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Why 70% of ICO Tokens Are Not Exchange Listed and Probably Never Will Be

Why 70% of ICO Tokens Are Not Exchange Listed and Probably Never Will Be

Wednesday, September 12, 2018 IST

“When Binance?” is the refrain from impatient bag-holders in ICO Telegram groups. For investors eager to flip their tokens and move onto the next thing, a major exchange listing is the big event, and the sooner the better. But for beleaguered project teams, with a community to manage, workforce to recruit, and decentralized solution to build, an exchange listing is the least of their concerns. It’s also the most expensive.

Creating a Token is Easy. Listing it is Hard

With the number of global cryptocurrency exchanges now in excess of 250, there ought to be more than enough platforms to support new ICO tokens. But as many of these projects are finding out, obtaining an exchange listing without paying exorbitant fees is almost impossible. ICOs unwilling to stump up risk being left to languish in the shadowlands of low liquidity DEXes. Recent research from ICOrating.com shows the difficulties projects face in getting their token listed on a reputable exchange – and those problems aren’t limited to affording the listing fee.

For one thing, the project needs to have completed a successful ICO in the first place. If their tokens failed to sell out, even with the remainder being burned, demand for the token on the secondary markets will be low and exchanges are unlikely to be interested. ICOrating reports that only 22% of ICOs that completed in Q1 of this year were able to have their token listed. This figure is down 10% on the previous quarter, which is attributed to the fact that half of all ICOs in Q1 of this year raised less than $100,000.

Listing Fees Vary Greatly

Projects that failed to hit their hard cap simply can’t afford an exchange listing, while those that did may still balk at the price. The discrepancy between what exchanges charge is huge, ranging from around $100,000 to $3 million for the largest and most liquid exchanges. (It has been claimed that Binance charges as much as $7 million in some cases.) In fairness to cryptocurrency exchanges, listing a new token isn’t as simple as many traders seem to think.

Among the many tasks that must be performed before a token can be listed is the necessary due diligence to ensure the project is not a scam. Should a token later be discovered to be one, it risks affecting the platform’s reputation, as happened when Centra was revealed to be a fraud, prompting Kucoin and Binance to hastily delist it. Due to the time required to perform various security checks and other administrative tasks, it takes an average of 21 days for an ICO’s token to start trading, ICOrating reports. Some exchanges also insist that the token’s smart contract is audited to check for bugs, which is understandable given their prevalence and potential severity.