The latest data from CoinMarketCap indicates there are over 450 exchanges and over 17,000 tokens. Centralized and decentralized exchanges allow users to swap major cryptocurrencies such as BTC, ETH & BNB, upcoming DeFi projects, and even obscure meme coins. More and more token projects are being created daily, and regardless of the project size, utility or exposure, all these projects want the same thing - to list a token on an exchange.
Just a few years ago, exchanges were chasing after the promising projects to list them, but as there are more projects now and only a handful of top-tier exchanges, the game has changed, and usually, it's the projects that have to do the chasing now.
Successful exchange listing requires some work and thought-through strategy. So let's dive deeper into token listing strategies on Centralized (CEX) and Decentralized (DEX) exchanges and explore which of them would be the right choice for your project.
Listing on Centralized Exchanges
Centralized exchanges provide a user-friendly platform that facilitates the purchase and management of digital assets. The exchange acts as a middleman who conducts and oversees trades and handles the assets. Due to the fact that network nodes do not need to be updated in real-time, the number of orders and transactions is much greater than those ones on a DEX. In addition, CEXs are governed by regulations and have rigorous know-your-customer (KYC) practices in place - the user must provide personal information and verify through passport or ID uploads.
However, while listing on a CEX can seem the obvious path for a new project to grow and gain more attention, the process and requirements can be a challenging hurdle to overcome.
Listing on Decentralized Exchanges
The world of DeFi offers multiple platforms for projects to list their token way easier.
DEXs, like PancakeSwap or Uniswap, do not require users to provide any personal information or verify themselves, nor do they provide any custody for the tokens. There are no third parties (authorities or financial regulators) monitoring or enforcing rules on the exchange. Transactions take place through a decentralized wallet (with many decentralized wallets across multiple blockchains available). Since limited users' data is required to execute a trade, DEXs are entirely anonymous.
Unlike centralized exchanges, DEXs allow anyone to list a token and provide liquidity to a token pair. Whereas anyone can go onto PancakeSwap and pick any two tokens that they own and allow other users to swap between that pair.
In a rapidly growing DeFi space, DEXs have become the first stop for many young token projects with a good community.
Listing your project on an exchange is an important step but may be a lengthy process if you don’t have a listing strategy in place. Here are a few points to consider before listing a token on an exchange.
1. Identify your options
Do the research and identify the best exchanges that would fit your projects, as not all of them are equal. Binance and FTX are not the same as Bitrue or Bittrex, and the same applies to decentralized exchanges as well. Just because your project has a lot of support and raised initial capital does not mean that Binance would welcome your token with open arms. Top exchanges consider different factors behind the token, including the number of wallets that hold the token, current trading activity on the network, project credibility, etc. Listing your token on various exchanges that fall under different tiers would be a good option to start with, as each exchange has its own features, connections, and ultimately types of tokens.
2. Plan ahead and build a network
Regardless of if you have done your token pre-sale, you want to be in contact with various exchanges as soon as possible, create these connections and relationships and stay up to date with them.
3. Take care of the legal set up and make sure the tech is safe
Ensure that the team is trustworthy and the technology is secure so that it is not vulnerable to hacks among future bugs and problems. Most exchanges will require projects to go through a KYC procedure to ensure that all measures are in place. These can include multiple meetings, audits and background checks to ensure the legitimacy of the project wishing to be listed. Ensure that you have all your paperwork in order and be prepared to make adjustments when needed as soon as possible.
4. Build up your community
Community and token holders are an essential part in negotiating a listing. Having strong community support benefits token liquidity and market sentiment, and definitely adds credibility and leverage to the token project. That becomes especially important when you decide to list on a decentralized exchange, as your community will become the number one liquidity provider.
5. Partner with a market maker
Among many reasons to work with market maker, this partnership helps you to get a token listed and keep it liquid on an exchange. After going through the costly due-diligence and setup process, no exchange wants to be stuck with a dead token with no trading activity going on. Approaching an exchange with a market making partner in place shows that you have thought about liquidity and understand its importance. Projects that have very low liquidity will just be delisted in a few months. Usually having a market maker is a non-negotiable condition for the token to get listed on a major exchange.
Such partnership becomes even more crucial since negotiations with CEXs can be challenging. Market makers are often familiar with the popular exchanges and have past relationships, they can support you in networking, help at different negotiations stages and provide assistance when needed.
6. Focus on building, not talking
We suggest that projects shouldn't overpromise and not deliver. Focus on building your project before bragging about all the big plans to list on major exchanges, as this is not entirely in your control, and many of the top exchanges won't easily list tokens of early-stage projects. Instead, projects should continue to provide their community with the use case behind their token and continuously aim to build the tech and keep up the hype while maintaining high levels of trust and engagement. Thus, when the time comes, the token is ready to be listed on a top-tier exchange.
