- To foster a healthier and more sustainable crypto ecosystem, Binance, the world’s largest cryptocurrency exchange, urged small and medium-sized crypto projects to address the prevalent trend of low float and high fully diluted valuations (FDV) on Monday.
- The exchange invites these projects to apply for its listing programs, emphasizing the importance of solid fundamentals and sustainable models.
- “We hope to enhance the development of the blockchain ecosystem through our support of small and medium-sized projects with strong fundamentals, an organic community base, a sustainable business model, and a dedicated team acting as responsible industry participants.”
Explore how Binance’s new initiative could reshape the landscape of cryptocurrency startups and their market valuations.
Binance Pledged Support For Projects To Tackle Low Float and High FDV Trend
Binance highlighted its commitment to supporting projects that demonstrate robust fundamentals, maintain an organic community base, and operate with a sustainable business model.
Impact of Low Float on Market Dynamics
The call to action responds to a growing trend in which new projects launch with high market capitalizations but retain a large portion of their token supply locked, leading to low float. On May 17, Binance Research reported that launching with low-circulating supplies has become increasingly common. Limited liquidity at launch causes rapid price appreciation under bullish market conditions. Such price growth is often unsustainable when many tokens are unlocked and flood the market, however.
Over 80% of Binance Token Declined
Pseudonymous crypto researcher Flow noted that 80% of tokens listed on Binance have declined in the past six months since their launch. Flow described these newly launched tokens as “exit liquidity” for insiders who capitalize on the restricted retail access due to the low initial circulating supply.
Conclusion
Despite limited venture capital support, tokens like Ordi have seen huge profits, up over 261% since launch, while memecoins like Dogwifhat have also surged. Retail interest has been a driving force behind the success of memecoins, which operate independently from traditional altcoin markets. Concerns persist regarding the high initial fully diluted valuations of new tokens listed on Binance, averaging over $4.2 billion, despite the tokens’ need for a substantial user base.
