 B Vol. 24h: $7.97 M to POL POL $0.37 24h volatility: 1.9% Market cap: $2.81 B Vol. 24h: $92.89 M . Additionally, Terra Luna network was rebranded to two networks after the major collapse in 2022.
However, Binance noted that investors are concerned with projects that rebrand to obscure certain actions.
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Binance Highlights Four Crucial Industry Observations from Token2049 Event in Its New Report
