Former Binance CEO Changpeng Zhao ‘CZ’ has admitted that the token listing process of the largest crypto exchange by trading volume is flawed and has called for reforms to transform how the platform handles new listings.
Digital assets that manage to be listed on centralized exchanges (CEXs) like Binance or Coinbase attract more investors, given that these trading platforms offer massive new liquidity, thus boosting the tokens’ prices. However, CZ says the listing procedure is broken, claiming that the long period between the announcement and the actual listing is unnecessary.
Why Zhao Wants Binance to Improve Its Token Listing Process
On Saturday, Zhao tweeted that Binance’s 4-hour notice period allows involved tokens to rise in value on decentralized exchanges (DEXs), with investors dumping their holdings on CEXs immediately after listing, causing massive selling pressure.
Also read:The Binance’s ex-CEO remarks come a few days after the exchange listed TEST, a token whose market cap skyrocketed to $488 million hours after listing, then later dropped 52% to $187 million, according to data from CoinMarketCap. Zhao argues that incidents like these drain liquidity from centralized exchanges, making affected tokens more volatile.
Adopt an Automatic Token Listing Process, Zhao Tells Binance
Following the Test listing, marked by a significant price rally and drop, Zhao has urged Binance to improve its listing process by making it automatic, just like decentralized exchanges. If the exchange implements an automatic listing process, then the 4-hour notice period will be abolished. That means traders and investors will be informed about a token listing when trading on the CEX starts.
More Tokens Pump, Then Dump After Binance Listing
The TEST case isn’t the first where a token listed on Binance has lost its value by at least 50%. Digital currencies like JUP, ORDI, JTO, and PORTAL have seen their price drop by significant margins after being listed on the number 1 exchange. According to data from Flow, most cryptocurrencies on Binance lose at least 30% of their value six months after getting listed.
Meanwhile, CZ has revealed that he only holds Bitcoin and BNB out of the hundreds of tokens listed on Binance. Although he is not considering buying other cryptocurrencies, he has made it clear that he’s not against them.
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