Important Message from Binance Regarding New Token Listings 💬
Binance, the leading cryptocurrency exchange globally, has raised concerns about the emerging trend of new projects debuting with limited circulating supply and inflated fully diluted valuations (FDVs).
- Float vs. FDV explained.
- Concerns about high FDVs and low float.
- Binance’s stance on the issue.
The Issue: Examining Float and FDV 📊
Float denotes the total number of tokens currently circulating in the market, whereas FDV represents the market capitalization when factoring in the maximum token supply.
This situatio of low float and a high FDV can lead to potential sell pressure in the future, particularly impacting retail investors negatively.
Binance’s Response to the Trend 🚨
- Binance’s observation of the concerning trend.
- The exchange’s commitment to a diverse market.
- Call for projects with appropriate valuations.
According to Binance’s statement, the recent pattern of tokens launching with soaring valuations and restricted initial circulating supplies has caught their attention.
To ensure a healthy industry ecosystem, Binance plans to engage with smaller to medium-sized projects that offer realistic valuations and sufficient circulation of tokens.
Launches with high FDV and low circulating supply can trigger dilution and subsequent selling pressure on tokens, an unfavorable scenario for retail investors and project community members.
Encouraging a Balanced Market 🤝
Binance has published a comprehensive report titled “Low Float & High FDV: How Did We Get Here?” addressing this ongoing concern.
In response to the dilemma, Binance is inviting projects with moderate valuations suitable for their respective sectors to apply for potential listing on the exchange.
Interested projects from any industry are welcome to apply, emphasizing substantial token allocations reserved for community users and controlled token float during token launches.
Binance’s aim is to support small to medium capitalization projects and foster a more stable and inclusive market environment for all stakeholders.
Hot Take: Binance’s Call for Industry Balance 🔥
The communication from Binance highlights the importance of maintaining a fair market environment by discouraging low float/high valuation coin listings and promoting projects with strong fundamentals and equitable token distribution.
By encouraging projects with realistic valuations and adequate token circulation, Binance aims to mitigate risks associated with skewed market structures and uphold the interests of retail investors and project supporters.
Featured Image: Shutterstock/tanatpon13p
The post Binance Warns Against Low Float/High Valuation Coins, Puts Out Call for Small Projects With Strong Fundamentals appeared first on The Daily Hodl.
Sources:
– Binance Announcement
– Binance Report
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