Why Do Crypto Platforms Have Their Own Utility Tokens?
Major cryptocurrency platforms such as Binance, Kucoin, Gemini and Bitcoin.com act as gateways to the world of crypto trading. They provide both an introduction to the world of blockchain and cryptocurrency with various educational articles about the world's major tokens, as well as tools to buy, sell and exchange them online. Many provide their own non-custodial wallets too, and some even offer payment applications that bridge the world of crypto and traditional cash.
As the crypto industry has matured, many of the major platforms have gotten into the digital token game themselves, issuing native utility coins for their respective ecosystems. These coins serve multiple purposes, providing benefits for their communities while raising funds for the companies behind them.
For example on the Binance exchange, the native BNB coin provides liquidity and helps it to increase its revenue. It also adds marketing value to the Binance ecosystem, adding to the attraction of its platform.
Crypto platform tokens provide genuine utility, with specific use cases within their platform's respective ecosystems. Many such tokens are used to pay transaction fees at a discount, while others provide unique opportunities in the world of decentralized finance.
One of the major advantages for crypto platforms is that by issuing their own token, they can increase the loyalty of their user base by giving them an easy way to take advantage of discounts and other offers. These utility tokens can also be used as a base market in exchange ecosystems, paired with other popular cryptocurrencies to create liquidity pools. By doing so, users of those platforms can trade their tokens confidently, without the risk of being hit by a sudden price change - known as slippage - which can happen sometimes due to a lack of liquidity.
A lot of cryptocurrency exchanges use a buyback and burn strategy to maintain the value of their native tokens. In the case of Binance for instance, every quarter it will use 20% of its profits to repurchase BNB tokens from the open market and then "burn", or permanently destroy those coins. The idea is that doing so gradually reduces the supply of the token.
The native tokens of some major crypto platforms are used for governance purposes too. While some exchanges are centralized, meaning the company that operates them makes all of the decisions, decentralized exchanges are governed by their communities of users. So holders of Curve Finance's native CRV token can make proposals on the platform's future direction and then vote on them. In this way, decisions are taken based on the community's consensus.
Crypto platform tokens have traditionally tended to perform very well during bear markets. That's because these platforms see a lot of trading volume during such periods. A recent example is the crypto market crash that followed the collapse of the Terra blockchain ecosystem and its LUNA and UST (stablecoin) tokens. As Terra crashed and burned, major cryptocurrencies such as Solana, Polkadot and XRP all lost around 25% of their value. But the tokens of crypto platforms held their value. Bitfinex's utility token LEO, for example, fell just 2% during the same period, while the FTX exchange's FTT token only declined 4%.
Examples Of Crypto Platform Utility Tokens
BNB
The native coin of the Binance ecosystem is one of the oldest utility tokens in the industry. BNB was launched back in 2017 with a simple goal of facilitating more trading on the platform's exchange.
BNB has done a stellar job, as Binance is by far and away the world's top cryptocurrency exchange in terms of trading volume and has been for many years. BNB provides big benefits to holders, notably allowing them to pay exchange commissions with discounts of up to 25%.
Binance has since extended the utility of BNB in various ways. The token can be used for payments on multiple retail websites, to book hotels on sites such as Trip.io, TravelbyBit and Travala.com, and for entertainment purposes, such as buying virtual gifts, lottery tickets and card packs. It can also be used to pay for online services such as Canva, Storm and BitTorrent, and even access DeFi services - for instance, holders of BNB can take out loans at ETHLend or make investments via Moeda.
Another use case of BNB is investing in new projects, or initial coin offerings, through Binance's launchpad program.
BNB has established multiple partnerships in other areas, such as with the premier live video streaming platform Uplive. There, users can buy virtual gifts using BNB and send them to other users on the platform.
CRO
Crypto.com's native cryptocurrency CRO is another hot token. Hong Kong-based Crypto.com offers services ranging from a crypto exchange to DeFi and payment applications, with features including staking, loans, crypto-based Visa debit cards, crypto loans, an NFT marketplace and more besides.
The platform has emerged as something of an empire in the DeFi space especially, which is perhaps not surprising given that its mission is to make crypto more accessible and "adoptable" by new users. Crypto.com wants everyone to use crypto for day-to-day payments such as their weekly grocery shopping and its services are designed to enable that.
The CRO token can be used to pay platform fees at a steep discount compared to other coins. Users can also "stake" their CRO coins for other benefits. The platform offers higher interest rates for those who stake CRO over other tokens, and users will also qualify for better rewards if they use one of Crypto.com's prepaid Visa debit cards which can be loaded with, yep, CRO tokens.
With Crypto.com's services, people can pay their day-to-day expenses with CRO. Whenever someone makes a purchase using its debit card, their CRO holdings are converted to fiat at the point of sale in real-time.
VERSE
The biggest major crypto platform token to land this year is VERSE, the native utility coin of the popular Bitcoin.com portal that serves as a gateway to the world of crypto. Bitcoin.com offers services including a non-custodial multi-crypto wallet, a cryptocurrency exchange, DeFi platform, payment services that bridge crypto to fiat, industry news and more besides.
Having been around since 2015, a native Bitcoin.com token is long overdue. The platform launched VERSE earlier this year, saying it recognized an urgent need for a native utility token.
VERSE is a cross-chain token based on the ERC-20 standard that's designed to expand into low-fee, EVM-compatible blockchains. One of its main utilities is with the Verse DEX, where anyone can deploy the token into liquidity pools to earn rewards through a share of that platform's trading fees. Yet more rewards can be earned by staking VERSE tokens and the LP tokens they receive as credit for providing liquidity.
Bitcoin.com believes that VERSE will be the first time many of its users have interacted with a token with this kind of utility. Therefore, it hopes it will be a way to onboard many new users to the world of decentralized finance.
Having already raised $33.6 million from its initial sale of VERSE tokens, there are high expectations for upcoming sales. Some 69% of the total 210 billion VERSE tokens are reserved for the Bitcoin.com community in the shape of ecosystem incentives, rewards and a community development fund. The precise allocation and emissions schedule, which will see incentive tokens disbursed over seven years, is designed to optimize the network effects and demand for VERSE. At the same time, Bitcoin.com will implement a buyback and burn strategy to decrease the circulating supply of VERSE.
VERSE's development and integration with the Bitcoin.com ecosystem is already underway, with the next token sale set to take place in June when 12.6 billion coins (6% of the total supply) will be made available to the community. Given the strength of Bitcoin.com's ecosystem and its global reach, demand is sure to be sky-high for a token that provides immediate and extremely beneficial real-world utility.
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