Do You Want CEX? Why Self-Listing is Perfect for New Projects

• Date Published:
November 1, 2023
Do You Want CEX? Why Self-Listing is Perfect for New Projects
Do You Want CEX? Why Self-Listing is Perfect for New Projects

If only people could buy it. Great inventors always wrestle with this problem. It’s not just about having something people will want, it’s about giving them a chance to buy it. Distribution is everything. In Web3, due the arcane retail infrastructure currently required for decentralised exchange, most average retail users and advanced traders using complex strategies use CEXs to buy, sell, and store their tokens.

It’s easy to see why. Despite fundamental custody concerns, clearly shown in the FTX debacle, CEXs allow for the most fluid, interoperable, cross-chain trading solution - precisely because you’re only ever trading IOUs issued by the exchange itself. This allows all manner of interlaced positions to occur in a smooth, traditional ‘web2’ interface that everyone, from newbies to veteran stock traders, are familiar with. Big new tokens launch on CEXs, and that’s where the price moves that define the market occur - from Bitcoin to the wildest altcoins.

How Easy Is It to List a Token on an Exchange?

As a project leader, then, getting your coin listed on a CEX is often one of the major milestones on the roadmap. You build a brilliant project, grow an organic community, and provide utility that solves a real life crypto problem - something that millions of web3 users would love to validate, support, and hold. Listing should be easy, right?

No, it isn’t. There’s a reason even major cryptocurrencies in the top 100 are not listed on every major central exchange. There’s a reason that many users have to use multiple CEXs just to get all the tokens they want. There’s a reason shopping for altcoins often means ditching CEXs altogether. In short, CEXs put high barriers to entry to listing on their exchange, and demand much more than simple trading profits on your organic activity around your token.

Although applications are open, a major exchange like Binance won’t commonly reply to applications the way a publisher doesn’t respond to every college novelist. You need an intro  and, whether you have one or not, you will have to fill out byzantine form after byzantine form detailing every inch and aspect of the project. You will be KYC’d, and everyone in your team will be known to the CEX.

Plus, even if someone introduces you, projects must have high standards. Good technology is not enough. They want huge, active communities that they can leverage to build hype. They don’t need to take chances, and they want the best. That way, it’s easier for them. They know enhancing distribution to your token will likely boost the price.

Should You Have CEX?

So, getting listed on an exchange is hard, but it’s surely the right step for any project to take?

Well, not necessarily. Yes, ‘wen Binance’ is a meme because, as the current largest crypto exchange, a listing on Binance often propels token prices upward due to the high levels of liquidity on the exchange. Listing on a major CEX is seen as the holy grail for many young projects - but should it be? A CEX listing is letting someone else profit from you and your community’s work. That’s no bad thing if the melon gets large enough, but oftentimes with stringent CEX demands - only the project will suffer if only small growth is achieved.

If you’ve been accepted on a major exchange, there are many costs. First, you have to pay a listing fee. Listing fees have been known to run into the millions of dollars. Either you have that cash on hand or, as is more usual and common, the fee is paid with tokens from the central supply for young cash-strapped projects trying to make a difference. This immediately gives an exchange a significant stake in the fate of your protocol. They can, also, delist at will. A small tranche of low volume, perhaps in the space between major dev work on your project, can lead to a callous delisting which can brutally affect faith  in your project, not to mention your token price - even though you were doing the right thing. Listing fees can get particularly traumatic when the CEX continues to demand payment to list your product, representing a significant capital outlay just as your project is most vulnerable.

There are also marketing costs, again frequently taken from the central supply, that CEXs demand. Often, these tokens are used for giveaways, and can boost adoption of your project, but it is another cost that the community around the token itself is not in control of. It’s very hard to stay in control of branding when you have to mediate through a CEX, with listing information, branding, links punishingly slow to update and must be done in conjunction with the CEX’s content team.

A further nasty cost, and possibly unexpected, is the need for market makers. Market makers will also need liquidity tokens to help guarantee trading of the token, something which further eats into the ecosystem budgets. Especially since most CEXs will mandate using their specific market makers. And that’s not all. Often a legal review, perhaps many, on your project must be undertaken before listing on a major exchange, which costs $10,000s in legal fees.

An Alternative to Listing on a Major CEX

Listing on a CEX, then, can be something of a poisoned chalice. A huge hurdle that can sap all momentum from a growing and popular project. Many leaders see the green lights and press on with it, but others are seeking a different solution, preferring to manage distribution themselves. It’s easier than ever for projects to use HollaEx’s white label exchange service and create a direct route to market for their token and give their community a chance to invest in their project using a traditional CEX interface.

HollaEx exchanges come with default liquidity for large markets like Bitcoin and Ethereum so that a project’s CEX can offer major tokens to users alongside their own token. Crypto-adjacent services with a loyal customer base can also spin up their own CEX to provide custom trading experiences to their followers.

The Benefits Self-Listing Your Token

For a project, selling their projects token through their own CEX allows them to stay in control. Whether that’s reducing trading fees to zero to create access to their token, keeping more of the profits from trading in-house, having the ability to reward their users, and providing easy fiat onramps that help users buy their token directly, a HollaEx exchange is a one stop shop solution to creating an engaging web3 storefront and rapid distribution model.

As you consider the path of getting your coin listed on a centralized exchange (CEX), it's crucial to weigh the alternatives, including decentralized exchanges (DEXs). While DEXs may initially appear attractive, they come with their fair share of challenges. These innovative platforms, often touted for their autonomy, can sometimes lead to unforeseen complexities. Rather than navigating the intricate and sometimes unpredictable terrain of DEXs, it's worth exploring the merits of centralized exchanges. With CEXs, you benefit from a well-established infrastructure that ensures liquidity, security, and access to a broader user base. It's about achieving your project's goals efficiently and effectively. So, before you dive into the DEX ecosystem, consider the compelling advantages that centralized exchanges can offer.

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