Binance’s Call to Action: Small and Medium Projects Key in Tackling Crypto’s Low Float, High FDV Trend
Crypto News- In a recent move, cryptocurrency exchange Binance has issued a rallying cry to small and medium-sized projects, urging them to take a stand against the prevailing trend of low float and soaring fully diluted valuations (FDV) in the crypto sphere.
Empowering Growth: Binance’s Commitment to Sustainable Crypto Projects
On May 20, Binance opened its doors to small and medium projects, encouraging them to participate in its listing programs. The exchange emphasized the importance of supporting projects with sustainable models, underscoring their role in fortifying the crypto ecosystem. In their statement, Binance expressed their vision:
“Our aim is to foster the growth of the blockchain community by backing small and medium-sized projects that exhibit strong fundamentals, foster organic communities, operate on sustainable business models, and are led by committed teams dedicated to ethical practices within the industry.”
This proactive step from Binance seems to directly address the concerning trend where projects debut with inflated market capitalizations, often leaving a significant portion of tokens inaccessible.
Unveiling Trends: Binance Research on Tokens with Restricted Circulating Supplies
On May 17, Binance Research brought attention to the growing prevalence of projects launching with restricted circulating supplies. These projects typically reserve a large portion of their token supply for future distribution. According to their findings, such tokens often experience rapid price surges during bullish market conditions due to limited liquidity at launch.
“However, it’s evident that this price surge is unsustainable once the locked-up tokens are released en masse,” noted Binance.
Crypto researcher Flow, operating under a pseudonym, echoed similar concerns on May 17, revealing that a staggering 80% of tokens listed on Binance have witnessed a decline in value since their debut.
Flow pointed out that many newly launched tokens primarily serve as an “exit liquidity” mechanism for insiders, leveraging the lack of retail access due to limited initial circulating supply.
As of May 2024, approximately $3 billion worth of vested crypto tokens were scheduled to become unlocked. Notable projects like Sui and Pyth Network are anticipated to release over $1 billion in crypto tokens allocated to various stakeholders, including early investors. Based on Token Unlocks and CoinMarketCap data, Binance projected that around $155 billion worth of tokens would be unleashed from 2024 to 2030. The exchange cautioned that this influx of tokens could exert significant selling pressure on the market, exacerbating the situation due to an absence of corresponding increases in demand and capital inflows.
FAQ on Binance’s Initiative for Small and Medium Projects
What is Binance’s new initiative for small and medium-sized projects?
Binance is inviting small and medium-sized crypto projects to participate in its listing programs. The aim is to support projects with sustainable business models and strong fundamentals to help enhance the overall development of the blockchain ecosystem.
Why is Binance focusing on small and medium-sized projects?
Binance believes that supporting these projects can significantly contribute to the growth and stability of the blockchain ecosystem. Projects with sustainable models and solid fundamentals are seen as vital components for long-term industry health.
What are the key criteria for projects to be supported by Binance?
Binance looks for projects that exhibit strong fundamentals, have an organic community base, operate on sustainable business models, and are led by dedicated teams committed to ethical practices within the industry.
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