The cryptocurrency and blockchain space first came to the fore out of the need to bypass gatekeepers of the traditional financial industry. So far, Bitcoin has pioneered an entire industry of digital currencies that champion the decentralization of financial services away from banks. It’s ironic how the industry is increasingly becoming centralized with cryptocurrency exchanges now acting as the gatekeepers to the entire industry. Nowadays, instead of launching ICOs on Ethereum or other rival platforms, prospective token creators are going directly to exchanges. Initial Exchange Offerings (IEOs) are increasing in popularity as blockchain startups seek to have their tokens listed on major exchanges.
For that reason, exchanges like Binance and Liquid with a huge pool of users are capitalizing on the trend by charging exorbitant listing fees. Although there are exchanges that genuinely base their token listing criteria on merit and not price, a majority of exchanges charge a listing fee that is tied to the size and popularity of the exchange.
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Binance for instance supposedly charges a listing fee in the tune of millions which is about the same as what the NYSE charges to list shares on the stock exchange. This level of control gives exchanges the power to act as middlemen of the crypto world with the power to legitimize or block any project. The recent report of the CFTC blocking Ledger X is a clear example of how crypto exchanges can stagnate with high barriers of entry controlled by industry gatekeepers.
Are decentralized exchanges the solution for token creators?
Decentralized exchanges have in some way offered token creators some reprieve. They make it possible for startup projects with minimal liquidity to get listed on an exchange and avoid paying high listing fees.
However, most DEX platforms lack stop-loss, lending and margin trading options that are common in centralized exchanges. Furthermore, popular DEX platforms such as IDEx come with token review criteria that can disqualify certain tokens. This brings to the fore the same problems of a CEX.
Also, while the top centralized exchanges can offer liquidity in the tune of billions, DEXs platforms can only manage to offer liquidity approximately up to $3.2 million. That’s why DEXs have limited options for token creators looking to scale their projects. Their low liquidity leads to low trading volumes limiting the market reach for token creators. Also, the user experience of most DEXs is still a work in progress.
Either way, DEXs do not eliminate the bottlenecks that come with a few centralized exchanges controlling the industry. For companies that want the benefit of an exchange without the barriers to entry, running a do-it-yourself exchange is the best option. However, even this solution requires funding, legal counsel as well as partnerships with payment processors. In addition to the high cost of starting from scratch, this process can take a long time.
DIY exchange kits
There are software solutions that make it possible to launch your own exchange in a day. For example, The HollaEx Kit is an open exchange software toolkit from bitHolla allows token creators to launch and run their own global exchange. Since there are no expensive startup costs that would otherwise be spent on getting listed.
As a do-it-yourself launch kit, the HollaEx Kit gives you the capacity to customize the user interface not to mention the capacity to create crypto wallets, trading interfaces, and an admin control panel. You can also set up your exchange with a reward system as well as other interesting trading rules to fit your project.
Going forward for token creators
The initial design of the blockchain space was one that promoted the freedom of independently run projects to participate in the global financial industry and the IEO trend has turned “exchanges intro gatekeepers” that qualify companies. Is this right or wrong?
With that being said, to maintain decentralization while preventing exchange platforms from introducing barriers to entry tools like is possible for anyone to launch their exchange platforms. Now, anyone can sidestep exchange listing fees and create a new brand with their token launch.