Comprehensive Guide On Exchange Token
Cryptocurrency Exchange platforms always issued assets called exchange tokens. This type of token helps the user to get access to trading fee discounts, voting discounts, and bonuses that a non-token holder cannot get access to.
Other groups that need to hold exchange tokens too are the investors because of the market value.
The token can be very difficult to understand for new investors, this is because some large exchanges whether centralized or decentralized have and operates with a token.
This article will give information on how exchanges work in crypto
Meaning of Exchange Token
It is a platform that facilitates exchange storage, swapping of currency, and trading process. It is a digital asset that is managed and can also be issued by a cryptocurrency.
These platforms can be categorized into two: centralized and decentralized.
Decentralized platforms are those that allow trading or transaction to be performed through Smart Contracts, Smart Contract transactions are those that do not require a third party.
It is built in a way that mathematical code will perform each transaction when it is agreed upon and sent to the blockchain.
Centralized exchanges are those that are owned by private organizations, they provide transactions between two people in the crypto space, and they serve as intermediaries. Examples of these are Binance, OKX, and KuCoin.
The unique function of the two is that centralized exchange operates on the level of third-party activities, while decentralized exchange does not operate with third-party intermediaries.
Read Also: All You Need To Know On Decentralized Finance (DeFi)
How Native Token is given By Exchanges
One of the common ways of issuing tokens by an exchange is through Airdrop.
This is done when the platform releases some portion of the token to participants that fulfill their rules.
They are different methods of giving out tokens, the exchange involved may release their token for public sale, at this point investors that are interested can buy and hold it early, early buying is always given at a discounted price.
Regardless of the method used by exchangers to distribute their tokens, the good thing is that the two parties involved get to benefit from it. The holders benefit from the gas fees and buy the token at a discounted price.
The crypto exchange benefits from it also because they will have people visiting their platform often.
Types Of Exchange Tokens.
There are different types of tokens, few of them will be discussed in this article.
Uniswap (UNI)
This is a decentralized platform that was launched in 2018, it deals with trading of crypto assets in Smart Contract.
Uniswap was released in 2020 through airdrop, it functions as an exchange Token and also as a governance token. This means that few of the trading fees users can vote to drive future protocol.
Binance Coin (BNB)
This is a native token for the Binance platform, it is considered to be the third largest platform trading on Bitcoin and Ethereum.
The BNB token was released in 2017 during an Initial Coin Offering (ICO). Early suppliers that bought the coin helped to raise its value.
At the time of the launch of Binance, it did not have its Blockchain, rather it lived in Ethereum Network, it was on Ethereum Blockchain till 2019 when its Blockchain was built and all the assets migrated.
As a user of Binance exchange, you get a discount when you pay with BNB, you can also use BNB to unlock new Binance token sales and pay fees in the Blockchain.
The Advantages Of Buying Exchange Token
Read also: Beginners’ Guide On How To Navigate Through Binance Exchange App
Some of the benefits of buying Binance Exchanges will be outlined.
- Governance Right
This is the right that a user has when he buys a crypto coin, the right allows a user to vote for suggestions that can influence the future of the exchange.
To hold exchange tokens for voting is one of the sought-after features in cryptocurrency projects that function in a decentralized autonomous organization DAOs, this is because the more token you hold the more you have voting power.
- Speculation
The exchange token also gives a channel for their users to Speculate on the growth of the business. This is because most exchanges with tokens are private firms.
- Low Trading Fee
One of the benefits of buying crypto toke is the benefit that comes with it, if a user buys a token they have access to a discounted trading fee on the platform they bought it from.
Though holders of other tokens can have access to features on the exchange, those that benefit more are those that hold the token of the traded platform.
Step To Buying Exchange Token.
Different platforms suggest different ways in which assets are bought, some of the steps that are important in buying exchange tokens are as follows:
- Create and verify your account, by undergoing the know your Customer (KYC) process
- Open the exchange.
- Select the crypto you want to buy
- Select the amount of the crypto you want to buy.
- Insert your bank details and credit card and confirm
- You will receive a notification about your wallet.
Places to buy Exchange tokens.
The best and easy to buy a token is to get it from the platform that launches it.
For instance, you can buy BNB on Binance and HT on Huobi, this is because Binance is the exchange that launches BNB and Huobi is an exchange that operates HT.
However, this token can also be traded in other exchange, what this mean is that you can buy BNB in Huobi and HT in Binance.
Final Note
The article attempt to answer the question of Crypto tokens and their Exchanges.
The readers are admonished to benefit from the information provided in this article.
As the world of cryptocurrencies grows more exchanges are coming up as well as more tokens are being created.
Careful attitude should be portrayed towards which exchanges to choose so that you don’t fall into the temptation of losing your asset.
Meet Daniel Abang: Crypto guru, content creator, and analyst. With a deep understanding of blockchain, he simplifies complex concepts, guiding audiences through the ever-changing crypto landscape. Trusted for his insightful analysis, Daniel is the go-to source for staying informed and empowered in the world of cryptocurrency.
