The economics of cryptocurrency exchange coins

The economics of cryptocurrency exchange coins

In this post I shared my view about native exchange coin like Binance BNB token, and whether it makes sense to use it to pay for trading fees or not.

What are cryptocurrency exchange tokens/coins

Cryptocurrency exchange tokens or coins are digital assets that powers the utility of a cryptocurrency exchange or incorporated 3rd party solutions.

A good example is; the BNB token of Binance platform(the world largest cryptocurrency exchange); the KCS token of the Kucoin cryptocurrency exchange; the Huobi Token of the Huobi Cryptocurrency exchange; and Uniswap token of the Uniswap decentralised exchange for crypto.

The main purpose of this native crypto exchange tokens

The major use case of this crypto exchange token is to pay for fees within the exchange platform. They can also serve as voting right or use in crypto payments.

Ordinarily, this coins tend to appreciate in price overtime if the exchange increases in userbase and trade volume. This is because the tokens get used more and more often. That is there is steady demand for it in other to access some features on the exchnage platform.

Such features include discount on trading fees and access to bonuses and free coins.

Let’s look at the discount offer closely. Binance for example offers 25% discount on trading fees if you pay with their token (BNB). However, I recently realise it’s good to just ignore the discount, hold onto your BNB and pay your fees with dollar.

This is mainly because the BNB will appreciate overtime and dollar will not appreciate.

READ  15 Ways You Can Use The Binance Coin(BNB)

In other words, the amount you will use to pay for fees in BNB now will increase in dollar value in the futures but the dollar you pay for fees will never appreciate.

Or what do you prefer?🤔 To pay with BNB now and get 25% discount or pay with dollar and watch your BNB increase in value?

I will leave you to decide for yourself 🤠.

Bye for now.

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