Why 70% of ICO Tokens Don’t Come to Exchanges
The number of crypto exchanges has exceeded 250 recently so it would be quite reasonable if every ICO token would find its appropriate exchange. But as the experience of many new projects has shown, being listed at exchanges without paying crippling fees is almost impossible. ICOs that are not wishing to take risks have left nothing but put up with low liquidity of decentralized exchanges. Recent study conducted by ICOrating.com shows the problems of listing at respected exchanges many projects face and they are not just about providing a listing fee.
First, a project has to finish its ICO successfully. If their token was not sold out even provided the rest being burnt, demand for the token at secondary markets is going to be low just as the interest of the exchange in it. ICOrating reports that only 22% of ICOs that finished in the first quarter of this year could sell their tokens to exchanges. The figure reduced to 10% when compared with the previous quarter as a half of all ICO raised less than $100,000 during the first quarter of this year.
Projects that failed to reach for hard cap just cannot afford exchange listing while many successful ICOs may deny it. Prices charged by exchanges may vary drastically and range from $100,000 to $3 million for the largest and highly liquid ones (reportedly, Binance charges up to $7 million in some cases). It is to be remembered though, listing of new token is not that simple as it may seem to many traders.
Just before the listing exchange has to do a lot, and remain cautious enough for the project not to be a scam. For if scam gets revealed it may affect the reputation of the platform. Just remember Centra project that was declared fraud which made Kucoin and Binance hastily delist it. As various security checks and other administration issues take time, ICO tokens demand in average 21 days to start being traded. Some exchanges also insist on token’s smart contracts being checked for errors which is rather understandable taking account of their popularity and potential severity.
Even with all requirements for listing settled, it is not fine all the time for ICOs. There were situations when exchanges delisted tokens without warning. Pressure by regulators may also give birth to some rumors, so if some token is rumored to be marked as share, exchange may get a scare and delist it. Given some recently added tokens can be pumped, dumped and left to die slowly although the project itself has got some months to launch it is no wonder that some ICOs are not hurrying giving their tokens to exchanges before beta-testing and before there is real demand for the tokens.