Save yourself from another FTX 🚨
What are exchange tokens in 4 points
GM 🔆
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You know what pairs best with your Sunday morning coffee or chai, YES, it’s This Week in Web3 with the best web3 news & resources in under a 5-minute read. Here’s what we have covered today:
Quick Numbers and News
What are exchange tokens?
Estimated reading time: 03:04 mins
Weekly Wrap: Numbers & News 🗞
Quick web3 updates curated for you:
The first airport metaverse takes flight in India with Polygon’s help to showcase the T2 Terminal. We just have two words: SO. COOL.
Binance CEO CZ plans to set up a crypto industry association to communicate with regulators.
Cristiano Ronaldo released his first NFT collection with Binance on 18th November. suii
El Salvador is now purchasing Bitcoin every day since November 18.
Tom Brady, Gisele Bundchen, Steph Curry and other celebrities were named in a class-action lawsuit against FTX.
What are these exchange tokens?
The sudden fall of FTX shook the movers and shakers of the crypto world.
Vitalik Buterin shared his beliefs as well. Buterin believed that people running Mt. Gox and LUNA ecosystems “looked” sketchy and did not try too hard to whitewash themselves enough. But on the other hand, “FTX was the opposite and did full-on compliance virtue signalling.”
However, given their length of acquaintance, Buterin believed that Sam, as a person, deserved love and support. But not everybody was willing to cut some slack for the troubled entrepreneur. And to avoid an FTX-like situation from happening, the crypto community has proactively begun cross-checking anomalies and educating folks.
Those revelations have put exchange tokens under the microscope. Let us also get more aware and understand what exchange tokens like FTT are, what they are for, and what risks they carry.
What’s an exchange token? 🪙
An exchange token is one native to a cryptocurrency exchange and created by the company that runs the exchange, often framed as a “utility token’, like Binance's BNB and FTX's FTT.
How are exchange tokens used? 📐
Crypto exchanges launch tokens for various reasons, including as customer incentives, covering transaction costs, raising capital and liquidity, and as governance token for DAOs.
How do you buy exchange tokens? 💳
Investors can purchase these tokens through the token's parent exchange. In some instances, they can also be bought on rival exchanges.
Unless the exchange has a fiat onramp, investors looking to load up on exchange tokens will need to swap their BTC or ETH for the token. This process typically involves setting up an account and going through KYC.
➕ Some tokens are only available in certain regions.
What are the risks with exchange tokens? 📊
With FTX, everything seemed fine until we realized a large sum of those tokens were held by their rival, Binance.
Another risk is counterparty risk; if the exchange has liquidity, it needs to back its token if liquidity dries up suddenly.
Staking tokens lock them into the network or exchange, the investor cannot move or trade those tokens. And in case of a meltdown, the tokens will potentially go with it.
As with everything related to money, it’s better to be safe and educated. DYOR before you buy the dip in this bear run. 🐻
Celo is on a mission to build a global financial system that promotes prosperity for all. Their platform makes sending money as easy as sending a text message, accessible to anyone with internet access. By using a decentralized address-based identity layer, Celo allows users to link their phone numbers to their wallet addresses. Additionally, mobile users have the opportunity to earn rewards for participating in the maintenance and security of the system.
Learn more about the Celo ecosystem 👉 HERE 👈
Work in Web3 👩💻
Software Development Engineer 🛠 Onmeta
UX/UI Designer 👩💻 Hector Network
Blockchain Developer ⛓ Offchain Labs
Brunch w Buildooors 🍽
The Product House has teamed up with Polygon to embark on a journey to Road to ETHindia with an invite-only offline mixer for the best minds in web3 across India. 🇮🇳
If you’re a Buildooor in Web3, this event is for YOU! Check out all the amazing perks of the mixer here, which includes copping this stunning NFT ✨
BwB is coming to Delhi on November 27th, lesssgo!
That’s a wrap for This Week in Web3, see you next week! 🚀
If you’re an early-stage web3 builder going from 0 to 1, holler at our creative-capital studio Spacekayak and let’s create something extraordinary through design! ✨