Recent controversial issues faced by Binance have prompted an analysis of the differences between traditional listings and cryptocurrency project listings, as well as an exploration of their flaws and future direction, along with proposed solutions. This article is based on an article written by 0xTodd and compiled and translated by PANews.
The two most important purposes of traditional companies going public are:
1. Refinancing and expanding production
2. Endorsement
Both of these purposes are aimed at giving the company a competitive advantage and creating more profits for themselves and shareholders. Additionally, there are:
3. Founder and investor exits
4. Employee incentives
The former is a true benefit and encourages the birth of more businesses in society, while the latter increases employee loyalty and thus gains a competitive advantage.
Importance: 1 > 2 > 3 > 4
This is why people always say “capital can reproduce itself” in the past, because all goals ultimately end in making more money through a competitive advantage.
Furthermore, many companies don’t even want to go public, such as ByteDance and Huawei, because they are already making enough money on their own and don’t need to expand their competitive advantage through refinancing.
The brutal reality of our industry is clear: 99% of cryptocurrency projects do not make money.
The purpose of expanding competitive advantage does not exist from the beginning. Investing in reproduction is meaningless, the more you invest, the greater the loss.
So, the only remaining purposes are 3 and 4, which are the exit strategies for founders, investors, and employees.
Traditional listings have strict requirements and obligations:
Before listing, there must be a reputable institution to do the IPO. This step at least proves that the founder and business model have no major issues and makes the founder aware that this opportunity is expensive and should not be taken lightly. The recommending institution also cherishes its own reputation and will not use excessive off-market tricks.
However, the problem with crypto protocols is that they enjoy the benefits of traditional listings, such as investor exits and employee incentives, but do not bear any of the obligations of traditional listings:
Before listing, project parties do not have recommending institutions, and many founders are not even aware that listing is a rigorous process. On the contrary, everyone operates anonymously, without considering future reproduction.
So, bribery, fraud, fake trading volume, and all tricks are naturally used to the fullest extent because there will be no punishment!
Important things need to be said three times:
There will be no punishment;
There will be no punishment;
There will be no punishment.
Project parties will not be punished, exchange employees will not be punished, and exchanges themselves will not be punished.
The most severe punishment for project parties is being blacklisted by exchanges.
But what does being blacklisted really matter?
Using a classic hypothetical question, if you were in front of a red button:
A. 50% chance to win 10 million dollars
B. 50% chance to never be able to press this button again
If it were you, would you press it? You would definitely press it 100 times immediately—what kind of punishment is that?
You can say that Binance and Coinbase punish corrupt employees—criticizing them, firing them, and even theoretically holding them legally accountable.
However, gathering evidence is extremely difficult. Crypto is the most difficult asset to trace in the world, and it is even used by countries like Russia, Iran, and North Korea. You should know that our industry is the world’s leader in privacy infrastructure:
I use Signal or Telegram for private chats;
I use some cross-chain bridges or even coin mixers for trading;
I use some three-line exchanges that don’t require KYC for withdrawals.
Even if Interpol personally investigates, it may not be able to crack it. Your exchange’s internal audit department has no right to speak out against corruption.
And corruption is also extremely secretive:
A few kind words within the exchange, a few hints at project meetings is enough.
Even if you choose to remain silent when the leader is involved in an information cocoon, instead of exposing it, the bribery process is complete.
So, as Jocy said, project parties specifically bribe the KOLs that exchanges’ bosses pay attention to. Your exchange’s internal guards, even if Chen Lifu is resurrected, cannot solve this unsolvable conspiracy.
We can imagine exchanges as physical entities.
Listing a token that immediately drops by 90%, and then drops another 90% a year later, is no different from listing a token that is ten times higher—it’s just a matter of making less money with the former and more money with the latter.
Yes, you’ve discovered that exchanges can list junk tokens and still make money. They don’t lose money.
And the punishment in terms of reputation cannot be quantified. Exchanges will not set up a department to specifically track changes in reputation, and no one will do it because it means offending leaders and colleagues without any benefits.
So, what kind of punishment is this? The punishment for listing a junk token is just “earning a little less money”?
Is that considered punishment?
After traditional companies go public, they regularly disclose financial statements, which countless short-selling institutions and retail investors scrutinize.
For example, because PwC took on the Evergrande project, it has been heavily criticized and, more importantly, PwC has been fined a huge amount of 320 million yuan by regulators.
However, after cryptocurrency projects go public, not to mention the lack of financial disclosure, even the destination of funds in on-chain treasuries is difficult to determine.
Project parties can freely dispose of the money obtained from reducing their holdings. They can buy mansions, organize yacht parties, fall in love, or even research immortality. The only certainty is that they will not reinvest to expand production. This is the key problem—after listing, reducing holdings or cashing out itself is not a problem, but the problem is not reinvesting after cashing out, creating a bleeding cycle.
The symptoms are obvious, and the disease is deep. The only solution is to stop listing, stop listing, stop listing.
Listing has no meaning until the problem of “no revenue at all” in crypto projects is completely solved:
Listing a token that immediately drops by 90% is a quick way to cut off all users;
Listing a token that increases tenfold and then traps users at the top is a way to cut off naive users for the benefit of smart users.
It’s just a difference in appearance, with the latter looking better and being considered “giving opportunities.”
Warning: If exchanges continue to adopt existing listing strategies, they will gradually be eroded and even replaced by DEXes; it’s just a matter of time.
Even one day, I wouldn’t be surprised if a Telegram Bot gets a 5-10% market share of BN, CB, and UB.
——Separator——
Now, let’s enter the realm of fantasy. The ultimate solution: setting up two platforms, a main platform and a community platform.
[Main Platform] Gradual contraction
Immediately stop listing, and if radical, gradually eliminate and delist tokens that were listed before.
[Community Platform] New establishment
The newly established community platform adopts a DEX model, which is a registration-based system where every project can list fairly.
Ask yourself, Uniswap and Raydium list tens of thousands of tokens every day, have they ever been criticized?
When has Hayden Adams been bribed? Alpha Ray even has a fake name, and no one needs to create an information cocoon for him.
There may be some initial difficulties, but the benefits are:
In the future, listing on Binance or Coinbase will no longer be the end point for project parties to exit; it will be the beginning of their struggle to create amazing applications (otherwise, they won’t make money).
Value discovery is completely handed over to the community, rather than the listing team or investment department. The registration-based system can perfectly solve the problem of “Why is BN always last?”
If there are future cryptocurrency stars inside, they will definitely not miss out. And inside, junk tokens will never cheat more people through unfair means.
Looking forward to that day, this decision is both great and brutal. However, once successful, it can even reverse the entire industry’s atmosphere, stop the trend of “To Binance” and “To Coinbase,” and give birth to a true killer app like ChatGPT.
Never go against human nature, and never go against the laws of business.