Today’s Eqonomics will be based on our listing process – one of the most stringent and compliant within the crypto industry.
Approaches to token listing will vary by exchange. The motivation to list a token can be driven by business strategy, target client or regulatory requirements.
Firstly, client demand is the principal driver of any token listing. This can often be validated by high trading volumes in the market. Although prevalent within crypto, EQONEX has never listed a token based on a monetary incentive from a project.
Once a shortlist of suitable tokens has been finalized, the first stage of analysis begins…
Non-exhaustive overview of a token evaluation.
The source code should be publicly verifiable. The security of both the source code and the smart contract must be deemed safe. For any layer 1 token, transaction speed and transparency need to be acceptable.
Founders should be fit and proper, whilst also having appropriate expertise. A proven track record of delivery will also be viewed favourably.
Metrics around traded volume and turnover help prove investment interest. We also look at on-chain metrics to evaluate the number of active addresses and any trends.
Social media data and trends help assess the popularity of a token. Additionally, for layer 1 tokens, public developer commits indicate the community’s interest in building on a blockchain.
The Crypto Rating Council (CRC) provides guidance on whether a token may be deemed a security, employing an asset rating framework consistent with the Howey Test. Other areas of interest include token supply, initial allocation, and utility. These are ‘negative screening’ tools, to identify red flags.
If you are interested in learning more about tokenomics, this area is touched upon in a previous Eqonomics: “Bootstrapping DeFi Liquidity”.
For each token, a final score is generated.
Additional questions to be answered:
Our preference is to use our FCA-registered custodian, Digivault.
To avoid receipt of ‘tainted’ tokens.
To ensure market integrity, we do not make markets ourselves.
We work very closely with regulators. Our objective is to remain compliant.
If we can complete these steps, alongside favourable analysis, we proceed to list the token.
While there are now many legitimate exchanges that operate fairly and ethically, certain exchange listings have been cause for consternation among crypto investors.
Historically, even some reputable and well-known exchanges have slipped along the risk curve to maximize revenues. For some investors, this has been perceived as working against their clients’ best interests and has led to reputational damage.
An additional issue is any suspicious on-chain transactions prior to exchange listings. Most tokens will be available for purchase through decentralized exchanges before being listed on a centralized exchange.
Unfortunately, this can lead to ‘front running’ by anyone with knowledge of an imminent listing. This is not to say anyone connected to an exchange is directly profiting – but, by definition, the information is likely to have originated from either the exchange or the token team.
The difficulty in assessing and mitigating these concerns:
For | Against |
Investors are provided with a wider range of tokens to purchase. | Opaqueness of due diligence performed and unknown motivations for listing. |
For | Against |
Decentralized blockchains are open to all and cannot (and possibly should not) be effectively regulated. | Material information is being leaked, resulting in short-term price spikes around listing date. |
Hypothetical “for” and “against”. A complex subject that can provoke differing opinions – particularly between “crypto-native” and “TradFi” investors.
Independence, transparency, and compliance are essential to EQONEX, in everything we do. Although rigorous analysis limits our ability to list certain tokens, our primary focus is providing investors with a trusted platform.
Get in touch if you have questions.
This week we will take the concept of correlation a step further and explore another technique for visualizing the relationship between assets: quantile analysis.
As markets behave badly, we can observe how crypto correlations have developed. In this Eqonomics, we explore the timing and magnitude of the correlation between BTC & ETH.
Volatile conditions negatively impact the bid/ask spread and willingness of liquidity providers to offer depth of market.
Following the launch of our latest BTC dated future contract, in this week's Eqonomics we provide a quick overview of our range.
Bringing digital assets to the world.
EQONEX is a digital assets financial services company focused on delivering a full, digital asset ecosystem that offers innovative, trusted, and transparent products and services.
© 2022 EQONEX Capital Pte Ltd
All rights reserved.
IS 749075