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Change tokens profit as centralized exchanges battle with DeFi platforms

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New inflows from institutional and retail investors into the cryptocurrency market have resulted in bull market conditions for many top tokens, from blue chips like Bitcoin (BTC) and Ether (ETH) to newer DeFi projects like AAVE and Synthetix (SNX).

Exchange tokens are another easily overlooked subsector of the market, but they performed exceptionally well in 2021 as an increase in trading volume results in a larger pool of fees to be levied when the exchange’s native token is used for settlement . Native exchange tokens are also typically used as a base pair for funding new listings and token buybacks.

Here are three of the top performing stock exchange tokens in 2021 that continue to see upside potential as new investors flock to the market.

Similar to CryptoKitty users in 2017, the decentralized financial community has found that the main downside to increasing usage of the Ethereum network is high gas fees and long transaction times.

As a result, centralized exchanges and their associated native tokens have renewed interest as new features like staking, income farming and collateralization allow investors to benefit from holding their assets. These new offers also allow investors to take part in DeFi-like offers without worrying about inconsistent losses, and they get access to the latest coin lists.

BNB / USDT

Binance Coin (BNB) saw its price break to a new high of $ 349.13 on February 19 as the highest-volume exchange continues to develop both its centralized and decentralized exchange functions, as well as other upgrades to the Binance Smart Chain.

BNB / USDT 4-hour chart. Source: TradingView

Several DeFi-related projects have been launched in the past few weeks, including Venus (VNS) and Linear Finance (LINA), which were launched at the BSC and use the BNB token to pay transaction fees on the network.

Binance also offers an ever-growing list of “investment products” that users can use to lend their tokens to the exchange pools in order to receive different return opportunities depending on the lock period and token demand.

Popular coins are quickly being added to the growing list of tokens with options or futures trading features, offering something to both dedicated community members and pessimists who would rather take the chance to sell newly listed assets.

The dominance of trading volume and the benefits of the first mover advantage suggest further upside potential for the Binance ecosystem and the BNB.

The constant expansion of Binance and the active project incubator as well as the Binance Smart Chain are intended to call into question the dominance of Ethereum in this sector. Therefore, there is still a high probability that the NBB could extend recent gains.

FTT / USDT

Traditional financial and cryptocurrency markets are slowly starting to bring together and develop products for all types of traders. In 2020, futures exchanges also became increasingly popular and their trading volume rose steadily to new highs every week.

Following the US government’s crackdown on controversial BitMEX futures exchange, the door has been opened to a newer, more community-focused option to fill the void.

FTX Token (FTT) is the exchange token for the FTX cryptocurrency exchange, which started in summer 2019. For much of its first year, FTT traded under $ 2 with an average trading volume of $ 2 million as the exchange worked to establish itself and attract new users.

The exchange saw an increase in activity in 2020, which coincided with an increase in financial transaction tax trading volume, as well as price.

With the expansion of the platform, additional functionality has been added to the token, which now includes fee discounts, stakeout and a “buy & burn” mechanism that can be used to reduce circulating FTT supply and increase token value.

FTT / USDT 4 hour chart. Source: TradingView

Since December 11th, when FTT was trading at $ 4.12, an increase in purchase volume that peaked at $ 270M on February 19th has pushed FTT to a new record high of $ 35.01 as the The cryptocurrency community is quickly becoming the focal point for derivatives.

KCS / USDT

KuCoin Shares (KCS) was a late bloomer in this bull market, maintaining a relatively flat token value until a sudden surge in trading volume in early February helped push the KCS price from $ 1.19 on February 2nd to a recent high of $ 3.99 raise February 19th.

Cointelegraph Markets Pro’s VORTECS ™ data found an optimistic outlook for KCS on February 18, when it peaked at 66 less than 24 hours before the price breakout.

Cointelegraph Markets Pro – VORTECS ™ Score (green) vs. KCS price

The VORTECS ™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points such as market sentiment, trading volume, recent price movements and Twitter activity.

A scroll through the project’s Twitter feed reveals that on February 4, the biggest announcement from the exchange was the listing of the popular blockchain-based video streaming platform Theta, which has been hard to come by for U.S. residents.

KuCoin also offers a growing list of tokens available to trade in derivatives, as well as various ways to make money by staking or providing liquidity. The fees generated by the platform are distributed to token holders who hold their KCS on the exchange.

DeFi hype is overshadowing the exchange of token prizes

DeFi may dominate the conversation in the cryptocurrency sector right now, but key issues, including gas fees, remain a barrier to widespread adoption.

While the introduction of Layer 2 solutions may alleviate this problem somewhat, concerns about liquidity across separate blockchains continue to be significant barriers to a smooth and cost-effective trading experience.

Many who chase the DeFi hype fail to realize that popular token listings and lower trading fees have sparked a revival in the use of central exchanges.

This results in a larger user base doing more transactions, resulting in a surge in trading volume and a healthy rise in the price of underlying exchange tokens such as BNB, FTT, and KCS.

Centralized exchanges still make up most of the trading volume, and this doesn’t seem to be changing anytime soon. While decentralized exchanges like Uniswap and SushiSwap are gaining traction and starting to gobble up the market share of centralized exchanges, they still make up only a small fraction of the total trading volume in the cryptocurrency market.

The battle between exchanges continues to intensify and as long as it does, the increased inflow to exchange tokens could lead to future upward moves.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading step is associated with risks. You should do your own research when making a decision.

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