- Binance has noticed the low-float token trend and will limit listings based on a new rule set.
- Venture-backed projects are entering the market, often with a low float.
- VC funding returned in Q1, creating a new challenge for centralized exchanges.
Binance issued a new list of rules for adding and supporting new projects. After a boom in new token generation and listing several high-profile meme assets, Binance is reassessing its rules. Binance also supports projects with clear utility and a plan beyond launching a meme token.
New listings have boomed during the latest bull market, attempting to capture the hottest new projects. Some have proven successful, quickly drawing in liquidity. Kraken and Binance are still ready to add new tokens in various trading tiers, but are careful to admit the right type of crypto project.
Binance and Kraken aim to standardize and accelerate their listing process. In the past, Binance has delisted multiple assets but has decided to be liberal about onboarding tokens. A new project listing ultimately rests with Binance, with all projects required to comply with the new listing form.
Binance to Protect End Buyers From Selling
One of the major guidelines for new Binance listings is that tokens must have a wide distribution and very few allocations outside the community. New projects are already applying under these rules.
Startups have sold tokens to the community but still have incentives for developers and VC investors. This has led to market dumping, even with a vesting schedule spanning a few years.
The listing pages will also include the total history of the project, especially the tokenomics. This will allow potential buyers to have all the information in one place to make informed decisions. One problem for Binance is projects launching with a small float and a significant valuation, which hides the potential Fully Diluted Valuation (FDV).
These types of projects get caught up in hype and make big promises, but they can’t sustain their initial price when too many people jump in. Another reason for small community allocations is a renewed interest in crypto startups on the side of venture capital buyers. This leaves projects with a small user pool but significant “whale” wallets belonging to funds and VCs.
Low Float Tokens Found Even Among Top Listings
Only 24.7% of top blue chip tokens are fully diluted. Large-cap coins and tokens are more secure, where 54% are fully diluted.
Among newer launches and high-profile tokens, a few stand out for having a small float. Worldcoin (WLD) has the smallest correlation between market capitalization and fully diluted value, followed by Cheelee (CHEEL), Starknet (STRK) and Saga (SAGA). Those four are also the lowest-float cryptos, with plans to release new coins over the years.
The meme coin boom has diverted some funds from those low-float assets. The crypto community has been skeptical of some of those projects, dubbing them “VC Coins”. Despite the volatile nature of meme assets, their power lies in building a community and wider distribution.
VC Inflows Recover During Bull Market
One of the reasons for low-float, high-valuation listings is the recovery of VC funding for crypto projects. This leads to startups that sound good on paper, have solid teams and significant financing, but have set aside a large portion of their tokens for early backers, funds and other “whales”.
The projects that won funding during peak market times in March 2024 are already trying to gain listings and liquidity. Investment activity is picking up, and is spread across the most common asset classes, including NFT projects.
Some investments come from crypto insiders, who are also trying to turn over their wallets and gain new value. VC funding has flowed into all major trending token classes, with DeFi and AI at the helm and data services. Funds are also flowing back into gaming, intending to revive play-to-earn with a more sustainable model.