Cryptocurrency exchange tokens such as the Binance Coin (BNB), Huobi (HT) or KuCoin (KC) began to slowly emerge in mid-2017. Where they were to serve as service tokens in order to provide certain benefits to users of the crypto exchange. Are these tokens a good investment?
Utilization of cryptocurrency exchange tokens
Cryptocurrency exchange tokens, created for exchanges, can be used as a good way to reward market makers who create market liquidity. They can be used effectively to reduce trading fees or increase your portfolio. Different crypto exchange also use their tokens for other functions.
The best-known and most successful exchange token is probably the Binance Coin (BNB), which has been a big win for the holder in many ways, as its price has risen significantly over the past few months.
Every year, the BNB offers a declining discount for all users who use the token as a way of paying business fees. Huobi, in turn, offers a graduated discount on trading fees for holders of Huobi Token (HT).
The common advantages of these tokens are also greater claim for airdrop cryptocurrencies or streamline portfolio management.
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Risks associated with tokens
Although cryptocurrency exchange tokens have gained great popularity with a small group of investors for their return on investment, there are a number of risks to them. Compliance is a major challenge, as these tokens are only marketed as auxiliary tokens.
An additional risk arises in security, as hacking a given exchange can create confusion in the cryptocurrency exchange tokens. Another risk is the rapid change in popularity. If the popularity of the crypto echange changes, the price of the token could see a very sharp and rapid decline.
For investors, these tokens can be an interesting investment opportunity. It is expected that more projects to create auxiliary tokens will be added in the future.